ESNA Corp. Realty is pleased to present an overview of: The River Grand™ A Green Economic Growth Development Project for the State of Michigan Mixed Use Development Mass Transit System Hydrogen Energy Plant This package contains information that is considered confidential and unique to the success of this project. The information is provided with an understanding of confidentiality to be used expressly for the purposes of evaluating this funding opportunity with ESNA Corp. Realty.
Transcript
ESNA Corp. Realty
is pleased to present an overview of:
The River Grand™
A Green Economic Growth Development Project for the State of Michigan
Mixed Use Development Mass Transit System Hydrogen Energy Plant
This package contains information that is considered confidential and unique to the success of this project. The information is provided with an understanding of confidentiality to be used expressly for the purposes of evaluating this funding opportunity with ESNA Corp. Realty.
A. The Company
ESNA Corp. Realty (ECR), is a Nevada Corporation formed to develop mixed-use projects involving public-private partnerships to create zones of entertainment, housing, and commerce to create a lively place to work, live, and spend leisure time.
B. Executive Summary
The River Grand™ is a multi-dimensional, comprehensive master plan for the city of Grand Rapids, Michigan. Its economic impact however, will affect the entire state of Michigan. The components of the project include "Green" Mixed-use, Transportation, and Energy infrastructure. In an effort to create jobs, tax revenues, and strengthen the foundation for a sustainable economy in Grand Rapids and West Michigan, ECR has partnered with industry-leaders in each segment of the development. Each corporate partner, all of whom have impeccable track records in their respective fields, considering the one with the least amount of experience has been in business for 33 years, will execute one aspect of the overall development plan. Each segment of this master-plan development will have a specific business and operations plan that will require independent feasibility. The current national economic environment, although challenging, has created the opportunity to obtain resources at the federal government level that previously did not exist. As a result of the American Economic Recovery Act, ECR will submit its master planned development for the Build America Bond Program. Considering the present administration's desire to direct resources toward areas in the country in need of: urban housing, transportation, and green energy infrastructure, the River Grand™ is uniquely positioned to achieve these goals in Michigan. In conclusion, the State of Michigan being a priority of the current administration, is in a position that should be fully realized and manifested. In the past, the State of Michigan with its great industrial history, has led America to vast economic wealth and prosperity. Now at this moment, during one of the country's most challenging times, it will be Michigan that will again spearhead America's economic recovery. The River Grand™ is the tip of that spear.
The River Grand™
The Project is a large-scale mixed use development in downtown Grand Rapids, Michigan. ECR focuses on developing mixed-use/public private projects that fulfill the following criteria:
Adjacent to a river or body of water
Adjacent to a major transportation artery
Utilizes under-served property in the region
In a public climate that is seeking development efforts to add residential, commercial entertainment, transportation and green renewable energy infrastructure
Pittsburg, Pennsylvania
Mixed Use Development
ECR plans to purchase 46 acres of currently under-used, mainly industrial property adjacent to the Grand River in the heart of Grand Rapids. Based on a master plan that will include a performing arts theater, a river walk and park area, retail stores, cinemas, restaurants, and parking facilities, all anchored by attractive office and residential space, ECR will develop the infrastructure necessary to re-sell the developed properties and create significant returns on the original capital invested. The City of Grand Rapids, with job growth outpacing the national average is a strong candidate for a mixed-use/public-private development such as the River Grand™. The area’s strong manufacturing jobs base indicates a friendly and receptive climate for business. A pro-business city government seeking to add high-salary jobs to its tax base is a tremendous advantage in creating a development that is attractive to corporate tenants.
ECR’s strategic positioning allows it to offer the City an expanded vision of its own land, causing greater tax revenues, job creation, and economic growth for the City and State of Michigan. The program for the development includes:
Condominiums
Town-homes
Apartments
Commercial offices
Movie studios
Vertical mall
5 star hotel
Retail shops
Restaurants
Movie theaters
3,000 seating concert venue
Marina basin
River walk
Bike paths
Medal of Honor Museum
The City of Grand Rapids, with health care, technology, science & research development outpacing the national average, is a strong candidate for a mixed use/public-private development such as the River Grand™. The area’s strong college population with 6 colleges and universities in a 3 mile radius of downtown Grand Rapids provides an educated work force for corporations relocating to Grand Rapids. A pro-business state government seeking to add high-salary jobs to its tax base is a tremendous advantage in creating a development that is attractive to new corporate tenants. The River Grand™ property sits in close proximity to both State Highway 131 and Business Interstate 196, each running through the heart of Grand Rapids. Additionally to the proximity to the Grand River, boating access is also available. The Wealthy Street bridge across the Grand River forms the southern boundary of the proposed development, adding to the attractiveness of the location and planned riverfront entertainment venues. The City of Grand Rapids is currently experiencing unprecedented growth. With $1.3 billion in construction projects underway or recently completed that include:
Research laboratories
Medical complexes
Children’s hospital
Art Museums
Cancer Institute
Marriott Hotel
Civic Theatre
Development Opportunities Office Space Opportunity While office vacancy varies in the various areas that constitute the Grand Rapids Central Business District vary from near the national average to significantly above the average, Grubb & Ellis’ report on Grand Rapids’ office vacancy rates in and around the City (December 2004) demonstrates the effect that location can have on these vacancy rates. Successful projects like Canary Wharf in London clearly show that newly constructed office space in an attractive and accessible location can achieve substantially lower vacancy rates than surrounding areas. In Canary Wharf’s case, the newly developed area, with ample access to transit and an attractive waterfront as draws for corporate tenants, actually began to draw office leaseholders out of formerly prized space in London’s banking district.
