The contract between the City of Evansville and Earthcare Energy that was signed by Mayor Winnecke on on behalf of the City and Ken Haney as Chairman and CEO of Earthcare Energyon March 1, 2012 is for the most part standard and easy to understand. There are some items in the contract that merit further review based on the fact that it is now widely reported that the deal is dead.

The first revelation is on page 5 where it clearly states that “Earthcare shall have a period of thirty (30) days to cure such failure, default, or breach.” Contrary to the sentiment in Evansville this deal may not be dead yet. Earthcare may well come back to assert that they have the cure to the items that the city has stated that they are in default for.

The City of Evansville specifically has stated that the default was because of two deficiencies.

The first was Earthcare’s failure to secure a DOE guarantee for the $5 Million loan that the City was committing to make to Earthcare when they had satisfied the pre-funding obligations. Obligation (1) reads “Prior to consummation of the loan transaction contemplated hereby, Earthcare shall APPLY FOR and take all actions necessary to secure from the DOE a loan guarantee of the Loan to be made by the City to Earthcare.” On page 2 of the contract it explicitly states that “The parties hereto both agree and acknowledge that securing a DOE loan guarantee may not be feasible prior to the execution of the agreements” and if it is not secured Earthcare will keep working diligently to try to get a DOE guarantee.

Will making an application for a loan guarantee be that difficult to do to cure Obligation (1)?

With respect to Earthcare’s failure to deliver to the City of Evansville the “license agreement” with Langson Energy on page 6 under the section titled “Conditions to Closing”, Condition #7 reads as follows: “Prior to the consummation of the Loan transaction, Earthcare shall prvide to the City A LETTER from Langson Energy addressed to Mayor Winnecke which outlines the agreement between Langson Energy and EarthCare with respect to Langson Energy’s intellectual property.”

There is no reference to any license agreement that was cited yesterday as reason for default. Of course the term “intellectual property” could and may be interpretted as meaning both the license agreement and the patent that has been represented as having been applied for. The question will be, can Earthcare come back during the next 30 days with a “license agreement” or a “Letter from Langson Energy” as the contract states and claim that they have cured the deficiency?

What is NOT in the contract that is somewhat confusing is any “Condition” or “Requirement” that the Evansville City Council has to vote to approve the loan. Quite frankly, there is no reference to the City Council anywhere in the contract.

There are other details that seem to have been distorted by public statements including the alleged $2.5 Million payments to be made to the City of Evansville by Earthcare in a profit sharing arrangement. The contract has no reference to any profit sharing but does refer in Article 8 of the Obligations of Earthcare to a $0.005 per kWh fee to be paid to the City by Earthcare for power generated under PPA’s with Vectren or other customers for a period of 15 years and not to exceed a total of $32 Million. A quick calculation reveals that to capture the full $32 Million that Earthcare would have to generate 6.4 Billion kWh through their devices and sell it back to utilities.

Perhaps in view of yesterday’s results the most haunting words in the contract are the words that comprise Item 7 of the Miscellaneous Items.

“Earthcare hereby acknowledges and agrees that (a)the City would be irreparable injured in the event of a breach by Earthcare of its obligations hereunder, and (b)monetary damages may not be an adequate remedy for the City in the event of a beach by Earthcare hereunder and (c) in the event of a breach by Earthcare hereunder, the City shall be entitled to seek specific performance or other injunctive relief with respect thereto (without posting of a bond), in addition to any other remedy that the City may have in equity or at law.”

Well, the breach is upon the City of Evansville and there is now 30 days for Earthcare to cure such breaches. Hopefully, for the sake of the people of Evansville this shall pass without further discourse. There is however plenty of opportunity for discourse if either party wishes to be discourseful.

On Monday night City Councilwoman Stephanie Riley will be introducing a resolution to rescind their loan approval and the Council will once again vote for or against a loan to Earthcare. The omission of Council approval as a condition of consummation is bumfuddling. So what if they rescind it, does that not just turn the clock back to when this was signed in the first place?

Of course the burning question is how was the City of Evansville able to justify making a $200,000 loan to Earthcare through the DMD? It would seem since this contract calls for a $5 Million loan that the City has violated its own contract by making that loan. It will be interesting to see what the $184,000 of those funds that have not yet been recovered were used for.

All of this could have been avoided by requiring that the LICENSE AGREEMENT be on file before signing this contract. Please Evansville, learn something about vetting and due diligence before doing another thing involving the use of taxpayer dollars. Put a process in place that makes sense and make sure that the implementation is done in a way and by people who do not have the potential for conflicts of interest.

Source: Contract Supplied to the CCO by the City of Evansville on May 9, 2012 after a press conference regarding the default of Earthcare

the City County Observer has secured and would like to make available to our readers the February 28th letter agreement between Earthcare Energy and the city of Evansville. It is Earthcare’s failure to perform according to the conditions set forth in this agreement that was given by Mayor Winnecke as the reasons for declaring Earthcare to be in default.

