Overview blog: ahualoa.net
David Tarnas, director of government affairs at Merica International, Waimea, and director of Malama Kai Foundation Robert Rapier, Chief Technology Officer for Merica International, a bioenergy holding company, and blogs rsquared.
Merica acquires majority stake in Choren, by acquiring Shell's stake in the company, Nov 2009.
2012 Dresden company buys bankrupt Choren's last remaining business. Sounds like Merica made a bad deal and Shell made a good one in 2009 since Choren went bankrupt several years later and was sold off to a European company with plans of its own in Europe. No website for Merica located.
Hawai‘i BioEnergy "(HBE) is a LLC established by three of Hawai‘i's
largest landowners: Kamehameha Schools, Grove Farm Company Inc., and
Maui Land & Pineapple Company, Inc.
Other partners include leaders from the venture capital community - Vinod Khosla, Ohana Holdings and Finistere Ventures." A 2011 news release from HBE, above, says that Grove Farm Lands in Kauai (see map) will be used to process 10 million gallons of biofuels, processed onsite, and used to fuel Oahu's Kahe power plant. This is a proposal for PUC decision and not a done deal.
May 9, 2012
May 2, 2012
Tim Formaz, Project Manager
Hu Honua Bioenergy has hired Tim Formaz, as its project manager for the mothballed power plant located in Pepeekeo.
May 1, 2012
No Coastal Trees for Hu Honua...
The largest landowner on the Hamakua Coast, Kamehameha Schools, has thousands of acres of eucalyptus trees which Hu Honua had long targeted as its supply of biomass to fuel the mothballed power plant at Pepeekeo Point. However, Kamehameha Schools and other large Hawaiian landowners have formed Hawaii Bioenergy LLC to capitalize on our state's need for ethanol - their plan is to manufacture ethanol using local timber resources. So, where will Hu Honua locate a source of wood to supply its biomass power plant?
Jan 10, 2010
Hu Honua files application to modify SMA permit in November
According to their new website:
"Hu Honua filed an air permit application with the Hawaii Department of Health in August. Hu Honua also filed an application to modify its Special Management Area (SMA) permit in November. The process for approving both permits will provide ample opportunity for public input and comment, including public hearings. Water and solid waste permits will be filed in the near future.
"Hu Honua filed an air permit application with the Hawaii Department of Health in August. Hu Honua also filed an application to modify its Special Management Area (SMA) permit in November. The process for approving both permits will provide ample opportunity for public input and comment, including public hearings. Water and solid waste permits will be filed in the near future.
Oct 31, 2009
Hu Honua back online with same lie...
ABOUT US Page:
"It [Hu Honua] is co-owned by ERH, a local firm that has been pursuing renewable projects in Hawaii for the past five years, and MMA Renewable Ventures, LLC, a leading producer of energy from renewable sources.
FAQ PAGE:
"MMA Renewable Ventures is a renewable energy company and co-owner of Hu Honua Bioenergy, LLC."
FACT: That has not been true since April 2009, when parent company MMA sold off the assets of MMA Renewables to Fotowatio, except for the power plant in Pepeekeo. See link to MMA's 10K report 4/2009.
The site has been off-line, so why come back online with the same old lie?
"It [Hu Honua] is co-owned by ERH, a local firm that has been pursuing renewable projects in Hawaii for the past five years, and MMA Renewable Ventures, LLC, a leading producer of energy from renewable sources.
FAQ PAGE:
"MMA Renewable Ventures is a renewable energy company and co-owner of Hu Honua Bioenergy, LLC."
FACT: That has not been true since April 2009, when parent company MMA sold off the assets of MMA Renewables to Fotowatio, except for the power plant in Pepeekeo. See link to MMA's 10K report 4/2009.
The site has been off-line, so why come back online with the same old lie?
Public Notification
Clean Air Branch has a web link to their public notices:
http://hawaii.gov/health/about/admin/health/environmental/air/cab/notices/notices_index.html
Here's an excerpt of the Application for the Covered Source Permit (clean air permit):
VII. After receipt of a complete application, the Director, in writing, shall approve, conditionally approve, or deny an application within eighteen months, except as provided in HAR §11-60.1-88 and (A) and (B) below.
A. Upon program approval, within nine months for an application containing an early reduction demonstration pursuant to section 112(i)(5) of the Clean Air Act.