Residential Opportunity The Brookings Institution’s recent white paper “Toward a New Metropolis: The Opportunity to Rebuild America,” predicts that by 2030, 50% of the “built space” used for office and residential needs will have been constructed after 2000. Additionally, the authors predict that most of this newly build space will be needed for residential purposes. Coupled with the nationwide trend of affluent suburbanites and families moving back into America’s urban centers, these predictions present a strong case for success with the River Grand™. Successful developments like the Grove in Los Angeles provide strong evidence that residential space can be integrated with retail and office development in a way that is attractive to all three types of tenants. Areas that offer convenient entertainment, accessible transportation arteries and options, and shortened commutes to business centers will attract upwardly mobile home-buyers who are eager for suburban convenience in an urban center. Leisure Time Opportunity and Entertainment Venue Opportunity Americans spend more to entertain themselves each year. Professional sports and arts venues continue to increase attendance as new facilities are constructed within urban centers. New and prosperous entertainment zones have grown up around San Francisco’s SBC Park and Baltimore’s Camden Yards stadium as new venues have increased attendance and provided a vastly increased customer base for local businesses. Spending on arts and entertainment, including cinema, music events, and fine arts performances increases year over year at a rate of around 10%. The proximity of the River Grand™ to Grand Rapids’ Van Andel Arena and to performing arts venues and museums puts the development in a prime location to take advantage of these trends. Creating a convenient and self contained entertainment district allows theatre-goers to choose the River Grand™, with its ample parking facilities, restaurants, river-front park, over a stand-alone cinema or restaurants. The River Grand™ will offer an entertainment experience instead of simply a movie. Live entertainment will be featured on a myriad of levels and audiences. Teen, pre-teen, family and adult contemporary live concert and festivals will be held in small, medium and large indoor and outdoor venues. The facilities will be able to accommodate the 3,000 person events; as well as country, jazz or family music festivals. The design, development and operations will be under contract and/or joint-venture with industry leading partners.
The River Grand™ Development Site Map
Mass Transit System
There is no doubt that in 2030, we will live differently. We will be experiencing population and
employment growth and new technologies will affect jobs and travel. There will be an increase in
gas prices and cost of travel. We will be faced with more congestion and greenhouse gas
emissions. And, of course, land use and development will be happening at a more rapid pace in
all urban, suburban and rural areas. Will mass transit be more widely accepted for everyday
travel?
What Should Our Community Look Like in 2030?
NEW GROWTH IN SUBURBAN AREAS NEW GROWTH CONCENTRATED IN URBAN AREAS
Primary travel mode - auto Multi-modal solutions (auto, transit,
pedestrian, bicycle)
“Low” energy costs “High” energy costs
Status quo land use and urban design “Green” developments
The Transit Master Plan will develop a regional transit plan that:
utilizes energy-efficient, sustainable vehicles
supports and enhances smart economic growth and land use development
meets existing and future travel needs
is fiscally responsible
What Should Our Transit System Look Like in 2030?
BUS AND GO! BUS INTRODUCE NEW “PREMIUM” MODES
Focus on transporting “transportation
disadvantaged” Design services to attract new riders
Auto encourages more suburban development Transit encourages more urban
development
Transit Master Plan study will: examine the efficiency and effectiveness of existing services
identify and evaluate future mobility needs for diverse populations, including seniors and
people with disabilities
include a Transit-Oriented Development (TOD) guidebook to help local jurisdictions plan
for and encourage transit-friendly development
identify transit service standards, performance measures, and planning
Source: Rapid Transit Master Plan
Subway System solely powered by Renewable Energy - Bilbao, Spain
The Grand Rapids Metropolitan Statistical Area will benefit immensely from the development
of a mass transit system. ECR in conjunction with its corporate partners, Hydrogenics &
Boyken/Hill International will build a 55km (34 mile) "looped subway system" that will
encompass a 500K population demographic.
Considering Grand Rapids already has major infrastructure components such as:
A major airport (Gerald Ford International)
Downtown developments (Van Andel Arena, Medical Hill, DeVos Convention Center)
Regional malls (Rivertown and Woodlands)
Dense population areas (44th & Byron Center. and 44th & Kalamazoo), as well as
Colleges and universities
A mass transit system will string together these "pearls" which will greatly enhance community continuity and population mobility. Thus, ECR and its corporate partners will introduce to the Grand Rapids Metropolitan Area, an advanced subway system that can be powered by hydrogen. In Charlotte, NC the City Council voted in Sept. 2008 to start design work on a 10 mile street car line. Officials evaluated several streetcar propulsion systems including one based on hydrogen, however due to a bidding war they got into with the city of Greenville, SC with the developer, the project was derailed. Therefore, ECR, Hydrogenics and Boyken/Hill International will research, design, and build the first hydrogen powered subway mass transit system in America in the city of Grand Rapids, MI. Given the overwhelming desire nationally to create green energy powered infrastructure, the Grand Rapids Mass Transit System will serve as a regional and national model for public transportation utilizing advanced technology.