Link to Letter:

City_Earthcare_Letter02282012

Source: Office of Mayor Lloyd Winnecke

IS IT TRUE June 1, 2012

IS IT TRUE Moody’s has downgraded the bonds that were sold to finance the YUM Center in Louisville to JUNK BOND STATUS?…the reasons given for the downgrade are lower than anticipated revenue from the Tax Increment Financing (TIF) District that was established to partially service the debt AND higher than anticipated operating costs?…the YUM CENTER has enjoyed good top line cash flow with the University of Louisville men’s and women’s basketball teams as the anchor tenants both of whom are in the top 5 in the country in their respective sports?…that UL women’s basketball is #2 in the country for attendance and the men sell out every game in the YUM CENTER?…that the concerts at YUM have been the marquee concerts like Lady Gaga and Rush that also sell out the house at over $100 per ticket?…that the magnificent top line is not enough to keep the debt from being downgraded to JUNK?…that we are wondering how long it will be until the Ford Center debt is up for a grade review and how it will stack up to Louisville?

IS IT TRUE CCO Mole #14 tells us that earlier this year a highly respected and credible investor floated the idea of doing a complete refurbishment of the McCurdy Hotel into a classic hotel that reflects the era in which it was built?…that this refurbishment idea would result in at least the number of rooms that the Winnecke Administration paid $75,000 to learn were needed by Hunden Strategic Partners?…that we hear they were not even interested enough to return the phone call as they are bound and determined to build a new FREEWAY HOTEL next to the Ford Center as that is the only way they think The Centre can be saved?…the financial package needed to get the McCurdy resurrected will be less than will be needed to attract a developer/operator that meets the desired criteria to do a new hotel?…that we also hear that the financial world in downtown Fort Wayne is not all wine and roses as far as the Convention Center and the new Hotels are concerned?…that there is a growing realization in the convention industry that the days of big conventions going to one horse towns is over?…that as conventions go Evansville is and will always be a one horse town compared to places like Las Vegas, Los Angeles, and New York City?

IS IT TRUE that the CCO has done some follow up on the situation with the overturned grave stones at the City of Evansville cemeteries?…that this is a big problem as there are many tombstones turned over?…that in the case of the Oak Hill Cemetery we have confirmed that the gates are not being locked at the end of the day?…we have had a number of calls and emails from concerned citizens letting us know that they have complained about the fact that the gates are not locked only to be dismissed by the cemetery manager?…we also have a contract and it explicitly states in the contract that the owner of the each grave is responsible for making sure that the monument on that grave is maintained?…we had to read that one a couple of times for it to sink in that in most cases the person or people in the grave are responsible to maintain their own monument?…Jay Leno should come to town and put together a batch of jokes on that little nuance?…we bet they have never gotten one phone call from the dead to complain about the condition of the headstones?…there seems to be some humor in everything?…that the laziness associated with not locking those gates is not one of the things that should be laughed about?…that if the Mayor appointed crypt keeper is too darn lazy to lock the gates at night then Mayor Winnecke should find another crypt keeper?…that finally the contract still states that Jonathan Weinzapfel is the Mayor of Evansville?…we guess the City that was willing to hand $5 Million to an out to town business can’t afford new cover pages to accurately reflect who the Mayor is?…that could just be a lazy manager too?

A City that Refuses to Honor it’s Dead is not Worthy of Respect

In yet another in our face example of abject failure with respect to maintenance and accepting responsibility on the part of the City of Evansville, Todd Robertson, the executive director of the Evansville Transportation and Services Department charged with running the cemeteries has laid the responsibility for maintenance of tombstones at the feet of the families of the deceased?

Why are we not surprised that this is the official position of the City Administration that has recently been exposed for needles in the parks, intentionally allowing Roberts Stadium to deteriorate, and not even having the foresight to spend $100,000 to keep the Mesker Park Amphitheatre painted and mold free? It was widely seen as arrogant and impractical several winters ago when then Department of Metropolitan Development leader Tom Barnett asserted the downtown merchants were responsible for snow removal at a time that over half of the storefronts were abandoned? Based on recent history we must ask if the City of Evansville has the capacity to do anything right that involves maintenance?

The attitude regarding the maintenance of tombstones in City owned cemeteries is the last draw? This policy is not practical, it spits in the face of our heritage, and it is not acceptable. Each and every person buried in these cemeteries represents a part of all of us. Each and every person buried in these cemeteries represents a commitment on the part of the City of Evansville to provide honorable maintenance in return for the payment that was made by or on behalf of our dead. To be cavalier in doing basic day to day tasks like locking the gates at night so vandals can’t wreak havoc and then make a public statement that the tombstones that need resetting are the responsibility of the relatives is not only arrogant it is impractical? Many of the dead do not have relatives yet their desecrated or poorly maintained headstones make the City of Evansville’s cemeteries look like a scene from a zombie movie.

The City County Observer calls upon Mayor Lloyd Winnecke to mobilize his growing army of fitness buffs who help with exercise videos and attempts to set world records for doing pushups in the park to take this issue on. If there is one thing that Mayor Winnecke deserves accolades for it is cleaning up blight. Desecrated tombstones are the most insulting form of blight that there is. To allow the stated opinion of Todd Robertson to stand is to sanction and enable the dishonor of our dead. The solution to this is simple and the time to correct this abomination is right now. To do anything less that restate the policy toward the dead and take immediate actions to reset these markers is simply whistling past the graveyard.