B. Within twelve months for a new covered source or significant modification subject to the requirements of subchapter 7.
VIII. A Covered Source Permit application for a new covered source or a significant modification shall be approved only if the Director determines that the construction or operation of the new covered source or significant modification will be in compliance with all applicable requirements.
IX. The Director shall provide for public notice, including the method by which a public hearing can be requested, and an opportunity for public comment on the draft Covered Source Permit in accordance with HAR §11-60.1-99. Each notification shall also identify the intent to operate at various locations, and the estimated number of location changes for the proposed term of the Temporary Covered Source Permit.
http://hawaii.gov/health/about/admin/health/environmental/air/cab/notices/notices_index.html
Here's an excerpt of the Application for the Covered Source Permit (clean air permit):
VII. After receipt of a complete application, the Director, in writing, shall approve, conditionally approve, or deny an application within eighteen months, except as provided in HAR §11-60.1-88 and (A) and (B) below.
A. Upon program approval, within nine months for an application containing an early reduction demonstration pursuant to section 112(i)(5) of the Clean Air Act.
B. Within twelve months for a new covered source or significant modification subject to the requirements of subchapter 7.
VIII. A Covered Source Permit application for a new covered source or a significant modification shall be approved only if the Director determines that the construction or operation of the new covered source or significant modification will be in compliance with all applicable requirements.
IX. The Director shall provide for public notice, including the method by which a public hearing can be requested, and an opportunity for public comment on the draft Covered Source Permit in accordance with HAR §11-60.1-99. Each notification shall also identify the intent to operate at various locations, and the estimated number of location changes for the proposed term of the Temporary Covered Source Permit.
Triggers for EIS - Office of Environmental Quality Control
§343-5 Applicability and requirements. (a) Except as otherwise provided, an environmental assessment shall be required for actions that:
(1) Propose the use of state or county lands or the use of state or county funds, other than funds to be used for feasibility or planning studies for possible future programs or projects that the agency has not approved, adopted, or funded, or funds to be used for the acquisition of unimproved real property; provided that the agency shall consider environmental factors and available alternatives in its feasibility or planning studies; provided further that an environmental assessment for proposed uses under section [205-2(d)(10)] or [205-4.5(a)(13)] shall only be required pursuant to section 205-5(b);
(2) Propose any use within any land classified as a conservation district by the state land use commission under chapter 205;
(3) Propose any use within a shoreline area as defined in section 205A-41;
(4) Propose any use within any historic site as designated in the National Register or Hawaii Register, as provided for in the Historic Preservation Act of 1966, Public Law 89-665, or chapter 6E;
(5) Propose any use within the Waikiki area of Oahu, the boundaries of which are delineated in the land use ordinance as amended, establishing the "Waikiki Special District";
(6) Propose any amendments to existing county general plans where the amendment would result in designations other than agriculture, conservation, or preservation, except actions proposing any new county general plan or amendments to any existing county general plan initiated by a county;
(7) Propose any reclassification of any land classified as a conservation district by the state land use commission under chapter 205;
(8) Propose the construction of new or the expansion or modification of existing helicopter facilities within the State, that by way of their activities, may affect:
(A) Any land classified as a conservation district by the state land use commission under chapter 205;
(B) A shoreline area as defined in section 205A-41; or
(C) Any historic site as designated in the National Register or Hawaii Register, as provided for in the Historic Preservation Act of 1966, Public Law 89-665, or chapter 6E; or until the statewide historic places inventory is completed, any historic site that is found by a field reconnaissance of the area affected by the helicopter facility and is under consideration for placement on the National Register or the Hawaii Register of Historic Places; and
(9) Propose any:
(A) Wastewater treatment unit, except an individual wastewater system or a wastewater treatment unit serving fewer than fifty single-family dwellings or the equivalent;
(B) Waste-to-energy facility;
(C) Landfill;
(D) Oil refinery; or
(E) Power-generating facility.
(b) Whenever an agency proposes an action in subsection (a), other than feasibility or planning studies for possible future programs or projects that the agency has not approved, adopted, or funded, or other than the use of state or county funds for the acquisition of unimproved real property that is not a specific type of action declared exempt under section 343-6, the agency shall prepare an environmental assessment for such action at the earliest practicable time to determine whether an environmental impact statement shall be required.
