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Public Private Partnership Proposal ZESC and CREBs Due Diligence Work Session

(Attachments)

Contents

Historical Record:................................................................................................................ 1

Record of My Review & Due Diligence: .............................................................................. 1

Technical and Human Resources of Due Diligence: ........................................................... 2

Informal Sub-Committee Due Diligence: ............................................................................ 2

Due Diligence and Preparation: .......................................................................................... 3

Recommendation to the Council: ....................................................................................... 4

Historical Record:

In March of 2009, a Renewable Energy Developer of ZESC technology offered a proposal to the City for a

conduit of CREBs in return for the option of obtaining a net revenue interest from a utility district that

would convert solid waste into green electricity without emissions.

On May 26th

this matter was brought before the City Council at a Work Session:

http://www.ci.troutdale.or.us/mayor-council/mp3/20090526CC_WS_n2.MP3

For various compounding reasons, the information made available to the city was not available for

council review before or after this meeting. Therefore, council Due Diligence has been delayed until

now.

In an effort to satisfy this Due Diligence, I have completed a list of activities below to assist our efforts,

based on the continued encouragement of Councilors Wand, Kyle, White, and Thomas.

Here is an outline of the work performed in accord with our previous decision for Due Diligence on the

proposed technology and CREBs program. Each outlined item is disclosed in greater detail following the

outline. This completes the council’s direction to perform Due Diligence and substantiates the

Developer’s proposal.

Record of My Review & Due Diligence:

I reviewed Los Alamos National Laboratories comments presented to the US DOE in 2006, the electrical

engineering certifications, CREBs application, combustion data, redundant systems engineering

certifications, Waste streams that were treatable, engineering recordings and videos showing

combustors, tire handling, waste reduction, and a MRF in operation. I communicated with the

prospective Debt Investor, Mark Alexander to confirm if he was able to perform.

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I acquired and reviewed the background on the Renewable Energy Developer (Zollinger), background on

the engineers and plasma sub-systems designers, the Debt Investor, the financial structure, the tax

credits, debt instruments and federal program funds.

I traveled and interviewed Senator Wyden’s staff members, in Washington DC office on a fact-gathering

mission and I met with Dave Berick our federal Energy Specialist. Mr. Berick was able to confirm the

program status for municipal renewable energy plant finance, and pending tax considerations “BTU

parity.” I recorded our interview. Mr. Berick was inclined to assist us with federal programs and suggest

that I visit the DOE, USDA and Treasury. I ascertained that federal program allocations resulted in less

than 50% success ratios. I ascertained that those who contribute to lobbyists increase their odds.

Mr. Berick committed to work with Mississippi’s Senator Wicker’s office on a bi-partisan basis to obtain

standard energy finance called “dNPV” (discounted net present value of a future flow). Senator Wyden

favors “parity for renewable energy” which translates into funding or financing for ZESC technology.

Finally, I researched and familiarized myself with competitive technologies and the pro’s and con’s to

the proposed facility versus alternative energy projects.

Technical and Human Resources of Due Diligence: 1. Marni Zollinger BYU BS Psychology Honors (Extensive Interviews)

2. Brigham Young University Degree Reference Registrar (801) 422-4530

3. Doug King Developer Reference (828) 329-1991

4. Mark Alexander Investor (Extensive Interviews) (832) 289-5669

5. Bill Brar PE Investor Reference (713) 849-5666

6. Mary Gautreaux Senator Wyden’s Deputy State Director (Interviews)

7. Dave Berick (Interviews) Senator Wyden’s Sr. Advisor for Energy and Investigations

8. Mayor Andre’ DeBerry City of Holly Springs (662) 252-4280

9. Kentucky EPA office

10. Department of Energy

11. Department of the Treasury

12. US Department of Agriculture Rural Utility Service Electric Program

13. Mississippi Senator Roger Wicker

14. Reviewed air related “No Permit Required” (NPR) protocol with the States of Florida, Kentucky

and New Mexico

Informal Sub-Committee Due Diligence:

When I returned from Washington, I asked the Developer to attend an informal sub-committee on

September 11th

to analyze my findings and address challenges from the participants.

Matthew Wand, Glenn White, Mayor Paul Thalhofer and Dave Ripma were present. The Renewable

Developer presented an expanded version of the May 26th

presentation. The attendees were invited to

ask any questions and confirm elements of the MOU while I observed and scrutinized the Developer’s

presentation. Glenn White requested information to address concerns about the MOU, which were

provided. Matthew Wand provided conditions for support, which will be embedded in the MOU.

With unanimous support by the group to continue my research, I encouraged additional city councilors

to complete their own Due Diligence with the Developer. I encouraged them to speak with the

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Developer on their own and request more information. All councilors were interested in the additional

findings.

Attendee Results: 3 Members of the group were positive and one 1 was Neutral

Due Diligence and Preparation:

I believe that exhaustive Due Diligence for the people of Troutdale has been honored.

