Attorneys refute media’s allegations on contracts

EL CENTRO — An Imperial Irrigation District attorney told board members they didn’t break any laws as alleged by a news outlet from outside the Imperial County recently.

A series of news articles by Palm Springs newspaper The Desert Sun alleged conflicts of interest regarding a $35 million Battery Energy Storage System and other projects dealing with engineering firm ZGlobal.

The newspaper also questioned the close relationship between ZGlobal and other developers in the Imperial Valley.

Although Aguirre’s report found no wrongdoing by the IID regarding the Battery Storage, one of the shortcomings of the report was it failed to mention ZGlobal and the potential conflict of interest with other projects.

“I do want to acknowledge that the particular newspaper involved has raised issues that we are looking at and paying attention to,” Aguirre said at the beginning of his presentation to the board.

Aguirre’s report focuses on the process of the battery storage contract awarded to Coachella Energy Storage Partners. The company was awarded a $35 million contract by the IID in the spring of 2015 to build the facility. The newspaper questioned why the district did not consider three cheaper offers from more experienced entities and why the contract was awarded to CESP, whose president at the time was Mike Abatti, a former IID board member.

Aguirre explained that out of the seven responding bidders for the project, four were disqualified because the proposals did not meet certain requirements — possessing a Class-A contracting license, no housing of the battery and a 20-year warranty. During the April 14, 2015, meeting in which the IID awarded the contract, Matt Giblin a representative of Invenergy, one of the disqualified proponents, questioned the process — he told the IID board that although they didn’t possess the license, they had a partner company which did possess the required license.

Aguirre said in that particular meeting, IID staff stated the requirement was for a primary contractor to possess the license, not a subcontractor.

However, it was pointed out that the CESP also didn’t possess the license, but Industrial Mechanical Services — who was a partner with CESP — did.

Aguirre said CESP was given the contract because CESP had a co-venture with IMS, in which both were equal partners and not a subcontractor. The news article questioned the fact that IMS ultimately never took part in the project.

Aguirre said during his report that IMS was replaced by General Electric, under the same structured proposal presented by CESP.

In reviewing the available public documents, the Imperial Valley Press couldn’t assess whether the contract arrangement between CESP and GE was the same as originally proposed with IMS.

Another issue raised by the Palms Springs-based newspaper was that three disqualified bids were cheaper than CESP’s proposal. In his report, Aguirre explains that the reason those proposals were not considered were that they didn’t meet certain specifications the IID requested, such as the requirement to include a building for the batteries as well as a 20-year warranty.

During the April 2015 meeting, IID staff explained that the Invenergy proposal didn’t include a building as they proposed to use shipping containers and the warranty of their proposal was only for 18 months, according to former energy manager Carl Stills.

It was also clarified during the April 2015 meeting that although the CESP cost of $31.8 million appeared to be more than the other three, staff clarified that wasn’t the case. Staff at the time and Aguirre’s report state CESP’s base proposal was about $20.4 million and increased to $31.8 when adding the IID-required specifications of a housing building and 20-year warranty. IID staff said during the April 15, 2015, meeting that had the other proposal included the requested specifications, those proposals would have increased anywhere from $4 to $6 million, which would make them costlier than CESP’s project.

“He (Invenergy representative) was comparing apples to oranges and that is when I think, our friends in the media were misled — I don’t blame them — it wasn’t an accurate statement,” Aguirre said.

“Do you really think the IID is capable of giving anyone $6 million that they’re not entitled to? I mean, I may be completely wrong, but I don’t think so. I don’t believe that is the corporate culture of IID.”

Although Aguirre’s report on the process for the battery storage was thorough, it also did not dive into the allegations regarding ZGlobal and the how the Allegretti Ranch in the northwest of the county comes into play.

Neither Aguirre’s written report nor his oral presentation ever mentioned any of the allegations surrounding ZGlobal.

Aguirre mentioned Tuesday that the questions raised regarding the ranch were not coherent because it wasn’t the same property in which the battery storage was located, however, that was not the issue raised by the newspaper.

As part of the three-part report, one of the questions raised was the role of ZGlobal serving as the primary consultant for CESP, while also advising IID during the process and the close ties between some of the current IID board members with CESP president Abatti and ZGlobal.

Although the outlet mentioned that Kuhn was hired to do leveling work at Allegretti Ranch, which was owned by Abbatti at the end of 2015, the property has come into focus since it is the site for the Seville Solar Farm — a solar project the IID considered in May as part of a $75 million contract for IID’s proposed community solar project.

When the IID was going to initially vote on the project, ZGlobal President Ziad Alaywan owned the property.

That led to the IID board to postpone the decision and also adopt a new protocol in March, in the hopes of avoiding any additional issues in the future.

Despite the new policy, and the fact that the firm sold the property to Solana Energy Farms, according to the Desert Sun, the district found itself in another complicated situation, when reports emerged that the company which now owns the property still has very close ties to Alaywan.

The reports from the Desert Sun stated some of the registered agents for Solana also work for companies owned or managed by Alaywan.

Despite the new policies approved March 28, the Imperial Valley Press obtained documents from the Imperial County Planning and Development Services which show that Alaywan wrote two checks totaling $14,500 for fees associated with the Seville IV project, also referred to as Titan, located at the Allegretti Ranch.

One of the two checks signed by Alaywan was made for $13,000 on March 31 and a second for $1,500 dated May 25, both payments were made after the new policy was approved and before a $75 million contract to purchase solar power from that solar farm was considered by IID in July.

The IID board initially approved the community solar project to be developed by Regenerate Power on July 18, after Alaywan sold the property and, eventually, the contract for the project was rescinded a few weeks later due to the rise in costs of solar panels.

In a letter addressed to IID, Titan Solar 1 Chief Executive Officer Reyad Fezzani cited an increase in the price of solar panels from the seller of 60 percent due to the uncertainty surrounding tariffs for imported solar panels, as one of the causes it could no longer fulfill the agreement.