(1) For environmental assessments for which a finding of no significant impact is anticipated:
(A) A draft environmental assessment shall be made available for public review and comment for a period of thirty days;
(B) The office shall inform the public of the availability of the draft environmental assessment for public review and comment pursuant to section 343-3;
(C) The agency shall respond in writing to comments received during the review and prepare a final environmental assessment to determine whether an environmental impact statement shall be required;
(D) A statement shall be required if the agency finds that the proposed action may have a significant effect on the environment; and
(E) The agency shall file notice of such determination with the office. When a conflict of interest may exist because the proposing agency and the agency making the determination are the same, the office may review the agency's determination, consult the agency, and advise the agency of potential conflicts, to comply with this section. The office shall publish the final determination for the public's information pursuant to section 343-3.
The draft and final statements, if required, shall be prepared by the agency and submitted to the office. The draft statement shall be made available for public review and comment through the office for a period of forty-five days. The office shall inform the public of the availability of the draft statement for public review and comment pursuant to section 343-3. The agency shall respond in writing to comments received during the review and prepare a final statement.
The office, when requested by the agency, may make a recommendation as to the acceptability of the final statement.
(2) The final authority to accept a final statement shall rest with:
(A) The governor, or the governor's authorized representative, whenever an action proposes the use of state lands or the use of state funds, or whenever a state agency proposes an action within the categories in subsection (a); or
(B) The mayor, or the mayor's authorized representative, of the respective county whenever an action proposes only the use of county lands or county funds.
Acceptance of a required final statement shall be a condition precedent to implementation of the proposed action. Upon acceptance or nonacceptance of the final statement, the governor or mayor, or the governor's or mayor's authorized representative, shall file notice of such determination with the office. The office, in turn, shall publish the determination of acceptance or nonacceptance pursuant to section 343-3.
(c) Whenever an applicant proposes an action specified by subsection (a) that requires approval of an agency and that is not a specific type of action declared exempt under section 343-6, the agency initially receiving and agreeing to process the request for approval shall prepare an environmental assessment of the proposed action at the earliest practicable time to determine whether an environmental impact statement shall be required; provided that, for an action that proposes the establishment of a renewable energy facility, a draft environmental impact statement shall be prepared at the earliest practicable time. The final approving agency for the request for approval is not required to be the accepting authority.
For environmental assessments for which a finding of no significant impact is anticipated:
(1) A draft environmental assessment shall be made available for public review and comment for a period of thirty days;
(2) The office shall inform the public of the availability of the draft environmental assessment for public review and comment pursuant to section 343-3; and
(3) The applicant shall respond in writing to comments received during the review, and the agency shall prepare a final environmental assessment to determine whether an environmental impact statement shall be required. A statement shall be required if the agency finds that the proposed action may have a significant effect on the environment. The agency shall file notice of the agency's determination with the office, which, in turn, shall publish the agency's determination for the public's information pursuant to section 343-3.
The draft and final statements, if required, shall be prepared by the applicant, who shall file these statements with the office.
The draft statement shall be made available for public review and comment through the office for a period of forty-five days. The office shall inform the public of the availability of the draft statement for public review and comment pursuant to section 343-3.
The applicant shall respond in writing to comments received during the review and prepare a final statement. The office, when requested by the applicant or agency, may make a recommendation as to the acceptability of the final statement.
The authority to accept a final statement shall rest with the agency initially receiving and agreeing to process the request for approval. The final decision-making body or approving agency for the request for approval is not required to be the accepting authority. The planning department for the county in which the proposed action will occur shall be a permissible accepting authority for the final statement.
