Yesterday I had a few moments of energy, and caught up with Civil Beat’s June 6 story by Mike Levine on tensions between the City Council and mayor over the direction of sewage processing (“Will Honolulu Council Give Back Mayor’s Sewage Construction Money?“).

The mayor is trying to move forward to fund an additional sewage digester at the Sand Island Sewage Treatment Plant. The original design-build-operate contracts were awarded to Synagro in May 2002, following a 1995 consent decree with the EPA., and the administration wants the proposed $24+ million contract to stay with the same vendor. The facility processes sewage sludge into biosolid fertilizer pellets.

There has been unhappiness among council members for years over problems with the Synagro facility. There are lingering environmental concerns prompted by problems in some mainland areas, and an August 2008 city audit of the Synagro contract detailed initial construction cost overruns resulting from delays and change orders. Council members have also complained the company has failed to develop a promised market for the fertilizer pellets, which were supposed to provide an income stream back to the city.

Levine reported the funding for the contract was restored to the budget at the last minute, subject to a proviso that the administration demonstrates its cost-effectiveness compared to a rival process being pushed by another company, HRP 56, LLC.

I came away from the story wondering about the two companies, the players behind them, etc.

The only Synagro entity registered to do business in Hawaii appears to be Synagro-WWT, Inc. It seems to be a subsidiary of Synagro, which describes itself as “the largest recycler of organic by-products in the United States.”

It turns out Synagro was taken over by The Carlyle Group back in 2007, according to a proxy statement filed with the SEC at the time. Remember Carlyle? They’re the politically well-connected group that bought Hawaiian Tel from Verizon, loaded it up with debt, and ran it into bankruptcy.

There’s a tangle of Carlyle entities involved in Synagro’s ownership structure, according to that proxy statement.

At the effective time of the merger, Parent will be owned by Carlyle Grey Partners, L.P., CIP Direct Partnership, L.P., CIP Grey Partnership, L.P. and CIP Coinvestment, L.P., which we collectively refer to as the “Carlyle Owners.” The Carlyle Owners are managed by and act through their general partner, Carlyle Infrastructure General Partner, L.P., which we refer to as the “General Partner.” The General Partner’s sole general partner is TC Group Infrastructure, L.L.C., the sole member of which is TC Group, L.L.C. The managing member of TC Group, L.L.C. is TCG Holdings, L.L.C. Each of the Carlyle Owners and the General Partner is a Delaware limited partnership, and each of TC Group Infrastructure, L.L.C., TC Group, L.L.C. and TCG Holdings, L.L.C. is a Delaware limited liability company. The Carlyle Owners are a part of The Carlyle Group, which we refer to as “Carlyle,” one of the world’s largest private equity firms.

Interestingly, Synergo doesn’t appear to have a lobbyist registered with the Honolulu Ethics Commission, so just who is representing the company in the political infighting isn’t clear from this vantage point.

HRP 56, LLP was registered to do business in Hawaii in February 2011. It’s sole registered member is Valentine Peroff Jr, president/director of Steeltech Inc., a Hawaii general contractor. City documents show Steeltech is the contractor that would build the new facility of HRP 56’s technology were to be selected selected.

State business registration records also list Peroff as officer or agent for a number of other companies, including president of KCOM, a real estate developer, which has had a long list of trade names over the years, now expired.

HONOKOWAI MARKETPLACE
HONOKOWAI MARKETPLACE SHOPPING CENTER
HONOKOWAI SHOPPING CENTER
KIHEI BUSINESS RECORDS CENTER
KIHEI COLD STORAGE AND DISTRIBUTION CENTER
KIHEI MINI STORAGE
KIHEI SELF STORAGE CENTER
LIHUE BUSINESS CENTER
LIHUE GATEWAY
LIHUE MINI-STORAGE
LIHUE SELF-STORAGE
LIHUE STORAGE CENTER
LIHUE TOWN CENTER
LIHUE TOWN CENTER ANNEX

Peroff is also the principal in NANI KAHUKU AINA LLC, which has proposed running with the former Hawaiian Riveira project in Kau once planned by Charles Chidiac.

According to the Environment Hawaii newsletter’s September 2011 issue:

Now Peroff’s Nani Kahuku `Aina is proposing a new development, called Kahuku Village, for the area, much of which consists of barren, `a`a lava. Near the Mamalahoa Highway (the Hawai`i Belt Road), on the mauka portion of the land, the developer has promised to dedicate 125 acres to state and county agencies for “civic facilities,” which could include an elementary school, park, police and fire stations, and an emergency medical facility. Near the ocean will be a mixed-use village on 1,600 acres. Included in the development are 1,050 residential units, two hotels with a total of 600 units, a golf course, commercial area, and a 500-acre “Hawaiian Heritage Center” that “will be empowered to steward and preserve the site’s many resources.” The developer anticipates the project cost will exceed $1 billion.

Real estate records show HRP 56 bought the former Hawaii Raceway Park site at the end of 2011, relying on seller financing from AG/CW Raceway Owner II LLC, controlled by Angelo, Gordon Advisors LLC, a New York hedge fund sponsor. Peroff also has ties to the Weinberg Foundation.

Of course, it isn’t clear how these many interests are related to the HRP 56 sewage processing proposal at the city, or who is doing what to whom for what political reasons, but it’s all potentially part of understanding the story, and a starting point for future reporting.