Ada County paid $2 million to Dynamis Energy to design a state-of-the-art plant that would turn trash into electricity at the Ada County landfill.
Commissioner Sharon Ullman assured taxpayers and critics that the design contract complied with state law, that the county was paying for design plans that Dynamis would buy back, and that the county had collateral against a possible default.
But documents obtained by the Idaho Statesman show that county money was used for expenses beyond designing a plant and raise doubts about whether the county has collateral it can collect on.
A notice filed in Idaho this summer by a Maryland company that invested money with Dynamis lays first claim to all Dynamis equipment, work products and even its tax refunds. Ada County has no such claim or bond against the companys failure to perform.
Additionally, the contract provided for hourly rates far beyond what other Treasure Valley governments pay engineers.
According to records obtained under a public records request, Ada County paid for high-end Apple computers, engineering software, and even government and power consultants. Payments included $30,000 to consultants who negotiated with Idaho Power, $71,000 to a firm that procures government contracts and $150,000 to industrial manufacturer Siemens for a deposit on a turbine.
Dynamis CEO C. Lloyd Mahaffey told the Statesman that the expenses fall within the parameters of the contract, which permitted spending beyond design.
The three commissioners who approved the project and signed off on the checks to Dynamis Ullman, Fred Tilman and Rick Yzaguirre are under investigation for their handling of the deal, including whether it complies with state laws. Ada County Prosecutor Greg Bower called for the investigation after receiving public complaints, and its expected to take about two months.
Tilman was voted out of office in the May 2010 Republican primary; Ullman was defeated in the May 2012 primary and will leave office in January. Yzaguirre has two years remaining in his term.
More than half of the countys $2 million went to Dynamis staffers: $650,000 to engineers paid $270 and $350 an hour; $100,000 for legal work at $220 an hour; $153,000 for drafting/engineering at $150 an hour; and $145,000 to Mahaffey and Chief Operating Officer John Johnston for design oversight and management.
Dynamis also pocketed $180,000 as a 10 percent markup designated for overhead and profit. This means the $350 per hour that Dynamis billed the county for engineering services actually cost the public $385 an hour.
The high hourly fees and the 10 percent markup were permitted in the 2010 contract. The county payments totalling $1,987,500 were made in six checks between August and December 2010. The county was contractually bound to make set payments by set dates.
None of the Ada County commissioners who approved the contract and Dynamis invoices would answer Statesman questions.
Idaho Citizens for a Safe Environment and Transparent Government, a group that opposes the Dynamis project, says some of the payments are improper and breaches of contract conditions that should prevent the project from moving forward. The group says the invoices show spending beyond the scope of the contract, what it says is a misuse of public funds.
In a statement to the Statesman, Idaho Citizens said it was odd for a company to enter into an agreement without the necessary equipment to perform the principal function of its business: Why did the county pay for nine computers of any make/model and the supporting software? An energy company that was properly vetted by the county and deemed qualified to perform on such a contract would certainly have had on hand the resources so fundamental to the companys core business.
The county had ample opportunity to scrutinize those invoices, as the contract provided 30-day payment terms, Mahaffey told the Statesman. We will defer to the countys internal process for reviewing invoices and determining their appropriateness prior to making payments under the contract.
Others say the payments went beyond designing the Ada County plant. They say the payments appear to be more like an investment in a startup company that needed to purchase computers and engineering software in order to design the plant it proposed. A finance expert who reviewed the contract noted the money spent on the Siemens turbine, which is a capital cost for building, not designing, the facility.
Mahaffey disputed that the countys money provided startup funds for Dynamis Energy LLC, which was registered with the Idaho Secretary of State about a month before the county signed the agreement.
Public money was not used as Dynamis startup money, he said.
Documents show that Dynamis sent its invoices directly to Ullman, the countys liaison on the project. Ullman requested that the clerks office give at least two of the checks directly to her so she could give them to Dynamis.
Under state law, county commissioners cannot consider any claim for payment not accompanied by receipts and documentation.
When the clerks office received the first two requests for Dynamis checks without receipts or time sheets, Ada County Clerk Chris Rich then chief deputy notified the company that the payments could not be processed without supporting documents. Dynamis then submitted documents with its invoices, and the commissioners signed off.
Rich said the clerks office ensures that payments are processed correctly but doesnt review other departments contracts or spending.
We process the paperwork, said Rich. We rely on experts within the county to approve the payments.
PAY TO ENGINEERS
Other Treasure Valley public agencies that have contracts with civil engineers Boise, Meridian, Ada County Highway District and Idaho Transportation Department say they pay much less than $350 an hour for services.
The highest hourly rate ACHD paid a contracted civil engineer who worked on the East ParkCenter bridge one of the agencys most expensive projects, built in 2009 was $200 an hour for five hours of work.
The highest engineering rate I could find on our contracts was $265 per hour, said Boise city spokesman Adam Park. This was for a regional vice president of a major consulting firm. Generally speaking, we pay managing/senior engineers in the range of $150 to $200 per hour and project engineers $125 to $160 per hour.
Meridian pays $67 to $240 an hour for professional engineering services.
Both cities said they do not allow contractors a separate markup charge on labor, materials and other expenses.
Any overhead or profit for the company would be built into those rates already and would not be a separate charge, said Robert Simison, chief of staff to the Meridian mayor.
The two road agencies do allow some markup when billing for some direct labor costs that do not already include overhead.
Typical billing rates for licensed civil engineers in the Treasure Valley range from less than $100 an hour to $200 an hour for specialists, according to Joe Canning, immediate past president of the Idaho Society of Professional Engineers. The typical billing rate is two to four times the salary rate, so it already includes a markup for overhead, he said.
Of the eight Dynamis employees who submitted timesheets to the county, only one, Doyle Pergande, is an Idaho-licensed civil engineer.
MONEY FOR CONSULTANTS
Dynamis also submitted six invoices totaling $71,605 from Boise consulting firm GSA Results.
That money paid GSA to help Dynamis try to get government contracts. Citing client confidentiality, co-founder Scott Turlington wouldnt discuss the specifics of what GSA did for Dynamis.
We assist companies in identifying, responding to and winning government contracts at the federal, state and local levels, Turlington said. He did say he was aware the GSA invoices were being included in the Dynamis submissions to the county.
Turlington serves as Dynamis lobbyist through a separate firm, Principle Strategic Advisors. Dynamis did not bill the county for any work by that firm.
Cynthia Sewell: 377-6428, Twitter: @CynthiaSewell