(1) Propose the use of state or county lands or the use of state or county funds, other than funds to be used for feasibility or planning studies for possible future programs or projects that the agency has not approved, adopted, or funded, or funds to be used for the acquisition of unimproved real property; provided that the agency shall consider environmental factors and available alternatives in its feasibility or planning studies; provided further that an environmental assessment for proposed uses under section [205-2(d)(10)] or [205-4.5(a)(13)] shall only be required pursuant to section 205-5(b);
(2) Propose any use within any land classified as a conservation district by the state land use commission under chapter 205;
(3) Propose any use within a shoreline area as defined in section 205A-41;
(4) Propose any use within any historic site as designated in the National Register or Hawaii Register, as provided for in the Historic Preservation Act of 1966, Public Law 89-665, or chapter 6E;
(5) Propose any use within the Waikiki area of Oahu, the boundaries of which are delineated in the land use ordinance as amended, establishing the "Waikiki Special District";
(6) Propose any amendments to existing county general plans where the amendment would result in designations other than agriculture, conservation, or preservation, except actions proposing any new county general plan or amendments to any existing county general plan initiated by a county;
(7) Propose any reclassification of any land classified as a conservation district by the state land use commission under chapter 205;
(8) Propose the construction of new or the expansion or modification of existing helicopter facilities within the State, that by way of their activities, may affect:
(A) Any land classified as a conservation district by the state land use commission under chapter 205;
(B) A shoreline area as defined in section 205A-41; or
(C) Any historic site as designated in the National Register or Hawaii Register, as provided for in the Historic Preservation Act of 1966, Public Law 89-665, or chapter 6E; or until the statewide historic places inventory is completed, any historic site that is found by a field reconnaissance of the area affected by the helicopter facility and is under consideration for placement on the National Register or the Hawaii Register of Historic Places; and
(9) Propose any:
(A) Wastewater treatment unit, except an individual wastewater system or a wastewater treatment unit serving fewer than fifty single-family dwellings or the equivalent;
(B) Waste-to-energy facility;
(C) Landfill;
(D) Oil refinery; or
(E) Power-generating facility.
(b) Whenever an agency proposes an action in subsection (a), other than feasibility or planning studies for possible future programs or projects that the agency has not approved, adopted, or funded, or other than the use of state or county funds for the acquisition of unimproved real property that is not a specific type of action declared exempt under section 343-6, the agency shall prepare an environmental assessment for such action at the earliest practicable time to determine whether an environmental impact statement shall be required.
(1) For environmental assessments for which a finding of no significant impact is anticipated:
(A) A draft environmental assessment shall be made available for public review and comment for a period of thirty days;
(B) The office shall inform the public of the availability of the draft environmental assessment for public review and comment pursuant to section 343-3;
(C) The agency shall respond in writing to comments received during the review and prepare a final environmental assessment to determine whether an environmental impact statement shall be required;
(D) A statement shall be required if the agency finds that the proposed action may have a significant effect on the environment; and
(E) The agency shall file notice of such determination with the office. When a conflict of interest may exist because the proposing agency and the agency making the determination are the same, the office may review the agency's determination, consult the agency, and advise the agency of potential conflicts, to comply with this section. The office shall publish the final determination for the public's information pursuant to section 343-3.
The draft and final statements, if required, shall be prepared by the agency and submitted to the office. The draft statement shall be made available for public review and comment through the office for a period of forty-five days. The office shall inform the public of the availability of the draft statement for public review and comment pursuant to section 343-3. The agency shall respond in writing to comments received during the review and prepare a final statement.
The office, when requested by the agency, may make a recommendation as to the acceptability of the final statement.
(2) The final authority to accept a final statement shall rest with:
(A) The governor, or the governor's authorized representative, whenever an action proposes the use of state lands or the use of state funds, or whenever a state agency proposes an action within the categories in subsection (a); or
(B) The mayor, or the mayor's authorized representative, of the respective county whenever an action proposes only the use of county lands or county funds.
Acceptance of a required final statement shall be a condition precedent to implementation of the proposed action. Upon acceptance or nonacceptance of the final statement, the governor or mayor, or the governor's or mayor's authorized representative, shall file notice of such determination with the office. The office, in turn, shall publish the determination of acceptance or nonacceptance pursuant to section 343-3.
(c) Whenever an applicant proposes an action specified by subsection (a) that requires approval of an agency and that is not a specific type of action declared exempt under section 343-6, the agency initially receiving and agreeing to process the request for approval shall prepare an environmental assessment of the proposed action at the earliest practicable time to determine whether an environmental impact statement shall be required; provided that, for an action that proposes the establishment of a renewable energy facility, a draft environmental impact statement shall be prepared at the earliest practicable time. The final approving agency for the request for approval is not required to be the accepting authority.
