UPDATE: Neumann Systems Group's Denver attorneys have issued a letter to Tim Leigh demanding he stop passing out wrong information about the company and that he retract his earlier statements. Here's the letter:
Dear Mr. Leigh:
My firm, along with Krendl Krendl Sachnoff & Way, P.C., represent Neumann Systems Group, Inc. (“NSG”). I am writing in response to the libelous statements in your company’s “Weekend Market Report” (the “Report”), which our client received earlier this week.
In the Report, you and your company (Hoff & Leigh) raised a number of “questions” about NSG and its business and compared Mr. Neumann, NSG’s CEO, to Harold Hill, the notorious con man in the “Music Man.” You further stated that CSU extended money for the contract to NSG for the “Neumann Scrubber System” on “the wings of hope & prayer.” These statements are false and libelous.
You and your company clearly have had access to the many public documents that address the questions you raise. In your other roles as City Councilperson and Board member for the $1.1B CSU municipal utility, you have access to much more detailed information about the “questions” to which you imply you are lacking answers. It is disturbing that you have chosen, in the Report, to raise so many questions to which you have already have the answers and therefore imply the organizations responsible are not doing their job. In addition, you and your company seem intent on reporting other inaccurate information which casts aspersions on our client and his company. In short, you have no reason to believe that our client is a con man and no reason to believe that CSU extended this contract on “the wings of hope & prayer”.
Accordingly, we demand that you immediately cease making the aforementioned libelous statements and issue a retraction of the Report. Our client will stand on the truth but will not be intimidated by deliberate lies.
Joel S. Neckers, Esq.
Cathy Krendl, Esq.
City councilman Tim Leigh is blithering about a pollution-control technology and other Colorado Springs Utilities matters by citing incorrect figures and inflammatory language. You know, Leigh is being Leigh.
But when he chooses to mislead on something as important as compliance with environmental regulations or millions of dollars in ratepayer investment, someone needs to set the record straight.
Don't count on the local daily newspaper, which simply posted Leigh's erroneous blather in a blog with no vetting whatsoever.
In his so-called "market report," Leigh likens Neumann Systems Group's emissions control equipment that's in the process of being installed on the downtown Drake Power Plant to Professor Harold Hill, the con man in the Broadway musical, The Music Man. Hill's ploy is to collect money in advance for musical instruments and uniforms and skip town before he has to actually teach the kids to play. When he lingers and is forced to teach them, he devises the "think system" of urging them to play simply by thinking about it.
In his newsletter Leigh says: "In reality, the Neumann System is not without risk. The system has never been proven to work on the currently planned scale. Recall the admonition from Professor Harold Hill trying to get his throng of adolescent musicians to play never before played musical instruments, 'think boys; think!'"
He then quotes wrong figures for Neumann Systems and raises questions, such as whether the city could simply ignore EPA regulations for emissions control. Right. That usually works out fine.
In an interview this morning, president Dave Neumann and Rob Fredell, Neumann's vice president of development, discredit Leigh's assertions.
"We're not selling musical instruments and skipping town," Fredell says. "It’s not very fair to talk like that."
In fact, the $30 million that Springs Utilities committed this year to the Neumann project was approved by the current City Council, who acts as the Utilities Board, which included Tim Leigh, making Leigh's question of who approved the R&D project more than outrageous. Everyone knows the Utilities Board approved it several years ago and every board since then has done likewise, including the current one on which Leigh sits.
Moreover, the Neumann deal is much better than any other available. Not only will the city pay tens of millions of dollars less for the technology, but it also stands to gain a cut of the action if and when the technology becomes widespread and lucrative, not to mention all the manufacturing jobs the new system will create locally. Neumann is marketing to 50 companies nationwide who are standing by to sign contracts based on the technology's performance at Drake. And by the way, three years of exhaustive testing has shown the technology to be sound.
No surprise considering Neumann has worked on some of the most sophisticated laser systems the nation possesses during his Air Force career.
"Money has been appropriated in the last three CSU budgets," Neumann says. "This is all public. The work that was done in validating the technology and leading up to the contract has all been presented to the board. They’ve all had time to read and digest this. They, the new board, agreed to the $30 million appropriation for this year. We’ve got lots of money that has been spent, more than $40 million, and the equipment is arriving at Drake today. What are they going to tell the ratepayers?"
Here are some points on which Leigh is flat-out wrong:
Leigh: The Neumann technology will cost
$240,000 $240 million.
Fact: The technology will cost about $112,000 for Drake and between $75 million and $85 million for Nixon Power Plan. Total cost: Less than $200 million.
Leigh: The Nixon solution is priced at $120 million.
Fact: $75 million to $85 million.
Leigh: "Can we renegotiate a better deal now that we know more about the product? Can we renegotiate a better deal that rewards us for the risk? Can we get at least a 50/50 share of profits?"
Fact: "He’s a real estate guy," Fredell says. "He knows a contract is a contract. This was done in the light of day, not in some dark room, and it’s disingenuous to suggest that just because he’s decided to raise this issue, he should come back and get a better deal."
Leigh seems to be stirring the waters to improve Mayor Steve Bach's chances of getting Drake moved from downtown to make way for a sports stadium. According to legal billings obtained by the Independent, the City Attorney's Office retained Hogan Lovells lawfirm to study such a prospect and paid for consult with Craig Umbaugh in January. Umbaugh has worked on nearly every major professional team and its facilities in the Denver area. Here's part of what the Hogan Lovells website says about him:
Craig Umbaugh focuses his practice in the areas of governmental and legislative law, finance, sports and sports facilities law, and banking and commercial transactions. Craig works with public entities and private clients advising them on issues such as urban redevelopment, negotiation of governmental agreements, elections, financing, construction, design, operation of stadiums and public venues, and the acquisition or relocation of teams. Craig serves as general counsel to the Denver Urban Renewal Authority, the Metropolitan Football Stadium District, the Denver Metropolitan Major League Baseball Stadium District, and The Colorado Bankers Association. He has extensive experience in drafting legislation and counseling clients with respect to state legislative issues. He has advised various clients on election matters, including the conduct of elections, campaign finance reporting, ballot titles, and initiatives and referenda.
It doesn't take a Columbo to decipher what Bach has in mind. He's called not only for the removal of Drake, but also for the sale of the electric utility. Cha ching! Money to pay for the stadium.
When all of the attendant businesses flock to the stadium zone, if they do, who might be there to help them with their real estate deals? Gee. Could it be commercial real estate broker Tim Leigh?
Bach, who has no authority over Utilities policy, persuaded the Utilities Board to spend money on a study of moving or decommissioning Drake, which provides a quarter of the city's power producing capacity.
Today, the Utilities Board will discuss the impact that decision will have on Neumann's plan to install the emissions technology on Drake. Neumann believes in his technology. He's spent a good portion of his professional life creating it. He's ready to debate the ups and downs of adding the technology to Drake, even if for a limited time until another source of power is developed, or installing it at Nixon where additional costs will be necessary to retrofit it there, or scrapping it altogether. (The city does have a "termination for convenience" clause in its contract.)
But Neumann isn't ready to deal with someone who can't get their facts straight, and seems to intentionally want to inflame the public.
"The community at large doesn’t have all the information," Neumann says. They don’t study the budget’s strategic plan for CSU. They don’t study the integrated resource plan. So by throwing this out in the way that he does, he creates an environment that causes people to lose confidence in Council and CSU and their ability to run a $1-billion-a-year corporation."
Here's Neumann's recent letter to City Council.
We called Leigh but haven't heard back. We'll update when we do. We'll also update after this afternoon's Utilities Board meeting.