State law is emphatic that only “qualified providers” may offer guaranteed utility savings contracts to New Mexico cities. Qualified Providers are ones who have applied to and been certified as such by the New Mexico State Energy, Mineral and Natural Resources Department. Dalkia, who Santa Fe engaged to upgrade its streetlights, is not a qualified provider and has apparently never sought to become one.
Is Dalkia a Qualified Provider for Guaranteed Utility Savings Contracts?
Almost every section of NM Stat §6-23-1 to -10 that governs when and how cities may enter into guaranteed utility savings contracts emphasizes that the contract must be with a “qualified provider.” What is a “qualified provider?”
NM Stat §6-23-2 defines a “qualified provider” as one “experienced in the design, implementation and installation of energy or water conservation measures and who meets the experience qualifications developed by the energy, minerals and natural resources department for energy conservation measures or the office of the state engineer for water conservation measures.”
NM Stat §6-23-5, entitled “Contract approval required”, reads in part that contract approval requires “certification by the energy, minerals and natural resources department that the qualified provider of energy conservation measures meets the experience requirements set by the department…”
We asked EMNRD how a company, like Dalkia, gains certification as a qualified provider. In response we were informed that there are three paths.
- One path requires responding to a periodic RFP issued by EMNRD. If the application is approved, EMNRD places the company on the state’s price agreement. Any municipality can then engage with the contractor without issuing an RFP and secure in the knowledge that the provider has been certified as a qualified provider.
- A second path may be followed if the company is selected by a municipality, like Santa Fe, in response to the municipality’s own RFP. In this case, the company is obligated to send its qualifications to EMNRD for review and approval before beginning the project’s investment grade audit.
- The third path to qualification is to be on the federal GSA agreement to conduct energy savings performance contracts.
Dalkia is not on the state’s price agreement. An IPRA filed with EMNRD requested copies of any certifications made by ENMRD that Dalkia is a qualified provider in the meaning of NM Stat §6-23-5, either generally or specifically for the Santa Fe project, or for the Albuquerque project. EMNRD responded that, following a search of their records, they “do not have any records of Dalkia LLC being certified as a qualified provided” by EMNRD. Finally, Dalkia is also not listed does not have a federal GSA agreement. [The same failure to having ever been certified applies to Citelum, who had the original contract with Albuquerque.]
City of Santa Fe IPRA request #21-6326 asked for copies of any communications between Santa Fe and the City of Albuquerque or any state agency regarding Dalkia and its qualifications as a provider of energy conservation measures. The City of Santa Fe was unable to provide any relevant records. [A similar IPRA filed with the City of Albuquerque November 2021 has not yet been responded to; however, as already mentioned EMNRD reports that neither Dalkia nor Citelum (the original City of Albuquerque contractor) were ever certified as qualified providers, either for New Mexico generally or for the City of Albuquerque or City of Santa Fe projects specifically.]
Correspondingly, we are led to conclude that Dalkia is not a qualified provider under state law. That being so, they should not have been allowed by the City to begin work on the street lighting project.
As a final comment, we note that if Dalkia was competent – in terms of experience, or knowledge, or business ethics – to act as a qualified provider in New Mexico, one would expect they would be aware of and follow state law governing the contracts they offer.
Dalkia had a responsibility under the law, which it shirked. It was required to seek certification as a qualified provider by the Energy, Mineral and Natural Resources Department before beginning work on the Santa Fe contract (or the Albuquerque contract before that). Dalkia has apparently either ignored the law or – equally concerning but in a different way – was unaware of the law. Either explanation ought have disqualified Dalkia as a partner for any city project, let alone a major one with significant financial and public safety implications like the streetlight upgrade.
Santa Fe also had a responsibility to vet the company it decided to enter into a contract with. In IPRA #21-2871 we asked Santa Fe to provide any and all records showing a careful and/or critical analysis of either Dalkia or Citelum as a vendor for the City of Santa Fe. In return we received the Dalkia proposal to the City of Santa Fe, the memo presented by Public Works Director Wheeler, which vastly overstated the cost savings associated with the streetlight project, the RFP that Albuquerque used to solicit bids for its streetlight project, a letter from Dalkia extended the same terms to Santa Fe that Citelum offered to Albuquerque, and a copy of the letter from Dalkia to the City of Albuquerque informing them that the re-assignment of Albuquerque’s Citelum contract to Dalkia had been finalized. None of these things show any investigation of Dalkia, or Citelum, as reliable vendors for Santa Fe.
The City officers that would have been expected to do that vetting – the Public Works Director Wheeler and City Attorney McSherry – appear to have failed to do even the minimum required of them by their positions. They are each Mayor Webber’s personal choices for those positions; furthermore, the current city charter, they are responsible solely to him. Thus, Mayor Webber bears primary responsibility for the failures described here, and in the related failures associated with the city’s contract with Dalkia:
- Entering into a general utility savings contract with a contractor, Dalkia, that is not certified by the state to offer such contracts;
- Failing to seek and gain the approval of the Dalkia contract by the Energy, Mineral and Natural Resources Department;
- Failing to require Dalkia to properly secure the energy savings promised under the contract; and,
- Misleading the councilors on the projects energy savings and the city’s ability to pay-off the financing.