For environmental assessments for which a finding of no significant impact is anticipated:
(1) A draft environmental assessment shall be made available for public review and comment for a period of thirty days;
(2) The office shall inform the public of the availability of the draft environmental assessment for public review and comment pursuant to section 343-3; and
(3) The applicant shall respond in writing to comments received during the review, and the agency shall prepare a final environmental assessment to determine whether an environmental impact statement shall be required. A statement shall be required if the agency finds that the proposed action may have a significant effect on the environment. The agency shall file notice of the agency's determination with the office, which, in turn, shall publish the agency's determination for the public's information pursuant to section 343-3.
The draft and final statements, if required, shall be prepared by the applicant, who shall file these statements with the office.
The draft statement shall be made available for public review and comment through the office for a period of forty-five days. The office shall inform the public of the availability of the draft statement for public review and comment pursuant to section 343-3.
The applicant shall respond in writing to comments received during the review and prepare a final statement. The office, when requested by the applicant or agency, may make a recommendation as to the acceptability of the final statement.
The authority to accept a final statement shall rest with the agency initially receiving and agreeing to process the request for approval. The final decision-making body or approving agency for the request for approval is not required to be the accepting authority. The planning department for the county in which the proposed action will occur shall be a permissible accepting authority for the final statement.
Oct 10, 2009
Hu Honua Goes Off-Line
Hu Honua's web site is down. The page you get asks the owner of the site to contact the hosting service. This message is generally given to site owners who haven't paid their bills. Link on the title of this post.
Jun 13, 2009
Hu Honua Bioenergy LLC completed a rate term sheet with Helco for approximately 22MW firm capacity. The purpose of this letter is to present facts about their parent company and why this information is important for any financial review of Hu Honua. I also present reasons to doubt Hu Honua’s past and current financial representations.
Executive Summary.
During 2008 and 2009, Hu Honua Bioenergy LLC and MMA Renewable Venture LLC executives and advisors met on numerous occasions with Pepeekeo residents, Helco representatives, County Planning representatives, local ILWU, Senator Akaka, Representative Hirono, Representative Neil Abercrombie, other government officials, and the media.
Representations were made by these executives that were not true at the time, and had never been true. These claims were made to persuade the listener of their ability to complete the renovation, refurbishing, operation, and licensing of a biomass power plant located in Pepeekeo, Hawaii.
There should be significant doubt about Hu Honua’s ability to perform on any agreement, since it no longer belongs to MMA Renewable Ventures, but remains an asset of the parent company, MuniMae, whose reorganization plan is to own and manage portfolios of tax-exempt and market rate bonds and loans. The ownership and operation of a biomass power plant is inconsistent with their plan. Further, the employees with the abilities to plan, manage, and operate renewable power plants are now employed by Fotowatio Renewable Ventures.
Discussion and Facts
Organization prior to May 2009:
Municipal Mortgage & Equity, LLC , or MuniMae, (parent), traded on the New York Stock Exchange: MMAB
MMA Renewable Ventures (wholly owned division)
Hu Honua Bioenergy, LLC (division is majority shareholder)
Ethanol Research Hawaii, LLC (partner of Hu Honua)
Current organization after sale of assets:
Municipal Mortgage & Equity, LLC (parent), traded over the counter: MMAB.PK
Hu Honua Bioenergy, LLC (including biomass plant)
Ethanol Research Hawaii, LLC (inactive)
Enclosed are excerpts of Municipal Mortgage & Equity’s (aka MuniMae) current 10-K submissions to the Securities and Exchange Commission (SEC), a 210 page document, which can be downloaded and/or printed in full at the SEC website, http://www.sec.gov.
Status of the company 2008 and 2009 were bad years for raising money, even for renewable energy projects. The company slowed down their investment in renewable energy projects as early as Q1 2008.
April 2009, 10-K report, page 11:
“During 2008 and the first part of 2009, we have been unable to form new funds, and in good part our business activities have been limited to providing multifamily loans in our business of originating mortgage loans for sale to, and servicing loans for, government sponsored enterprises and agencies, and new solar projects in our renewable ventures business (although even this aspect of our business was substantially reduced during 2008).”
