Possible Investigation Short Circuits Chicago’s Electric Vehicle Charging Station Program
There was much fanfare back in early 2010, when Chicago signed a nearly $2 million deal to install 280 electric vehicle chargers around the city and surrounding areas.
Chicago and the State of Illinois kicked in $1.9 million (much of it federal stimulus money) for a project with 350Green,one of the nation’s most aggressive developer of EV charging station networks, to install a total of 280 charging stations. The total cost was pegged at $8.8 million, with 350Green finding private funds for the nearly $7 million to fully fund the project.
According to the 55 page city contract, all 280 charging stations were scheduled to be completed by the end of 2011. But now, six months after the original deadline, the project is only 60% complete, contractors have not been paid for work already completed and it seems the City of Chicago has stopped their payments to 350Green.
Even as far back in March of this year, while the company was touting the installation of new charging stations at Chicago area Illinois Tollway Oases, when questioned about the delay, 350Green public relations spokesperson at the time Nicole Fallat admitted the project was behind schedule but was confident it would be completed by the end of April.
While refusing to be specific with any of the details, the City of Chicago is implying some sort of impropriety has been going on with the 350Green contract.
“The City discovered apparent financial irregularities involving 350Green LLC’s installation of electric vehicle charging stations,” says Tom Alexander, a spokesperson with the Mayor’s office. “We immediately notified the appropriate authorities and are cooperating fully with those agencies and any potential investigation.”
While a spokesperson for Chicago’s Inspector General Office would not confirm nor deny their office was investigating, it is common practice to turn over any suspicious behavior surrounding a city contract to the IGO.
When contacted, 350Green CEO Mariana Gerzanych, while also not being specific, seemed to confirm the company was under some sort of investigative scrutiny.
“We express our full support and cooperation with any concerned authority in
Chicago as our commitment to ethics and transparency is essential to how we
conduct our business. We are working very hard on resolving this issue,” said Gerzanych.
When pressed with additional questions, Gerzanych essentially echoed a statement posted to the company website on June 14th.
“There isn’t much we can add other than that we have experienced significant
cash flow shortages that have caused delinquencies with contractor payments,” Gerzanych explained. “We are in the final stages of closing new permanent financing that will allow us to finish the project.”
The company’s posted statement also put some blame on the state of a slow moving EV industry.
“The electric car infrastructure industry is suffering from slow electric vehicle sales and an infrastructure tax credit which expired at the end of 2011.”
According to the 350Green website, the original plan called for installing 73 fast and 207 slower, level 2 chargers. But over six months after the original completion deadline has passed, the company has only installed 26 Fast and 142 Level 2 charging stations and still seems to be over $2 million short of the money they need to complete the project.
“We have drawn $1.7 million from the city/state grant and have invested $4.6 million of private capital funds,” says Gerzanych in the posted statement. “We assure all our contractors and parties involved of our commitment to the project and of our mission to make driving an electric vehicle a viable option for the citizens of Chicago.”
But according to Kate Tomford, who works for the State of Illinois Energy Office under the Department of Commerce and Economic Opportunity, and who sat in on weekly status meetings regarding the project, work on completing the project has stopped.
“To my knowledge, stations are not currently being installed,” said Tomford.
Tomford says one of the concerns with the project’s delay was that the federal funds designated for these infrastructure investments had hard time limits.
“Yes, it was a concern because funds were tied to grant deadlines,” said Tomford. “It’s always a concern when a project runs over a timeline. The rule is to get it done quickly. Obviously we’d have liked the project to go smoothly. But we work with the situation we have.”
But Tomford, who is also Chair of the Electric Vehicle Advisory Council doesn’t think this particular stalled EV infrastructure project will derail the technology’s momentum citing other recent instances of EV charging stations being installed locally by other firms.
“I would say if anything, it’s just a bump in the road,” said Tomford explaining entrepreneurs are still trying to figure out the most effective and profitable ways of sustaining EV charging stations. “It’s a reflection of the issues nationally and globally on the establishment of EV infrastructure…What will be the winning (business) model? That’s an open question.”
350Green holds similar contracts in other cities to provide EV charging stations in San Diego, San Francisco, Seattle, Portland, Phoenix, Tucson and Nashville, but there seems to have been no hint of issues with any of those projects.
UPDATED: Content, context, quotes 6/19/12 at 9 PM.
UPDATED: misspelling of Ms. Tomford’s name corrected 6/20/12 at 9 PM.