With that, I conferred with Debbie Stickney and Mr. Nelson about a work session to discuss this topic on

Tuesday October 20th

. Due to SummerLake’s cancellation, Mr. Nelson recognized additional council

support and is making the necessary arrangements for the work session. This letter and email reflect a

formal record of my phone request with the supporting record and documentation to engage a

comprehensive decision at the work session.

I have requested that the Developer and debt investor make themselves available during this

intervening period for any City Councilors who wish to join in Due Diligence. I have included

contact information as well as additional references.

• Councilors who seek to perform Due Diligence should do so prior to our work meeting. The

Developer is readily available for your inquiry. Councilors have requested minor amendments to

the MOU (letter agreement, original attached) and UDA (utility development agreement,

original attached) as per recommendations from the work session in May and subsequent Due

Diligence interviews. To our benefit, the Developer incorporated these changes (see amended

documents, attached) over time. Prior to taking votes upon the motions recommended in the

following section, I will ask for a Due Diligence roll-call to obtain updates to our Due Diligence

status. Please let me know if this status changes. I will send an update to Mr. Nelson as needed.

Current status:

City Councilors Due Diligence

(voting)

Due Diligence

(abstaining)

Mayor

Jim Kight

Offered to Include

(Response Pending)

President

Doug Daoust

Materials Sent

(Contact Pending)

Matthew Wand Completed

Barbara Kyle Materials Reviewed

(Meeting Scheduled)

Norm Thomas Completed

David Hartmann Completed

Glenn White Completed

• Some City Councilors may have constraints which impede their ability to complete their Due

Diligence which is reasonable grounds for recusal or abstention.

If you have an email request for additional information, I am happy to send responses to Mr.

Nelson and copy the council to stay within our email guidelines. I will not be making comments

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or clarifications on requested information and they all become part of the Due Diligence

packets Mr. Nelson will be preparing for our meeting. The debt investor Mark Alexander and

the Developer Marni Zollinger are standing by to assist you if you need more information than I

have, and they can also provide clarity to concerns you may raise.

Recommendation to the Council:

It is my formal recommendation to proceed with the ZESC Proposal as follows:

1. Non-recourse preparation:

The Renewable Developer requires the formation of a Utility District. This requirement may be satisfied

by amending the Enterprise Zone District, creating a new Rural Renewable Energy District (RRED), or a

Municipal Utility District. The district creates bond and tax authority. I have attached the initial

investigation of the formation of Utility Districts as discussed with the state (see RRED communication,

attached).

I have drafted below a resolution to exclude the ability of the Utility district to tax outside of the district.

This prohibits the joint public/private entity from ever collecting tax money to pay for operations or

debt. This also provisions, that only net revenues from the Profit Centers described in the MOU will be

used for debt repayment. This city resolution meets the non-recourse financing terms as required by

the City Council and as designed by the Developer.

Motion: that the ZESC Renewable Energy Utility District shall be created

Motion: that the public/private business combination shall be enacted.

Motion: that the financing authority for the Utility District shall exclude authority to obtain tax

revenues of any sort or kind.

Motion: that the Utility District shall have power to satisfy debt service through revenues

derived from ZESC facility Profit Centers.

Motion: that the Utility District shall have no authority to petition for a Voter referendum of any

sort or kind.

2. Finance Requests:

Motion: to delegate David Hartmann as the cities contact and liaison on all matters

pursuant to ZESC Development.

Motion: to delegate David Hartmann to seek dNPV permanent financing and bring

recommendations to the council.

Motion: to delegate David Hartmann to work with Senator Wyden in concert with

Senator Wicker of Mississippi and Mayor Andre DeBerry of Holly Springs, Mississippi in

order to obtain the best ZESC revenues for the city of Troutdale from our federal

agencies.

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3. Additional Measures:

Motion: that the Amended Memorandum of Understanding (letter agreement), and Utility

Development Agreement (Letter of Intent) with Limited Power of Attorney be granted to the

Renewable Energy Developer with authority to:

1. Generate renewable electricity (engineering certifications received)

2. Create up to 135 jobs (see attached Job Creation Estimate)

3. Design a smokestack-free impact on air, ground or water pollution

4. non-recourse to City and residents with no credit or cash contribution by City

5. clean stockpile facility for ample fuel reserve to underwrite decommissioning

6. Roll-in all pre-engineering fees to facility financing as well as all other incidental costs that

are associated to the construction, preconstruction and operation of the facility.

While this hasn’t been discussed, I assumed we would be interested in protecting the incidental costs to

our citizens. With that in mind, item 6 of this proposed motion rolls-in the legal fees incurred at this

point into financing instead of forwarding those costs on to the people of Troutdale. Legal fees are

estimated in the UDA’s list of Allowable Costs under the Construction category, see amended UDA page

four. Upon signing the MOU and UDA, Troutdale may roll-in the anticipated costs of hiring counsel to

form the Rural Renewable Energy District, determine siting preferences and misc. milestones.