“We had remained actively engaged through the first quarter of 2008 in our renewable energy finance and development activities. However, beginning in the second quarter of 2008, we reduced the pace at which we were investing in renewable energy projects, partly because of a slowdown in our ability to obtain funds for investments, and partly because of investor uncertainty caused by Congress’ delay in finalizing legislation extending tax credits that were scheduled to reduce significantly at the end of 2008 (but now have been extended). “ Page 16
April 2009, 10-K report, page F-89
“The Company is currently managing its businesses in a manner to conserve capital and reduce costs and has been working with all of its lenders to restructure as many of its creditor agreements as possible in order to satisfy its ongoing liquidity needs and obtain forbearance agreements… In the event management’s plans are not successful, the Company could consider seeking relief through a bankruptcy filing. …If we complete the sales of our Agency Lending business and our Tax Credit Equity business, our only significant remaining activities will be owning and managing portfolios of tax-exempt and market rate bonds and loans. This will enable us to reduce significantly the number of people we employ (in addition to the personnel of the businesses we sell who become employees of the buyers or whose services are no longer required because we do not operate those businesses).“ page 11
Dog & Pony Show. Executives of MMA Renewable Ventures visit Hawaii to discuss the strength of their company, and their ability to make a significant investment in the community.
July 9, 2008 Hu Honua and MMA Renewable Ventures meet with Pepeekeo residents:
I asked them about the 46% drop in MuniMae stock price and the recent class action lawsuits accusing management of financial fraud and they said they had no comment about internal legal issues of their parent company. Noticeably, they did not say they were unaware of the issues. Since MuniMae was the largest stockholder of both entities, it seems that these executives would be interested in the drop in the value of their personal assets, i.e., MuniMae stock. Further, it is inconceivable that the parent company would not be issuing statements to its employees explaining their position on the reason for the stock decline as well as the 10 class action lawsuits. Being silent with employees could only jeopardize morale, productivity, and possibly employee turnover.
August 8, 2008 Hawaii Tribune-Herald “Power Facility: No Coal”, interviews Tim Lasocki, (then Vice President for Business Development MMA Renewable Ventures, and now Executive Vice President Hu Honua). “Hu Honua's operation is expected to cost between $25 million and $40 million. The money would come from long-term loans typically used to finance power plants, Lasocki said.” Surely Mr. Lasocki was aware that MuniMae was cutting back on their renewable investments as was recounted above in the paragraph entitled “Status of the company”.
Oct 2008 Hu Honua’s PowerPoint presentation to Pepeekeo Community:
• “Parent company MuniMae has $19 billion in assets under management”
• “$3.5 billion in new financing annually”
I find this entirely false, because the company did not have any unencumbered assets at that time, and the company was finding it difficult to raise money and slowed down its investment in renewable projects in Q1 as cited above under “Status of the company”. Further, there were no financial reports made by the company for 2008 and numerous lawsuits filed in 2008 cast doubt on any financial information.
“All of our businesses require significant access to borrowed funds and as such we have almost no assets that are unencumbered at December 31, 2008... Because we were not able to deliver financial statements in a timely manner, most of our debt that is not part of a bond securitization transaction was in default, and most of our lenders could have required us to repay the indebtedness.” Page 25, April 2009 10-K report
Hu Honua executives continue to represent that they the parent company will provide the funds for their project, however, the parent company has not filed any required financial reports to the SEC for 2007, 2008, or Q1 2009. They restated their prior SEC submissions for 2004, 2005, and 2006. So how can a reasonable person believe Hu Honua’s representations of their financial capacity to perform on this project? Further, How could these executives believe that they could pull off this project when their parent company was slowing down its investment in renewable projects and was finding it difficult to raise money?
“This Report does not contain quarterly information for years ended December 31, 2006 and 2005 nor do we plan to provide this information through subsequent Securities and Exchange Commission (“SEC”) filings. Preparing and providing this information would be costly, would be only marginally beneficial to our investors and would serve only to delay the filing of this Report as well as future filings which will provide our 2007 and 2008 financial position and results of operations.” Page 5.
Investor Beware. The renewable energy projects that MMA Renewable Ventures LLC funded, built, and operated before being sold to Fotowatio followed a similar approach. Money was raised from institutional investors and set aside in designated funds, such as Solar I, Solar II, Solar III, and Solar IV. Each fund was formed as a general partnership with limited partnership shares. Each fund was used to build and operate a specific project facility. Over $200Million was raised in 2007 and 2008 for these committed solar projects. MMA Renewable was sold for $19.7 million earlier this year, a fraction of what those projects cost. What happens to the investors holding limited partnership interests? Well, MuniMae committed to guarantee its obligations, but, that seems a hollow promise given their current condition. So, what sort of institutional investor will invest in more renewable energy projects, given the sorry experience of MMA Renewables? The risk seems too great in today’s market.