Additionally, not only will the subway system serve as a transportation medium, it will also stimulate economic growth at each line depot. Due to increased foot traffic at each stop, developments and economic opportunity will arise out of business plans utilizing the subway stop as a demographic centerpiece. The River Grand™ & Gerald Ford International Airport will serve as the anchor legs upon which the transit system will stand. This will allow for all the other line stops to represent additional limbs and other parts needed for a functional metropolitan body to be up and running. The long term economic impact of the transit system is incalculable, however suffice it to say Grand Rapids and the State of Michigan will be a 21st century transportation model to the world. The cities and townships the transit system will trace through are:
Byron Township
Cascade Township
Grand Rapids Township
East Grand Rapids Township
Grand Rapids
Grandville
Kentwood
Wyoming
The transit system will also take advantage of Grand Rapids' exploding medical & Research communities, intersecting major hospitals and universities such as:
Blodgett
Butterworth
Metro
St Mary's
Aquinas College
Calvin College
Grand Valley State University
Lastly, densely populated areas and regional malls will serve as subway stops such as:
Rivertown
Woodland
Devos Convention Center
City Hall
44th & Byron Center
Transit System Site Map
Driving the building process for optimal resultsSM
400 NORTHRIDGE ROAD • SUITE 1200 • ATLANTA, GA 30350 • USA • P: 770.992.3210 • T: 800.842.5489
A HILL INTERNATIONAL COMPANY
STRATEGIC PLANNING
PROGRAM MANAGEMENT
COST MANAGEMENT
SCHEDULE MANAGEMENT
COST ESTIMATING
DUE DILIGENCE
INSPECTION SERVICES
DISPUTE RESOLUTION
ESTABLISHED 1980 WWW.BOYKEN.COM
January 26, 2010 Mr. Duane Faust ESNA Corp. Realty One Atlantic Center, 14th Floor 1201 West Peachtree St. NW Atlanta, GA 30309-3488 Re: THE RIVER GRAND TM DEVELOPMENT AND MASS TRANSIT SYSTEM
GRAND RAPIDS, MICHIGAN PROGRAM MANAGEMENT SERVICES – LETTER OF INTEREST
Dear Mr. Faust: Boyken International, Inc.; a Hill International Company is pleased to present our letter of interest to provide Program Management Services for the River Grand TM and Mass Transit System Project. We understand the project to be a large-scale mixed use development and Mass Transit System (34 Miles) in downtown Grand Rapids, Michigan. The development is currently positioned to secure 30 acres of private property through option agreements directly behind 16 acres of city owned land that is located on the Grand River. As Program Manager we will assemble a project team that has extensive experience in successfully delivering complex and challenging projects. We offer ESNA Corp. Realty a knowledge base and leadership role in mitigating problems and minimizing risk that few firms, if any, can match. In selecting Boyken you will have a Program Management team that has:
• The commitment of top-level management with extensive organizational capabilities, supported by key staff carefully selected for the needs of this project;
• Construction management expertise independent of design and construction responsibilities, thus avoiding conflicts of interest;
• Demonstrated ability and resources to keep projects out of trouble, within budget, on schedule, and free from claims.
From our experience as Program Managers, we know the importance of establishing sound project management guidelines and standards in order to effectively undertake such a comprehensive development program. The River Grand TM Project provides an excellent opportunity to allow Boyken to act as an extension of your organization and develop procedures and processes to ensure that the project runs smoothly and cost-effectively. Boyken possesses a unique set of qualifications that differentiates us from our competitors and would be of direct benefit to your team. Specific strengths include:
• The Right Team for the Job – Our firm employs over 2300 professionals (project managers, inspectors, architects, engineers, schedulers, cost estimators, contract administrators, and claims specialists), allowing us to provide a multi-discipline approach towards any project.
The River Grand TM – Grand Rapids, Michigan January 26, 2010 Page 2
• Emphasis on the Pre-Construction Phase – We place significant emphasis on the Pre-Construction Phase of every project. This philosophy has evolved from our reputation as an international provider of Construction Claims services and an unparalleled understanding of what can go wrong on a project. Our Pre-Construction services can be thought of as “a second pair of eyes” or compared to an “insurance policy”. Boyken’s Pre-Construction services incorporate the performance of constructability reviews, refining cost estimates, schedules, and value engineering. The intent is not to minimize the overall vision of a project; rather it is meant to optimize the selection of construction materials and methods, and eliminate design ambiguities that could potentially result in higher than expected bid results and/or unforeseen cost overruns.
• Scheduling and Budget Controls – We will provide you with state-of-the-art web-based project
control systems as a singular service for large, complex projects and as part of our construction management services. Boyken utilizes Primavera Expedition project controls software and will create a system that can easily serve as the framework for all future work at the site. Our system incorporates schedule and budget data to meet the needs for successful control of and timely, accurate reporting on cash flow, costs, schedules, changes, progress (status), claims, material, equipment, and labor utilization. We have worked extensively with performance measurement techniques to create a system to keep track of thousands of activities, flagging those requiring immediate managerial attention. Through our pioneering efforts, Boyken has been repeatedly recognized as the industry leader with scheduling and budget controls.
• Ability to Complete Projects Within Budget and On Schedule – Boyken takes great pride in its
ability to deliver projects on-time and within budget. Based on our experience, we know that successful projects are not the result of happenstance; they are well-planned and thought through before execution. The essential elements to this success are effective planning, controlled execution, and aggressive follow-through. This approach, combined with the resourcefulness and commitment of our project team, will keep each project participant focused on meeting the critical time and budget objectives of the River Grand TM Development Project.
• Construction Claims Expertise – Boyken International; a Hill International Company is the world leader in construction claims consulting and has developed an international reputation for our innovative approaches to avoiding and resolving time and cost overruns on major construction projects worldwide. We offer ESNA Corp. Realty a full spectrum of construction dispute resolution services, enabling them to complete construction on-time and within budget, while minimizing claims and other problems. We are one of the largest firms providing these services in the world today; having resolved over 5,000 disputes valued in excess of $50 billion.
