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Tuesday, June 9, 2015 04:00 pm

No guarantees

Plaintiffs say district’s deal was illegal

The Ball-Chatham School District has wrongly paid more than $2.2 million to a company with ties to the district’s former superintendent, according to a lawsuit recently unveiled in Sangamon County Circuit Court.

The lawsuit centers on a state law designed to allow school districts to reduce energy costs at no upfront expense. Under the statute, which allows school districts to bypass requirements that contracts be awarded to low bidders, improvements such as new windows or insulation are supposed to cut energy costs in an amount sufficient to pay for the work.

Contractors are supposed to be paid over time, not all at once. If energy savings equal or exceed the amount to be paid in a given year, then the district pays the contractor the amount specified for that year. If savings fall short, then the contractor, typically via a bond, pays the district the difference between the amount specified in the contract and the actual savings.

The goal is to have savings over 20 years pay the entire amount for work performed to save energy costs. If savings fall short, districts are supposed to be protected by requirements that contractors make up the difference. The contracts are supposed to specify methods to measure savings to determine how much energy projects have saved.

“A guaranteed energy savings contract enables school districts to use future energy savings to finance the cost of modifying and improving existing energy systems,” lawyers for the plaintiffs, two Chatham residents, say in court filings.

But the Ball-Chatham School District received no guarantee that savings would pay for work performed by Ameresco, a Massachusetts company that develops renewable energy projects and makes buildings energy efficient for government bodies throughout the United States, the plaintiffs say in their lawsuit against the company. If the plaintiffs prevail, Ameresco could be forced to return more than $2.2 million it received from the district while the plaintiffs could collect three times that amount, under terms of the Illinois False Claims Act that provides incentives for private citizens to sue if governmental bodies are defrauded.

According to the plaintiffs, the contract between Ameresco and the district was supposed to guarantee that energy savings would cover the cost of work that included installation of energy-efficient transformers and lights at schools. But an attachment to the contract, which neither the school board nor the district’s lawyer saw before paperwork was signed, negated any guarantee that savings would cover the cost of the work.

The attachment, which Ameresco sent to the district five days before the board passed a resolution approving the deal, decreed that all energy savings were stipulated as having been accomplished, as opposed to having been proven through an objective measurement of energy savings. In short, the school district, simply by signing the contract with Ameresco, agreed that the goal of having savings cover the cost of work had been achieved before any work was accomplished.

“(T)he board was shown only the guaranteed energy savings contract itself, and not the attachments in which the guarantees were all but eliminated by stipulation,” attorneys for the plaintiffs allege in court documents.

Rick Grenzebach, the school district’s lawyer, acknowledged that the contract with Ameresco did not guarantee energy savings. He said that he did not see the attachment stating that savings were stipulated, as opposed to guaranteed, when he reviewed the contract prior to the district consummating the deal.

“The contract we were presented with was a guaranteed savings contract,” Grenzebach said. “We weren’t advised that it was a stipulated savings contract for several years. It was treated as routine by the district. … In this instance, I was told that project terms had been negotiated to the satisfaction of the school district.”

The lawsuit includes an affidavit from Rich Kern, a former Ameresco employee who says that he told the school board that energy savings would be guaranteed when he explained the deal to the board. Kern says that he wasn’t aware that the contract actually contained no such guarantee. Dr. John Kwedar, a former school board member, says in an affidavit that he voted for the contract based on promises by Kern that the company would guarantee energy savings. In his affidavit, Kwedar said that he and other board members asked Kern what would happen if savings didn’t meet or exceed the project’s cost.

“’We write a shortfall check to make up the difference,’” Kwedar says in his affidavit, recalling what Kern told the school board. “’We’re standing behind the energy savings.’”

The plaintiffs paint Robert Gillum, former district superintendent, as an architect of the deal between the district and Ameresco. Gillum, unbeknownst to the school board, had a consulting relationship with Ameresco --  the plaintiffs say that Gillum, who is not a defendant, had established a relationship with Ameresco before he was hired by the district in 2007. The precise nature of the relationship isn’t detailed in court filings.

Gillum in November 2009 arranged for the school board and senior district officials to dine at a Chicago restaurant, with Ameresco picking up the tab, the plaintiffs say. In January 2010 the district issued a request for proposals for the work Ameresco eventually performed. Potential contractors had 10 days to submit a proposal under terms of the RFP, which the plaintiffs say was based on a model provided to the district by Ameresco. The district received responses from two companies.

Grenzebach said that he discussed the contract with Gillum before the contract was signed in the spring of 2010. Ameresco had given Gillum copies of the contract attachments that negated any guarantee that savings would cover the project’s cost, the plaintiffs say, but the superintendent didn’t show the attachments to either the school board or Grenzebach.

“Ameresco knew or suspected that Gillum strategically concealed the contract attachments from the board or the district’s legal counsel,” attorneys for the plaintiffs write in the lawsuit. “Ameresco and Gillum worked together in intentionally deceiving the board about the nature of the contract and Ameresco’s continuing obligations to the district under the contract.”

Neither Gillum nor Ameresco officials could be reached for comment.

Gillum came under fire after his 2012 retirement from the district, which determined in 2013 that he had either misspent or hadn’t properly documented nearly $30,000 in expenses he received during his tenure as superintendent. Gillum agreed to repay $16,100 and give up health insurance that the district had agreed to provide for himself and his wife through 2022, when he will turn 65.

Instead of making payments over time, as required by law, the district paid Ameresco slightly more than $2.2 million in 2010 for the entire cost of work performed under the contract, the plaintiffs say. Invoices submitted by Ameresco constitute false claims because the contract was in violation of the law that says energy savings must be guaranteed and payments must be made over time, according to the lawsuit.

Grenzebach said that it’s possible that energy savings resulting from Ameresco’s work were sufficient for the district to cover its costs. But Don Craven, attorney for the plaintiffs, said that the law required the district and Ameresco to come up with a way to measure savings resulting from the work before any work was done. The contract contained no provisions for measuring savings, and Craven noted that the attachment that neither the board nor Grenzebach saw stipulated that savings had been accomplished absent any proof.

Any number of things, including changes in weather, changes in thermostat settings or windows that were either opened or shut could account for changes in utility bills, Craven said.

“At this point, given the passage of time, how are you going to determine whether there were any energy savings as a result of this project for the school district?” Craven said. “Maybe they changed the settings on thermostats. Maybe they started turning the lights off at night. Pick one.”

The lawsuit, filed in December, had been under seal while the state attorney general’s office considered whether to take action to address the allegations. The attorney general declined to take up the matter and so the lawsuit was unsealed last week. Craven said that the attorney general’s decision’s doesn’t indicate any weakness in the case.

“The attorney general views all False Claims Act complaints,” Craven said. “They’re required by the statute to proceed or not. The notice of declination (from the attorney general) very clearly states that this has nothing to do with the merits of your claim.”

Contact Bruce Rushton at brushton@illinoistimes.com.





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