Conclusion. I do not believe any representations made by Hu Honua Bioenergy LLC or former executives of MMA Renewable Ventures. I do not believe that they can raise $40 million or even $80 million (as told to one government official). I hope that any financial information presented to Helco, PUC, EPA, or DOH, be given a full audit by Hawaii State auditors. I hope that a rigorous risk analysis be conducted on any agreement with this company. It seems likely that MuniMae will sell Hu Honua, so the State auditors should look any exposure, should that occur. Any new owner should provide audited financials as part of the due diligence process.
Executive Summary.
During 2008 and 2009, Hu Honua Bioenergy LLC and MMA Renewable Venture LLC executives and advisors met on numerous occasions with Pepeekeo residents, Helco representatives, County Planning representatives, local ILWU, Senator Akaka, Representative Hirono, Representative Neil Abercrombie, other government officials, and the media.
Representations were made by these executives that were not true at the time, and had never been true. These claims were made to persuade the listener of their ability to complete the renovation, refurbishing, operation, and licensing of a biomass power plant located in Pepeekeo, Hawaii.
There should be significant doubt about Hu Honua’s ability to perform on any agreement, since it no longer belongs to MMA Renewable Ventures, but remains an asset of the parent company, MuniMae, whose reorganization plan is to own and manage portfolios of tax-exempt and market rate bonds and loans. The ownership and operation of a biomass power plant is inconsistent with their plan. Further, the employees with the abilities to plan, manage, and operate renewable power plants are now employed by Fotowatio Renewable Ventures.
Discussion and Facts
Organization prior to May 2009:
Municipal Mortgage & Equity, LLC , or MuniMae, (parent), traded on the New York Stock Exchange: MMAB
MMA Renewable Ventures (wholly owned division)
Hu Honua Bioenergy, LLC (division is majority shareholder)
Ethanol Research Hawaii, LLC (partner of Hu Honua)
Current organization after sale of assets:
Municipal Mortgage & Equity, LLC (parent), traded over the counter: MMAB.PK
Hu Honua Bioenergy, LLC (including biomass plant)
Ethanol Research Hawaii, LLC (inactive)
Enclosed are excerpts of Municipal Mortgage & Equity’s (aka MuniMae) current 10-K submissions to the Securities and Exchange Commission (SEC), a 210 page document, which can be downloaded and/or printed in full at the SEC website, http://www.sec.gov.
Status of the company 2008 and 2009 were bad years for raising money, even for renewable energy projects. The company slowed down their investment in renewable energy projects as early as Q1 2008.
April 2009, 10-K report, page 11:
“During 2008 and the first part of 2009, we have been unable to form new funds, and in good part our business activities have been limited to providing multifamily loans in our business of originating mortgage loans for sale to, and servicing loans for, government sponsored enterprises and agencies, and new solar projects in our renewable ventures business (although even this aspect of our business was substantially reduced during 2008).”
“We had remained actively engaged through the first quarter of 2008 in our renewable energy finance and development activities. However, beginning in the second quarter of 2008, we reduced the pace at which we were investing in renewable energy projects, partly because of a slowdown in our ability to obtain funds for investments, and partly because of investor uncertainty caused by Congress’ delay in finalizing legislation extending tax credits that were scheduled to reduce significantly at the end of 2008 (but now have been extended). “ Page 16
April 2009, 10-K report, page F-89
“The Company is currently managing its businesses in a manner to conserve capital and reduce costs and has been working with all of its lenders to restructure as many of its creditor agreements as possible in order to satisfy its ongoing liquidity needs and obtain forbearance agreements… In the event management’s plans are not successful, the Company could consider seeking relief through a bankruptcy filing. …If we complete the sales of our Agency Lending business and our Tax Credit Equity business, our only significant remaining activities will be owning and managing portfolios of tax-exempt and market rate bonds and loans. This will enable us to reduce significantly the number of people we employ (in addition to the personnel of the businesses we sell who become employees of the buyers or whose services are no longer required because we do not operate those businesses).“ page 11
Dog & Pony Show. Executives of MMA Renewable Ventures visit Hawaii to discuss the strength of their company, and their ability to make a significant investment in the community.