The following is an overview of our Program Management Scope of Services. We will establish a specific plan/scope of services with you once we receive formal “Notice to proceed”. SCOPE OF SERVICES
I. PLANNING PHASE
Completion of the Project Team Boyken will assist ESNA Corp Realty with the selection of consultants not previously engaged for the project and will provide the following services:
The River Grand TM – Grand Rapids, Michigan January 26, 2010 Page 3
• Project Kick-off Meeting Coordinate a project kick-off meeting with all design team members and ESNA Corp Realty. The purpose of this meeting is to establish clear lines of communication between all team members and to develop a total team approach to the design and development of the Project.
• Conceptual Cost Estimate Boyken will prepare a conceptual cost estimate for the project based on the site plan, conceptual design, utility plan, and other scope documents prepared by the design team and provided by ESNA Corp Realty.
• Project Scheduling Boyken will manage input from the design team and ESNA Corp Realty to develop a schedule for complete delivery of the project.
• Project Report At the completion of this phase, Boyken will aggregate the cost, schedule, and relevant information into a report for ESNA Corp Realty’s use in evaluating the project.
• Project Management Plan Boyken, in consultation with the Architect, will develop a Construction/Project Management Plan, which shall define and document all project requirements in narrative form. This document will serve to outline the scope of work of each of the team members.
• Governmental Relations Advisory Services Boyken will work in conjunction with ESNA Corp Realty on issues such as: Environmental Studies, Entitlements and Concession Agreements, assisting the team in identifying required permits from regulatory agencies and Development Concessions and Implementation procedures.
II. SCHEMATIC DESIGN PHASE
• Construction/Project Management Plan Upon completion of the concept plan and notice to proceed, Boyken, in consultation with the Architect, will develop a Construction/Project Management Plan.
• Project Schedule/Time Management Based on the Project Program of Requirements, Boyken will develop an executive summary-level provisional schedule.
• Project Budget/Schematic Estimate Boyken in association with ESNA Corp Realty and other members of the Project team will develop a component cost estimate, including any site-specific development costs.
III. DESIGN DEVELOPMENT AND CONSTRUCTION DOCUMENT PHASES
• Project Meetings Boyken will conduct (periodic) review meetings during the Design Phase for the purpose of assessing progress, establishing conformance with the Project Management Plan.
• Design Document Review Boyken will meet with the Design Team to provide Constructability Review of the Design Documents.
• Pre-Bid Schedules Boyken will develop the appropriate pre-bid conference construction schedules for each major construction bid package to be issued.
The River Grand TM – Grand Rapids, Michigan January 26, 2010 Page 4
• Design Development Estimate Boyken’s costing professional will attend the periodic design review meetings and will record and respond to all discussions on topics that may have cost implications.
• Value Engineering/Cost Trade-off Pricing During the Design Phase, if required by ESNA Corp Realty and Boyken in conjunction with the Design Team will provide Value - Engineering (VE) services.
IV. BID AND AWARD PHASE
• Construction Contracts Boyken will assist ESNA Corp Realty with the preparation, issuance and execution of the various construction and vendor contracts.
• Pre-Purchased Equipment/Materials (Long Lead) Boyken will coordinate the scheduling and delivery of long lead items and ESNA Corp Realty purchased equipment and materials.
• Permits and Insurance Boyken will confirm that all applicable permits have been applied for and issued.
• Master Schedule Boyken working from information provided by the various trade contractors and/or each prime contractor, will update the master schedule.
• Schedule of Values Boyken will work with the contractor(s) in the development of a schedule of values that will be loaded into a cost-loaded project construction schedule.
V. CONSTRUCTION PHASE
• General Duties Boyken will operate as Owner’s Representative in directing the day to day activities of all prime contracts to ESNA Corp. Realty.
o Construction Administration o Field Reports o Project Progress Meetings o Observation (Quality Control) o Change Order Review o Construction Schedules o Cost Reporting
VI. POST CONSTRUCTION PHASE
• Occupancy Permits Boyken will monitor the final inspections by the applicable regulatory agencies and coordinate the required occupancy permits.
• O&M Manuals and Training Boyken will receive and log for transmittal to ESNA Corp Realty all required Operations and Maintenance data.
• Warranties/Guarantees The Architect & Boyken will receive and assemble for transmittal to ESNA Corp Realty all applicable warranties and guarantees.
The River Grand TM – Grand Rapids, Michigan January 26, 2010 Page 5
• Close-out Procedures Boyken will coordinate all project closeout procedures.
Boyken’s business philosophy and principle operating objective is to provide “best-in-class” services. With numerous successful construction management assignments to our credit, clients and owners worldwide have chosen Boyken to protect their interests and allow them to build with confidence. The Boyken team commits the energy, talent and multi-disciplinary resources to provide you the assurance of excellence. We pledge to you our professional best and appreciate the opportunity to work with you on this project. We have included additional basic information about of our firm on the following pages. If you have any questions or require additional information, please don’t hesitate to contact me at 404-561-7550 or via e-mail at [email protected]. We look forward to working with you on this exciting project! Sincerely, BOYKEN INTERNATIONAL, INC.
