Message-ID: <28568978.1075853530901.JavaMail.evans@thyme>
Date: Mon, 11 Jun 2001 08:26:00 -0700 (PDT)
From: greg.krause@enron.com
To: ben.jacoby@enron.com
Subject: Certosa Holdings issues
Cc: kay.mann@enron.com
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Ben,

I know you want to put Certosa Holdings on the back burner for a while but 
unfortunately we can't stop the process unless we withdrawal our request for 
unusual use permit.   If we do so, we can not re-submit for 18 months.   
Since the application was submitted in the name of Certosa Holdings, if the 
property is conveyed to another entity, it may be possible to re-submit under 
this new entity.  I've asked Kay to look into the possibility if throwing 
Certosa Holdings into bankruptcy.  I have not heard back but here are my 
thoughts:
 (1) We are not a creditor and therefore we may not have the ability to put 
CH in bankruptcy
 (2) If we can deem CH in default of the option agreement,  one of the 
remedies is reimbursement.  Since CH is illiquid, we would automatically be a 
creditor with the       ability to throw them into bankruptcy
 (3) Once in bankruptcy, I don't know what would happen.  There are no 
secured creditors and we would be the only unsecured creditor.  
 (4) Whether bankruptcy would halt the unusual use permit approval process or 
not, I do not know. 
Until we determine if bankruptcy helps, us we have no choice but to proceed.

I estimate the burn rate will be between $50,000 and $60,000 per month 
through October.  This is broken down into four types of costs:
 (a) lobbyists: $17,000 per month from June through October plus $210,000 in 
success fees if we get project approval from the commissioners.
 (b) yet to be negotiated option consideration:  $20k to $35k to Certosa 
Holdings as well as an adjacent property owner looking for a buyout
 (c) land fill closure related activities: $35,000 (ground water testing, 
fencing the property and funding assistance to get $800,000 of bond money 
released to reimburse       closure costs)
 (d) Consultants and lawyers: $23,000 per month

  
As you know we are now out of the jurisdiction of the CZAB and in the 
jurisdiction of the Board of County Commissioners.  Below is a summary of 
where we are and where we need to go.  Please let me know when you have a few 
minutes to discuss this project.

Renew or New Option Agreement:
We need to renegotiate the Option Agreement with Certosa Holdings:  Rather 
than giving CH a chunk of money that could disappear immediately, I'd like to 
structure an arrangement where we fund, as long as the Option Agreement is in 
effect (we don't terminate before expiration), some landfill closure work.  
This benefits both Enron and CH as DERM will be more amenable to amending the 
Consent Agreement that sets out the time table of closure if they can see 
some progress.  I an trying to get with Kay to discuss alternatives.  We need 
to be aware that CH could file bankruptcy sooner or later.  I checked the 
Option Agreement and unlike some of the other agreements, this one does not 
appear to have bankruptcy as a default.  If we have to give CH anything I 
would want to give him only a nominal amount of money;  $25k max

Option on adjacent property:
As referenced above, we (Kerri) have been contacted  by an attorney 
representing a property owner adjacent to the CH site who may be looking for 
a buy out.  The property is wetlands and should be relatively cheap 
considering it is useless.

Unusual Use Permit Application and Claim of Taking:
We expect to present the project and argue the taking issue before the 
Development of Impact Committee ("DIC") in July.  This is a committee of 
County Department heads.  They will make a recommendation to the Board of 
County Commissioners who will hear the merits of the project and decide on 
whether to approve the project.  Only if they reject the project does the 
taking issue come into play.  I will work to target the Board of County 
Commissioners hearing for October.  

You are aware of the ordinance we propose to discuss with the Commissioners.  
I'd like to talk to you about this when you have time. 

DERM (Department of Environmental Resource Management) issues:
When we executed this option agreement, we fully expected CH to have closed 
the landfill by now.  Obviously things have changed.  

We (Kerri, Valorie Settles of Shutts & Bowen and I) met DERM last week.  DERM 
is willing to consider revising the Consent Agreement and the schedule of 
closing the landfill.  We discussed creating a 3 phase closure.  the first 
phase would be the easy (cheap) stuff as discussed above.  The second phase 
would be more expensive and may include removal of a pile of wood for $171k 
and or removal of exotics from the wetlands for $83k.  The second phase would 
be times to occur after we received County Commissioners approval for the 
Unusual Use Permit.  The third phase would be the very expensive stuff ($ 
millions) and would be timed to be when we expect to exercise the option.

Consultant Agreements for Lobbyists:
We have been working with one lobbyist, whose contract expired at the end of 
May.  Another, a former chief of staff of the commissionwer whose district 
the project is in, publishes a newspaper called the Gospel Truth, which 
recently published an article about the project and the need for power