July 9, 2008 Hu Honua and MMA Renewable Ventures meet with Pepeekeo residents:
I asked them about the 46% drop in MuniMae stock price and the recent class action lawsuits accusing management of financial fraud and they said they had no comment about internal legal issues of their parent company. Noticeably, they did not say they were unaware of the issues. Since MuniMae was the largest stockholder of both entities, it seems that these executives would be interested in the drop in the value of their personal assets, i.e., MuniMae stock. Further, it is inconceivable that the parent company would not be issuing statements to its employees explaining their position on the reason for the stock decline as well as the 10 class action lawsuits. Being silent with employees could only jeopardize morale, productivity, and possibly employee turnover.
August 8, 2008 Hawaii Tribune-Herald “Power Facility: No Coal”, interviews Tim Lasocki, (then Vice President for Business Development MMA Renewable Ventures, and now Executive Vice President Hu Honua). “Hu Honua's operation is expected to cost between $25 million and $40 million. The money would come from long-term loans typically used to finance power plants, Lasocki said.” Surely Mr. Lasocki was aware that MuniMae was cutting back on their renewable investments as was recounted above in the paragraph entitled “Status of the company”.
Oct 2008 Hu Honua’s PowerPoint presentation to Pepeekeo Community:
• “Parent company MuniMae has $19 billion in assets under management”
• “$3.5 billion in new financing annually”
I find this entirely false, because the company did not have any unencumbered assets at that time, and the company was finding it difficult to raise money and slowed down its investment in renewable projects in Q1 as cited above under “Status of the company”. Further, there were no financial reports made by the company for 2008 and numerous lawsuits filed in 2008 cast doubt on any financial information.
“All of our businesses require significant access to borrowed funds and as such we have almost no assets that are unencumbered at December 31, 2008... Because we were not able to deliver financial statements in a timely manner, most of our debt that is not part of a bond securitization transaction was in default, and most of our lenders could have required us to repay the indebtedness.” Page 25, April 2009 10-K report
Hu Honua executives continue to represent that they the parent company will provide the funds for their project, however, the parent company has not filed any required financial reports to the SEC for 2007, 2008, or Q1 2009. They restated their prior SEC submissions for 2004, 2005, and 2006. So how can a reasonable person believe Hu Honua’s representations of their financial capacity to perform on this project? Further, How could these executives believe that they could pull off this project when their parent company was slowing down its investment in renewable projects and was finding it difficult to raise money?
“This Report does not contain quarterly information for years ended December 31, 2006 and 2005 nor do we plan to provide this information through subsequent Securities and Exchange Commission (“SEC”) filings. Preparing and providing this information would be costly, would be only marginally beneficial to our investors and would serve only to delay the filing of this Report as well as future filings which will provide our 2007 and 2008 financial position and results of operations.” Page 5.
Investor Beware. The renewable energy projects that MMA Renewable Ventures LLC funded, built, and operated before being sold to Fotowatio followed a similar approach. Money was raised from institutional investors and set aside in designated funds, such as Solar I, Solar II, Solar III, and Solar IV. Each fund was formed as a general partnership with limited partnership shares. Each fund was used to build and operate a specific project facility. Over $200Million was raised in 2007 and 2008 for these committed solar projects. MMA Renewable was sold for $19.7 million earlier this year, a fraction of what those projects cost. What happens to the investors holding limited partnership interests? Well, MuniMae committed to guarantee its obligations, but, that seems a hollow promise given their current condition. So, what sort of institutional investor will invest in more renewable energy projects, given the sorry experience of MMA Renewables? The risk seems too great in today’s market.
Conclusion. I do not believe any representations made by Hu Honua Bioenergy LLC or former executives of MMA Renewable Ventures. I do not believe that they can raise $40 million or even $80 million (as told to one government official). I hope that any financial information presented to Helco, PUC, EPA, or DOH, be given a full audit by Hawaii State auditors. I hope that a rigorous risk analysis be conducted on any agreement with this company. It seems likely that MuniMae will sell Hu Honua, so the State auditors should look any exposure, should that occur. Any new owner should provide audited financials as part of the due diligence process.