Susan Wise Director, Business Development cc: Simon Mortimer, Chief Operating Officer cc: Barry Stein, Vice President
The River Grand TM – Grand Rapids, Michigan January 26, 2010 Page 6
FIRM OVERVIEW Headquarters Contact Information: Boyken International, Inc.; a Hill International Company 400 Northridge Road, Suite 1200 Atlanta, GA 30350 www.boyken.com Primary Contact: Simon Mortimer, C.Eng, MICE, MRICS, CCE, LEED® AP Chief Operating Officer Telephone: (770) 992-3210 Fax: (770) 992-1489 E-Mail: [email protected] Form of Ownership: Corporation Years in Business: 33 Office Locations: 83 offices in 35 countries worldwide – 28 which are located in North America. Parent Company Hill International, Inc. 303 Lippincott Centre Marlton, NJ 08053 Telephone: (856) 810-6200 Fax: (856) 810-1309 Website: www.hillintl.com Services Provided • Program Management • Project Management • Construction Management • Staff Augmentation • Estimating & Cost Management • Value Engineering • Schedule Management • Commissioning • Construction Claims & Consulting Work Completion Boyken International has never been removed from any project awarded to the firm. HISTORY AND GROWTH OF FIRM Founded in 1980 in Atlanta, Georgia as Boyken & Associates, Inc., the firm provided consulting services to developers, governmental agencies, architects property investors and owners. In 1995, the name Boyken International, Inc. was adopted to reflect the firm’s long term commitment to serving a greatly expanded and increasingly diverse global clientele. Our focus expanded to include healthcare, hospitality, higher education, medical research and we infused expert services into our service offerings. We hold a General Services Administration Schedule Contract and are members of the U.S. Green Building Council. Boyken has earned an impeccable reputation for accuracy and dependability by going beyond our clients’ expectations and delivering a level of professionalism and performance based upon the principle of continuous improvement.
The River Grand TM – Grand Rapids, Michigan January 26, 2010 Page 7
In December 2009 Boyken significantly strengthened its corporate base and its ability to provide you with valued professional services. We’ve become a wholly owned subsidiary of one of the largest Program Management firms in the world – Hill International, Inc. (Hill). Hill is a publicly traded company (NYSE: HIL) with over 2,300 employees worldwide and is based in Marlton, NJ. Their annual revenues exceeded $400 million in 2008 and are set to increase in 2009. Through our combined experience we have successfully managed over 5,000 projects with a total construction value over $250 billion. We are the largest pure construction management for fee firm in the country. Boyken is the Southern region of Hill covering Georgia, Florida, Texas, Oklahoma, Arkansas, Mississippi, Alabama, North and South Carolina, Tennessee and the Caribbean. Our strengths in higher education, healthcare, hospitality, and government program management will be complimented and reinforced by the extensive experience and financial resources of Hill. FINANCIAL AND BAKING REFERENCES Boyken International, Inc. BANK OF AMERICA Mr. David DeLucia Assistant Vice President 3350 Riverwood Parkway, 11th Floor Atlanta, GA 30339 (888) 852-5000 Ext. 2008 Hill International Banking: Hill International CITIZENS BANK Mr. Paul A. Hample Vice President Cash Management Citizens Bank of Pennsylvania Citizens Gateway Center 3025 Chemical Road, Suite 325 Plymouth Meeting, PA 19462 (484) 530-7296 (610) 832-2943 – Fax [email protected] BANK OF AMERICA Mr. George A. Linhart Senior Vice President Construction & Engineering Division Bank of America 135 South LaSalle Street, Suite 600 Chicago, IL 60603 (312) 904-6055 (312) 904-6021 – Fax [email protected]
Hydrogen Energy Plant
The electric power sector is the fastest growing share of the energy economy in Michigan, the United States, and most of the world. This growth requires considerable investment and planning by power generating companies and state agencies. Most economists link electricity consumption directly with economic growth. Analysts at the U.S. Department of Energy (DoE) Energy Information Administration (EIA) project that the U.S. gross domestic product will grow at an average annual rate of 2.9% per year through 2030. And they predict electricity consumption will grow over this same period at a rate of 0.8% per year. That means electric power consumption, and the accompanying infrastructure to produce and deliver electricity, will be about 43% greater in 2030 than it is today. For Michigan, looking at past consumption trends is one good indicator for projecting growth rates into the future.
Source: U.S. Department of Energy
Hydrogen Plant - Brisbane, Australia
In review of fuel sources for Michigan electric power generation, it is clear that the predominant source of energy is coal (57%). If Michigan is going to become a sustainable green energy economy it must reduce its dependence on coal.
Therefore ECR and its corporate partner Hydrogenics Corporation will build a Hydrogen Energy Plant that will provide a green energy source for Grand Rapids and the West Michigan region in general. To better understand hydrogen’s benefits, we can first review some of the present concerns with the structure of the existing energy economy. Three realities suggest that the current energy economy is not sustainable:
1. The demand for energy is growing and the raw materials for the fossil fuel economy are diminishing. Oil, coal, and natural gas supplies are not replenished as it is consumed, so an alternative must be found.
2. Most of the people who consume fossil fuels don't live where fuels are extracted. This situation creates enormous economic motivation for the consuming nations to try to exert control over the regions that supply the fuels. For many people and governments in the world, the resulting conflicts are unacceptable.
3. Emissions from fossil fuel usage significantly degrade air quality all over the world, especially in Northeastern United States. The resulting carbon byproducts are substantially changing the world's climate. For many people and governments in the world the resulting health and climate impacts are unacceptable.
One of the greatest challenges the hydrogen energy industry has experienced in the development of its plants, are its costs. The argument is, "How do you power a power plant?" There have been essentially two schools of thought addressing this question:
Most models used today address this issue by utilizing fossil fuels such as coal or oil to power non-fossil fuel plants. As you can imagine, this model results in a zero sum gain. Simply put, we are using dirty energy and polluting the atmosphere further to create clean energy.
Other models used today incorporate solar systems into hydrogen energy plant facilities. These facilities have not proven to be cost efficient due to the solar costs involved - their average ratio is 9 to 1. For every dollar spent on a hydrogen plant, only 10 cents of that dollar is used towards the hydrogen plant.
