| Present, Discuss, and Consider Action on a Resolution to Ratify the Agreement to Settle the Lawsuit between the Town of Addison and Landmark Structures I, L.P., Urban Green Energy, and Freese and Nichols, Inc. |
In February 2012 Landmark Structures installed a wind energy system on the Surveyor Water Tower at 4000 Arapaho Road. The goal of the system was not only to generate enough wind energy to power the water tower learning center and some street lights along Arapaho Road, but also to position Addison as a model for cities around the country in the use of affordable alternative energy sources. Landmark contracted with Urban Green Energy (UGE) to manufacture and install the wind energy system; Freese and Nichols served as the Town's project manager.
After the turbines were installed in 2012, the system functioned for only three months before an entire wind turbine fell from the top of the water tower to the ground. The system was retrofitted, but a few months later, in a second incident, a blade broke free, pierced the roof of a nearby building, and landed in the conference room of a local business. At the Town’s request Landmark and its partners on the project rebuilt the turbines, but once again a blade separated from a turbine, causing damage to other parts of the turbine system. No one was hurt in any of the incidents, but the Town decided to secure the turbines in a non-operating state in 2014 due to the potential safety concerns. In the Summer/Fall of 2015, after three failures and extensive discussions with Landmark that failed to resolve the issues, the Town of Addison instituted suit against Landmark Structures and UGE alleging causes of action for breach of contract, breach of warranty, negligence and fraudulent inducement. Freese and Nichols was added to the suit in 2016.
Following an Executive Session during the February 27 City Council Meeting, the Council authorized the City Manager to settle the two-year-old wind turbine lawsuit with Landmark Structures, L.P., Freese and Nichols, Inc., and Urban Green Energy pursuant to the terms discussed in Executive Session (those terms are summarized in the bullet points below). As part of that settlement, which was signed on April 11, 2018, all parties agree to the following:
- Landmark and Freese and Nichols will pay the Town a total of $800,000 in cash ($550,000 from Landmark Structures and $250,000 from Freese and Nichols, Inc.); and
- Landmark will remove the wind turbines and make any necessary repairs to the roof of the water tower at no cost to the Town.
The total cost for the wind turbine project in 2012 was $1,263,973. $472,400 was funded through a federal energy conservation grant through the State Energy Conservation Office (SECO), which Addison is not required to return. The remaining $791,573 was funded through the certificates of obligation (COs) that were approved by Council in 2008 to cover a broad range of Town projects. The issuance of this debt was not specifically for this project, but the funds were eligible to be spent on projects related to Addison’s Utility Fund. The final payment on this 2008 debt issuance was made in February 2018. Legal fees associated with this issue exceed $496,000.
The attached resolution ratifies the agreement signed on April 11, 2018. |