The city of Cleveland and Cleveland Public Power made up their minds back in 2008: A revolutionary system that would vaporize trash was definitely the way to go.
The so-called "gasification plant" would fit nicely at the city's Ridge Road garbage transfer station, and it would save oodles of cash that for years has been forked over to a landfill in Mansfield. Plus, the gas that would stream from it could fire boilers that would generate free electricity for the city. The new plant would even turn useless garbage sludge into fuel pellets and decorative bricks that could be sold on the side.
And they found the perfect company to help spin their trash into gold: Kinsei Sangyo of Japan had advertised garbage-gassing units so clean and so green that only wisps of what looks like water vapor float from the stacks. Cleveland would be the first city in the U.S. to showcase the Kinsei technology — a new toy to wave in front of jealous neighbors.
So Cleveland Public Power called the only company licensed to sell Kinsei units in the U.S.: Princeton Environmental Group, based in New Jersey and headed by a man named Peter Tien. He made wonderful promises: a $180 million gasification plant would employ 90 to 120 Clevelanders. A Kinsei manufacturing facility would be built here, and Cleveland would become an epicenter for plant design and manufacturing across the country.
In order to witness the gasification majesty in action, the city paid for a junket to Asia in August 2009. For Tien, the trip marked the ideal opportunity to trot out another enviro-happy sales pitch: Could your fine city use some LED light bulbs too?
Tien, it turned out, also represented Chinese LED maker Sunpu Opto Semiconductor — and did he have a deal for Cleveland: For the low price of 10 years' worth of LED bulbs, Sunpu would build an LED factory on our shores, complete with 350 new jobs.
With visions of trash and light-bulb supremacy dancing in their heads, city officials delightedly forged ahead with Sunpu Opto. East Cleveland-based GE, which happens to specialize in light bulbs, was not as delighted. Neither were other U.S. LED companies, who were curious why they never had a shot at such a contract.
Outrage ensued, the city asked for contract bids, and in the end, Sunpu Opto didn't even try to compete — the company couldn't live up to the promises Tien had said it would. Neither could GE or anyone else, for that matter.
Yet in the midst of Cleveland's Great LED Fiasco of 2010, city leaders signed a $1.5 million no-bid contract with Tien's Princeton Environmental for preliminary designs and an EPA permit for a Kinsei gasification plant. The money is held in an escrow account, and Tien earns his cut once the EPA permit is approved.
But if the LED incident wasn't enough to sprout doubt about Tien's promises, recent gasification dealings should.
Scene obtained a string of e-mails between Cleveland Public Power and Tien indicating that trouble started last spring. Not only did Tien ask for a contract modification allowing him more time to produce the required design reports; he requested a $600,000 advance on his $1.5 million so he could pay his subcontractors.
"Transparency of process with a clear and well-developed timeline and milestones is what I need from you in order to remain confident of your ability to deliver on the contract," CPP Commissioner Ivan Henderson replied to one such request from Tien in April.
The city didn't hand over the cash, but it did extend Tien's deadlines. Now, with the EPA permit en route to approval, the city and CPP seem to have cooled to Tien's advances.
Henderson says the city's contract with Tien expires at the end of the year. And he knows that Tien wants to be the one to bring a gasifier here. "So would a lot of people," is his quick response. "We will put the project out for bids, and if he would like to bid, that's fine."
But if the EPA permit is approved and a gasifier company other than Kinsei is chosen, Tien walks away with a cool $1.5 million for his three-year affair with Cleveland, and the city will be left holding a pile of recommendations and a worthless EPA permit. (The city of Cleveland did not respond to Scene's requests for an interview with Mayor Frank Jackson for this story.)
Meanwhile, environmental groups have grown increasingly concerned that Cleveland is getting gassed in the deal.
"The city has gotten itself into this one company, this one technology. Why?" asks Sandy Buchanan, executive director of Ohio Citizen Action, a pollution watchdog group. "There are hundreds of technologies out there."
THE ANSWER MAN
Clevelanders have been scratching their heads over where the cash-strapped city will get the $180 million Tien has estimated it will take to build a gasification plant on Ridge Road.
Tien is quick with a plan. Only problem: His idea will cost more. Tien says he's negotiated a $300 million financing package if the city chooses a Kinsei plant.
"The city now has an option instead of using taxpayer dollars," says the sixtyish Tien, a Taiwanese transplant who ventured to California in 1972 armed with an engineering degree from back home. Most of those millions will pour into the local economy, creating construction and manufacturing jobs, he says. Not only that: The package includes $28 million for new garbage trucks the city would need to increase curbside recycling efforts to 100 percent.
"People ask, 'Where will the money come from?' Investment trusts," Tien says with a quickness that seems inherent to his Asian accent. But he declines to name them. "It's taken us seven years to get this far. Why would I tell anyone else how to do it?" For now, he'll say only that those involved include major financial institutions looking for a long-term opportunity outside the stock market.
According to Tien, the investment trust money will pay for everything, and the city will lease the plant for 25 years. He estimates Cleveland could profit $1 to $2 million a year on recyclables and fuel pellets and decorative bricks. While the city currently pays about $65 a ton to process trash and dump it in a landfill, Kinsei gasification will cost only $26 a ton, he says.
How much will the city's lease cost? "I don't know," Tien responds. But the fringe benefits would seem to cover any expenses.
In a slide presentation before city council in February, Tien listed among Cleveland's rewards not only the Kinsei parts manufacturing facility that would be built here, but an assurance that 14 related companies would set up shop here as a result.
Nine months later, the new Kinsei manufacturing plant has fallen out of the conversation; Tien now says Kinsei's parts will be made by existing local companies. He's also grown sketchy on details of the 14 other companies eager to move here.
"We are working with Honeywell; they will move here — we want them to," he says. "We will tell them if [they] want to work with us on this project, come to Cleveland and make it their regional headquarters."
But Tien stops short of actually naming a second — or 14th — company. "We will ask the same for people who make gasifiers, turbines, and civil engineers. Then using this project," he says, "we've created a whole new industry for the city of Cleveland" — an industry that will serve other U.S. cities that Tien claims will follow our lead.
"I'm working with three major cities now, and they will be contracted by the end of next year," he says. And which cities might those be?
"They are among the top 10 U.S. cities," is all he will say.
As for the EPA permit he submitted on the city's behalf, Tien is unable to stifle his enthusiasm: "The EPA permit has been approved!"
And with it rides his $1.5 million payday.