The River Grand™ development has addressed this issue in a forward thinking, sustainable, cost efficient, and pure green energy generation approach. The mixed use infrastructure of the River Grand™ (Hotels, Condos, Apartments, Retail, Entertainment) will contain photovoltaic solar panels as the "skin of the buildings", thereby serving dual purposes:
The first being a world class destination inclusive of housing, commercial, and entertainment venues for its residents and visitors, and
Secondly, as a solar power generating source that will "feed" power to the hydrogen plant, which will in turn will "feed" clean, renewable green energy into West Michigan.
A world class, high density, vertical infrastructure, destination point that has a dual purpose in simultaneously powering a power plant, is cutting edge sustainability at its finest. The River Grand™ will have addressed the issues of cost, efficiency, as well as energy independence in one broad sweeping stroke.
In conclusion, hydrogen has three basic benefits that address these concerns.
1. The use of hydrogen greatly reduces pollution. When hydrogen is combined with oxygen in a fuel cell, energy in the form of electricity is produced. This electricity can be used to power vehicles, as a heat source and for many other uses. The advantage of using hydrogen as an energy carrier is that when it combines with oxygen the only byproducts are water and heat. No greenhouse gasses or other particulates are produced by the use of hydrogen fuel cells
2. If hydrogen is produced from water we have a sustainable production system . Electrolysis is the method of separating water into hydrogen and oxygen. Renewable energy can be used to power electrolyzers to produce the hydrogen from water. Using renewable energy provides a sustainable system that is independent of petroleum products and is nonpolluting. Some of the renewable sources used to power electrolyzers are wind, hydro, solar and tidal energy. After the hydrogen is produced in an electrolyzer it can be used in a fuel cell to produce electricity. The by-products of the fuel cell process are water and heat. If fuel cells operate at high temperatures the system can be set up as a co-generator, with the waste energy used for heating.
3. Aside from the production of hydrogen, the everyday use and acceptance of hydrogen must be carefully introduced. Hydrogen today is being used to power commercial buses both by internal combustion engines burning a combination of hydrogen and other fuels and solely by hydrogen used in fuel cells. Hydrogen is used in many commercial applications from welding metal to dying fabrics to making electronics, plastics and fertilizers. When a renewable economically viable production process of hydrogen can be achieved the advantages will be spread out to many industries. Some of the proving grounds for various production methods can be locally developed to provide hydrogen for these industries.
Mr. Duane Faust ESNA Corp. Reality One Atlantic Centre, 14th
West Peachtree St. NW Floor 1201
Atlanta, GA 30309‐3488
Dear Mr. Faust,
This letter is to show Hydrogenics Corporation’s interest in supporting the River Grand project. We understand the project will require hydrogen generation and power systems to firm renewable energy power sources. Hydrogenics is a commercial supplier of hydrogen electrolysis generation and fuel cell equipment and related services for industrial and energy markets. We feel that hydrogen energy systems can help enable renewable energy sources to achieve a high penetration of the grid while linking hydrogen fueling applications.
Hydrogenics Corporation (www.hydrogenics.com
Hydrogenics applies a sustainable business plan based on a portfolio of products and capabilities serving the hydrogen and energy markets of today and tomorrow. The Company’s three areas of business include:
) is a leading global developer of clean energy solutions, advancing the Hydrogen Economy by commercializing hydrogen and fuel cell products. The Company has gained recognition from key customers for developing innovative solutions through solid hands‐on competency and comprehensive system integration knowledge and skills.
Power Systems – fuel cell power products, with particular focus on fully integrated power modules and fuel cell hybrid power packs. These systems are manufactured in our ISO 9000 certified facility in Canada.
Onsite Generation – turnkey hydrogen generation and refueling systems for a full range of hydrogen applications. These systems are manufactured in our ISO 9000 certified facility in Belgium.
Renewable Energy – Hydrogen energy systems incorporating electrolysis and fuel cell systems for community hydrogen energy storage and smart grid applications.
These areas of business provide innovative hydrogen generation and energy solutions for our clients across industrial, transportation, and stationary markets. Hydrogenics has completed a wide variety of projects utilizing its alkaline and PEM technologies in both electrical generation and hydrogen production.
Hydrogenics is headquartered in a 96,840 sq ft (9,000 sq m) facility in Mississauga, Ontario with R&D and production capacity. The Company has additional facilities and offices in Belgium, Germany, Japan, United States, Russia, China, and India. As a publicly traded company, Hydrogenics is listed on the NASDAQ (HYG) and the TSX (HYG).
We wish to see the success of this project leading to the use of hydrogen energy systems in Grand Rapids, Michigan. If you have any questions about Hydrogenics Corporation or the equipment and services we can provide to this project, please feel free to contact me at 905‐298‐3337 or by email at [email protected]
Regards,
. We look forward to working with you on this project.
