Please review this excellent review of the contract proposed by foreign owned US Wind to the Delaware Association of Coastal Town mayors and councils, to accept money in exchange for their silence against any part of the offshore wind turbine process. See the actual contract at the end of this article.
Please plan to attend the Bethany Beach Town Hall meeting today Friday 11/12/2024 at 2:00 p.m. at 214 Garfield Parkway, Bethany Beach. Forewarned is forearmed!
US WIND CONTRACT REVIEW
The purpose of this article is not to argue the merits of offshore wind turbines (that conversation can be addressed on another day) rather this document addresses the perceived benefits of US Wind’s proposal.
The Benefit to the Beach Towns is a Small Payment Relative to Budgets
The major take aways from US Wind’s proposal is the benefit to each of the town’s is a $100,000 payment for 20 years. For this payment, the towns agree not to engage in any disruption of US Wind’s building of the infrastructure. The $100,000 annual payment works out to $8,333 a month and is .33% of City of Rehoboth Beach’s (Rehoboth Beach) $30 million annual budget (FYE 2023). While the $2 million dollars might sound like a lot of money, it is a pittance of a payment for which there is no real benefit.
38th Interject: For the Town of Bethany Beach, their general fund revenue is $11.5 million, so that $100,000 annual payment works out to 0.87% of the annual budget. Review budget here.
Delays of the Project:
In paragraph III.a of the contract, it stipulates that the Town will not exercise discretionary authority to obstruct or delay development of the project.
Issue: if the towns have an issue about a proposed structure being implemented and how, it appears a though this agreement would limit the ability to address concerns and delay the project.
38th Interject: If you were building a home or an addition, would you agree to take a small payment in exchange for not being allowed to bring up any concerns with the work being done??
US Wind Admits to Financial and Environmental Impact to Towns
In the contract preamble, US Wind admits that the impact from US Wind WILL have a financial impact on the the environment and tourism. "The economic return that the Town realize from tourisms and aid from the State and County is not sufficient to cover the maintenance, improvement, and resiliency of the infrastructure and the natural resources that are so vital to sustain and grow this important industry. Therefore, US Wind will help "address these challenges over time." US Wind suggests the necessity of "beach and bay storm water management, dredging, and infrastructure maintenance, repair and improvements to ensure resiliency." US Wind such an investment will help with real estate value, businesses and attract tourism.
Only Benefits Addressed in the Contract
The contract and presentation only discussed the benefits of the contract and did not address any risks (monetary or ancillary).
Minimal Contract Terms/Protections
My first observation is the simplicity of the contract at only five pages long. There appears to be much content missing from this contract, yet the Contract states "This agreement constitutes the full, complete, and entire understanding and agreement between the Parties." Of note, though, is that the Contract allows US Wind to offer a similar contract with other towns, but is not beholden to offer the same deal. Other town groups may negotiate their own deal, though Bethany Beach would have "most favored party status."
AND, the Contract states that if for any reason the Contract is found to be invalid, by either side, any payments made by US Wind to the towns would be returned "any payment provided pursuant to the Agreement shall be returned to US Wind." So US Wind could be in breach of contract, making the contract invalid, and all payments made would be returned to US Wind!
38th Interject: A Beach Town attorney should at least make more demands and assurances before even remotely considering to sign this sham of a contract.
Due Diligence
Typically when such a contract is entered into there is a period of due diligence to ensure that viability of the entity. There was no support of such in the presentation in Rehoboth Beach. Further, US Wind was incorporated in Delaware on 4/10/2023. Consequently, this entity does not have a history of doing business and as such there is a performance risk associated with this contract.
38th Interject: Foreign owned US Wind is a mere shell company, it is a company in name only, with no long term history or substance. If US Wind is sued for breach of contract or negligence, it will likely blow away in the wind and disappear as quickly as it appeared.
Assignment of the Contract
Typically, a contract has terms related to the assignment of the contract. That is, can US Wind sell this contract to another party to perform the work. The contract is silent on this, therefore it is assumed that this contract could be assigned to any other company. Could the new entity be from a country which is not a friend of the state? Could the new entity be from a communist country?
38th Interject: Yep, there is no language in this contract to stop the contract with US Wind being sold to Russia, the CCP or any other foreign hostile entity. Again, if you were building a home or addition, would you agree to allow the builder to change without your input?
Infrastructure Risk
There is great risk in handing over the maintenance of our electric grid to a third party where Delaware and the towns may not have any repercussion should issues arise. Should power be turned off.
State, Town and City Financial Statements
There appears to be a great risk with permitting a foreign entity the management of the states infrastructure. Typically, such risk would fall within the parameters requiring a footnote on financial statements of the state, towns and cities which should oftentimes be accompanied by an estimate of any potential liability.
Due diligence on the vendor
Typically in large deals, a due diligence is performed on the vendor as a viable business and business partner. This would include an investigation into the financials of the business, etc. This would ensure that the company has the capacity and infrastructure to perform the job. There are no terms in the contract if the company were to go belly up, what would be the ramifications be to the towns if this were to happen. If US Wind were to walk away from the project and perhaps even go bankrupt, what protections do the cities and towns have.
Legal review
Contracts such as this should have a legal review from someone experienced in deal reviews. Can you please show us the documentation of this review and any comments associated with the legal review?
Performance bond/Insurance
Due to the long term nature of the contract and the fact the US wind has only been incorporated since April of 2023, it would be most appropriate for US Wind to provide guarantee of performance. This could be accomplished through a bond or insurance. Again, a topic for the M&A attorneys.
Transparency
There is a question of timing and transparency with respect to the meeting to review the contract. This meeting is right after the holidays when everyone is busy and the summer home people are not around.
Summary
In summation, there are no protections at all for the citizens of Delaware. A decision should not be made without looking at both the benefits along with the risks and associated costs and/or loss of revenue. Any analysis would need to be completed by an unbiased third party located within the United States. Without all of the information and only looking at the benefits could be considered negligent. Citizens should be able to expect more from their elected officials who should be looking out for their best interests and not just at benefits but both financial and ancillary risks and cost.
Finally, there is a question of the qualifications and integrity of the Town Council not performing the an in-depth analysis of this contract.
This Contract has lines for signatures for 5 Beach Towns (Bethany Beach, South Bethany, Dewey Beach, Rehoboth Beach and Henlopen Acres), this is a GROUP contract. I urge everyone to email and call each Beach Town Mayor and Commissioners and all other beach town council members to JUST SAY NO. Whether you are a resident of the town, a resident of the state, a property owner or tourist this deal will have financial and ancillary impact to the quality of life in Delaware and its shore towns. This is your time to step up to the plate and get involved.
Keep Our Ocean as God Intended.
Excerpt from the Delaware Department of State with the incorporation information for US Wind:
OK, Mighty 38th, forewarned is forearmed. Now go to the Bethany Beach Town Hall meeting this Friday 1/12/24 2 pm!
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Upcoming 2023 Meetings
38th Election District Captain Meeting, Tuesday, January 29th, 6:00pm
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