Each of these failures places city taxpayers at real financial risk. Each draws into question the competency of Mayor Webber and his appointees. Each raises concern about the physical safety risk involved in lighting installed, adjusted, and maintained by a contractor that either does not meet state standards, is ignorant of state law, or is comfortable ignoring state law. Each raises concerns about other lapses in judgement related to city finances and the larger public trust, in this and other city projects and business.
While Mayor Webber bears ultimately responsibility, the role of the city councilors should not escape scrutiny. City committees – particularly the Public Works and Utilities Committee and the Finance Committee – had an oversight responsibility for the Dalkia contract and Sterling National Bank loan. In fairness, their ability to exercise that oversight responsibility is hampered by the “strong mayor” charter amendment approved by voters in 2014. That system made all city staff responsible to the mayor alone. Perhaps not recognized by the drafters and advocates of that amendment (which include Councilor Romero-Wirth) was that – at least on paper – the amendment robbed the councilors and the council oversight committees of the authority necessary to exercise their oversight responsibilities. Working together the councilors can still demand accountability by withholding approval of the Mayor’s “proposals” until they are satisfied. Perhaps not surprisingly, the power of a “strong mayor” may be an aphrodisiac to some and even when not, the control a strong mayor can exert over city departments in response to constituent requests of their councilors (“you want that pothole filled?”) can be very persuasive. This is especially the case when the City Attorney advises City Staff, as City Attorney McSherry has, that they may ignore or respond to requests of the councilors or city committees at their discretion.
The budgeting and financial planning, and the absence of the required financial guarantee backing the promised energy savings, may have larger repercussions for city taxpayers. The city has, no doubt, planned in anticipation of savings that will not materialize. What city services will be cut to make-up for that deficit? What are the implications of this mismanagement for the Sterling National Bank loan: did the city provide incorrect information about its resources when applying for the loan? Similarly, what are the implications for the city’s bond rating, which affects the city’s ability to issue bonds and seek other loans at favorable rates? How will these oversights be viewed bythe State Auditor, who has already expressed serious concerns with the city’s audit reports?
Ultimately, however, in Santa Fe’s “strong-mayor”/CEO style city government, responsibility rests with the Mayor. And, regrettably, the careless and reckless disregard of law and community interest that has characterized the Mayor’s handling of the streetlight upgrade is representative of a now long and well-established pattern. That first example of that pattern took place immediately following his 2018 inauguration, when he sought to circumvent city law in awarding raises to select employees without approval by the City Council. It showed itself in his gross mismanagement of the long-standing controversy and concern over the Plaza obelisk and the de Vargas statue. It includes his botched planning for the “mid-town campus.” It includes promoting and hiring for the “CHART” process a facilitator who misrepresented her heritage and was opposed leaders of the communities that the process is supposed to bring together. And, it shows in his eagerness to reward his political supporters and cronies with lucrative senior staff positions. And, it has been recognized – finally – by the State Auditor in connection with the failure or inability of the Mayor’s hand-picked staff to be able to reconcile its cash accounts, and – for every year of his administration – prepare an even close to on-time annual audit of the Santa Fe’s finances.
We’ve provided what we believe to be a factual and well-documented discussion of what the law appears to require and where the city –and Dalkia – have fallen short. Write your Councilors and ask them to provide an equally factual and well-documented discussion either confirming or disputing the statements made here: in particular
- Is Dalkia a Qualified Provider of Guaranteed Utility Savings Contracts under New Mexico Law?
- If not, why did Santa Fe fail to follow state law, whose purpose is to protect the city’s residents and taxpayers, and
- What are the city councilors going to do to address the problems created by the Mayor and his appointees?
Get the word out! Share this blog with everyone you think might be interested in responsible city government.
The city and area news media have a role to play here as well. Contact the New Mexican, the Santa Fe Reporter, Searchlight New Mexico, KRQE TV and KSFR radio news, and other local radio and TV news outlets and urge them to provide their own, independent reporting on the issues raised here. City Attorney McSherry has famously stated that the City Attorney’s office does not answer or otherwise respond to city or area resident questions or complaints: perhaps the City Attorney’s office will respond to questions from one of these news outlets. Insist that area newspapers, radio, and TV stations not take the Mayor or other City Staff “at their word:” fact-check them. If they are being honest the independent assurance is good to have; if they are not, they need to be held accountable.
Contact the Office of the State Auditor. City government has a fundamental responsibility to be effective stewards of the taxpayers’ money. The State Auditor’s office is responsible for holding local (as well as state) government and elected officials accountable in the use of public funds.
Contact the Office of the Attorney General and ask that they investigate whether Dalkia is operating in the state of New Mexico legally, as well as what are apparently multiple violations of state law associated with the Santa Fe’s entering into the Dalkia contract.