Robert McGillivray Director, Renewable Energy HYDROGENICS CORPORATION
Primary Request from the Office of the Governor and the State of Michigan The three primary requests from the Office of the Governor and the State of Michigan are:
Approval and support for Build America Bond Applications for this project through a Governor’s proclamation and corresponding support by the Michigan Economic Development Corporation
Creation, by resolution/executive order or equivalent, under existing enabling legislation of a Private Activity Bond for this project that is non-recourse to State, County or City
Joint Office of the Governor and Center of Energy Excellence resolution in support of our green project elements; including Hydrogen Power Generation Plant and the greater Grand Rapids mass transportation system
Primary Request from the City of Grand Rapids
Adoption of a Business Improvement District (“BID”) by resolution/executive order or equivalent under the enabling legislation and creating a special 50 year BID for the project; allowing for the creation and adoption of a User Fee which will effectuate a NON-RECOURSE to the government bond program with an AA or AAA rating and NO tax liability to government
Project Attributes This Project is estimated to provide:
5,000 construction jobs with a project build out of 5 years
Estimated $1.5 billion USD in wages during the development phase
Creation of sales and property taxes to state county and city entities with NO TIF OR OVERLAY DISTRICT
Green power generation product that will provide 100% of site power consumption which is non-fossil fuel
Estimated direct site employment of over 39,000 FTE jobs
Indirect multiplier employment of over 32,000 FTE jobs
Direct grants are included for University and College research and teaching grants for green energy, green design, green engineering and work for development in the Build America Bonds application
World class destination attraction that will be multi-generational and include a Medal of Honor/Medal of Valor Museum, year round amusement and water park, entertainment venues, a marina, entertainment venues, shopping and first class and family accommodations for more than an estimated 3 million annual visitors to the site
Creation of a world class mass transportation system for the Greater Grand Rapids community which is 100% electric and powered by non-fossil fuel energy
The Funding Mechanism In order to create a quality large scale project that brings immediate development, employment, tax base enhancement and capital infusion into the Michigan economy that embodies the primary goals and objectives of the Governor and Legislature, a unique, viable, immediate and comprehensive financing plan must be implemented. Because of the condition of the private money market today, getting funding to move the River Grand™
project today requires a re-tooling of traditional financing packages to provide a viable and credible development. The express purpose of the River Grand™ project is to create a private industry driven economic development package in partnership with the State of Michigan in a comprehensive industry-leading, innovating and safe economic model; utilizing existing stimuli resources, formatted project entitlements which do not utilize overlays or new Tax Increment Financing (“TIF”), state obligations or guarantees and/or appropriations. The enhancements of the funding package is not just for the exit strategy but a significant enhancement of the bridge loan, Private Placement Memorandum, land acquisition, construction and operations funding that is culminated with a viable and comprehensive exit strategy. Without a wholly new package financing for major and impact projects, they will stay frozen in the market place for the foreseeable future, or until market conditions improve, which could be the end of this year, even the next or under any five year plan. This spring, the River Grand™ will be ready to make a tremendous regional impact by being a development and employment provider, provided we immediately and aggressively partner with the State of Michigan to effectuate our existing work product. Special District District Definition: The district is in essence a funding vehicle. It memorializes a user fee, a district specific target tax to create revenues to service the notes and create an ongoing development and redevelopment fund; utilizing a rated or higher revenue bonds. By having the user fee memorialized through legislation it gives the River Grand™ the ability to run feasibility studies on different projects and businesses and forecast the revenue that would be created by this fee. Therefore, any business or project that comes into the district is required to be a money maker. The feasibility studies and business plans will be independently commissioned and are held to Merrill Lynch's, UBS’s or equivalent standards, making them applicable to any financial institution. What that means is that the bonds themselves and their rating will make the bond placement and sale for both the private and institutional markets easily attainable. District Legislation: The legislation has three key points:
1. The legislation ties the district directly to the project with legislatively specific requirements that empower exclusive rights to control and build the district.
2. The legislation memorializes the user fee at an amount necessary to retire bonds, pay
capital venture partners and create a development and redevelopment fund for future venues and ventures. The amount of that user fee will be determined by the feasibility and business plan of each venue, venture or joint venture, and inclusive of the need to service the district as previously stated. These funds are critical because they are imperative to creating a dedicated revenue source to bring the cost of bonds down, their ratings up, and provide funding of the capital costs of the district without accessing project/venue gross or net revenues.
3. The legislation also creates a non-contiguous bond and tax district which is a cross between an IDA (Industrial Development Authority) or otherwise known as an IDRB (Industrial Development Revenue Bond) and a Special Tax District (STD). This structure is taking the best elements of an IDRA and a STD and having them underwritten by private industry, developed by private industry and operated by private industry. Using one or the other would not be feasible, as the bonds would have to be underwritten by the state, city, county or where the project would be built, with all the associated non-free market restrictions. These governmental entities would also be liable for whatever is built and project failure would affect their ratings. In addition, structuring the district financing in this manner gives private industry the confidence necessary for the security of these bonds. Because all aspects of the project has to meet feasibility studies, business plan requirements and be profitable, all projects must make sense, a project cannot be undertaken unless it makes money. It is imperative to note that this is NOT A TIF (Tax Increment Financing). It is a dedicated tax of an amount significant to service the district and create an ongoing development and redevelopment fund.
Elements of the District:
Revenue Bonds with NO general tax requested are necessary. Ordinance requires NO appropriation.
No liability to municipalities, county or state. NON-RECOURSE revenue bonds. No full faith and credit required. Will create, at full build out, millions annually in new state revenues: because there is NO TIF (Tax Increment Financing) the government retains revenue generated from current sales tax structure.
All pre-development costs, legislation costs and start-up capital is privately funded. NO contribution is requested of any participating government jurisdiction.
Private market driven. Private landholders. No public taking. No Right of Eminent Domain. NOT an overlay district. Non-contiguous, project by project District.
Dedicated user fee repays capital bonds and capital investment and brings rating of bonds up and cost of bonds down. Venues are geared toward creating and extending visitor based economy and traditional master-planned development with local ownership and right-partnering maintaining project control.
Green Tax Credits are used to enhance bond program.
Assets are owned by the District unless contracted/joint ventured with government or private entity.
District is non-contiguous, and therefore can include any government jurisdiction that mutually decides to participate.
District venues must be stand-alone financially sound entities, with independent feasibility studies and business plans acceptable to bond houses.
District is a “turn-key” operation. Vendors, whether local or national, must adhere to the strictest standards memorialized in an operating agreement.
District is backed by, developed by, and managed by a private entity under contract to the District. District will create an ongoing development fund after retirement of debt to renovate, update and expand district.
Duane Faust ESNA Corp. Realty One Atlantic Center, 14th Floor 1201 West Peachtree St. NW Atlanta, GA 30309 Mohammad Rahman Rubicon Global Capital Markets February 4, 2010
Re: The River Grand, Grand Rapids, Michigan Dear Mr. Faust: We at Rubicon Global Capital Markets are very pleased to be working with ESNA Corp. Realty on the River Grand project. We are extremely excited with the fact that this project will enable 5,000 direct jobs and tens of thousands of more jobs through economic growth. Such a charismatic leader as Governor Jennifer Granholm managing the affairs of the state of Michigan, and the respect she commands nationally, also strengthens the case for such a visionary project. Scope of engagement: Rubicon will do a rapid due diligence and investor package. We will review, assess, and compile the appropriate documents for the investor package including the project plan, investor presentation, offering documents, and accredited investor questionnaire. Secondly, we will advise and assist with raising private equity to make this venture a true private/public partnership, which we believe will be an inspiration and catalyst in this economic environment. With over 25 years of investment banking experience, Rubicon is a boutique, global investment company driving our clients’ success by applying deep expertise, passion to win and compassion for the individual. We provide capital development coupled with deep, global operational experience. We appreciate your visit to Portland this Sunday, and look forward to having you present to our group this coming Monday. We are pleased to assist you in this grand endeavor. Best regards,
Mohammad Rahman
Bonds A, AA and AAA rated NON-RECOURSE revenue bonds are issued based on feasibility studies and projected revenue. These studies are independently commissioned (conducted by ERA, Management Resources equivalent) on business models and venues, such as themed parks, entertainment venues, office complexes, high rises, commercial and retail developments. Similar to any business plan, there are projections of costs, profits, losses and project timelines. These studies incorporate not only the bonds authorized by the district but the additional revenue that is created through the dedicated user fee as well. Based on these projections it is possible to see how much money the dedicated revenue stream will create to service the bond debt. Bond houses must sign-off on the feasibility study prior to approval of any specific development package. Build America Bonds According to the U.S. Treasury Department Office of Public Affairs Press Release dated April 3, 2009:
The United States is facing the most severe financial crisis in generations. Extraordinary challenges require extraordinary action by our government to ensure the economy gets back on track and that millions of Americans get back to work. The American Recovery and Reinvestment Act of 2009, along with the Financial Stability Plan, are critical steps. In just two months, the Obama Administration, in conjunction with Congress, has enacted legislation to create or save 3.5 million jobs; give a tax break to 95% of working families; and has put forward detailed programs to address falling home prices, frozen credit markets, weak bank balance sheets and legacy assets. Creating the conditions for an economic recovery also requires addressing the challenges facing state and local governments in the midst of the current economic climate. Budgets are being scaled back, government jobs are being cut, and services are being curtailed. These cuts contribute to a deeper recession, while restricting access to services at a time when the need for them is greatest. Turning things around requires innovate thinking. Today Treasury announces two new, innovative bond programs to help states pursue capital projects. This funding means much needed infrastructure projects can begin to revitalize our communities while putting Americans back to work.
Build America Bonds will enable state and local governments to pursue necessary capital projects, such as work on public buildings, courthouses, schools, roads, transportation infrastructure, government hospitals, public safety facilities and equipment, water and sewer projects, environmental projects, governmental housing projects and public utilities. The U.S. Treasury Department press release goes on to describe how the Build America Bonds work:
Build America Bonds are a new financing tool for the state and local governments. The bonds, which allow a new direct federal payment subsidy, are taxable bonds issued by state and local governments that will give them access to the conventional corporate debt markets. At the election of the state and local governments, the Treasury Department will make a direct payment to the state or local governmental issuer in an amount equal to 35 percent of the interest payment on the Build America Bonds. As a result of this federal subsidy payment, state and local governments will
have lower net borrowing costs and be able to reach more sources of borrowing than with more traditional tax-exempt or tax credit bonds. For example, if a state or local government were to issue Build America Bonds at 10 percent taxable interest rate, the Treasury Department would make a payment directly to the government of 3.5 percent of that interest, and the government’s net borrowing cost would thus be only 6.5 percent on a bond that actually pays 10 percent. This feature will make Build America Bonds attractive to a broader group of investors, and therefore create a larger market than typically invest in more traditional state and local tax-exempt bonds, where interest rates, due to the federal tax exemption, have historically been about 20 percent lower than taxable interest rates. They should be attractive to investors without regard to their tax status or income tax bracket (e.g., pension funds and other tax-exempt investors, investors in low tax brackets, and foreign investors).
Conclusion The River Grand™ is shovel ready. The project will produce sustained employment for professional, trade and general workforces, entry level to retirement professional and medical professional employment base, in-state career opportunities for tens of thousands of graduates, a stellar, world class green energy program, direct revenues to state, county and city, a destination attraction for over two and a half million visitors and a project that will bring federal economic stimulus and world recognition to Michigan and Grand Rapids. The bond program and user fee program created and memorialized in an executive order, ordinance or regulation will produce a readily approvable Build America Bond package and a Private Activity Bond package ready for placement in the market with no recourse to government and immediate development of the project.
