'Setup for failure': How fortunes dimmed for Sunnyland, a company under FBI scrutiny (UPDATE)

Jeffrey Schweers | Tallahassee Democrat

The solar balloons are gone, along with the deflated dreams of Florida State University scientists who invented the mechanism to produce cheap solar energy for the city of Tallahassee.

The solar energy startup — fueled by millions of dollars in federal and state loans and tax credits — was built by several prominent business people named in an FBI investigation of the Tallahassee Community Redevelopment Agency.

At the time it was announced six years ago, the project was met with much fanfare from local officials and civic leaders as a source of cutting-edge renewable energy. But massive equipment damage about two years in stalled the project indefinitely and led to a lawsuit pitting John "J.T." Burnette against longtime business partner Chad Kittrell.

All that remains are the wooden frames from which power-generating “solar sausages” once hung at the three project locations — including a 10-acre plot at Innovation Park and a 23-acre parcel in Madison County.

“All the sites are empty today, but in the day they were populated with 50 foot long balloons all of the time,” said Sean Barton, lead scientist on the project and co-inventor of the solar sausages. “It’s amazing how time takes its toll. It’s heartbreaking. It was once full of balloons and optimism.”

The FBI-led probe is seeking records going back five years. The subpoena demands emails to and from commissioners, their voting records on specific projects as well as money paid to them.

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Several of them are responsible for high-profile developments that helped reshape downtown Tallahassee — including the Hotel Duval, the Gateway Center and the DoubleTree. They've also received millions in local tax dollars for some of those projects.

Burnette and Kittrell under two separate companies qualified for state economic incentives totaling $2.325 million.

They have not offered comments about the FBI investigation. Burnette did not return a call seeking information about the solar energy project. When reached by phone, a third partner who helped construct the solar equipment, Frank Whitley said he didn't have time to answer questions about Sunnyland.

Sources say all have obtained legal counsel.

Solar Startup

Burnette created Sunnyland Solar and Kittrell created SolarSink to work on a solar energy startup using prototype technology developed by Barton when he was a graduate student and co-inventor Ian Winger, an associate instructor and research assistant who retired from FSU in 2016.

Winger received $15,000 from FSU's Office of Commercialization in 2009 to help complete the prototype and get the technology closer to becoming a money-making product -- before Sunnyland and Solarsink got involved.

Sunnyland and SolarSink applied separately to the Governor's Office of Tourism, Trade and Economic Development, which has since been disbanded and absorbed by the Department of Economic Opportunity.

Their applications were approved in November of 2010.

Burnette’s company qualified to receive $175,000 in Qualified Target Industry tax credits, which required a local match of $35,000 split evenly between the city and county. To get the money, they had to create 35 jobs with an annual average income of $42,000 and invest $25 million in capital development in Tallahassee and Leon County.

Kittrell’s company qualified for $150,000 in Qualified Target Industry tax credits with a 20 percent local match for 30 jobs at $42,000 a year and $25 million in capital investment locally.

Each company also qualified for $1 million in High Impact Performance Incentive grants, which don’t require a local match. In January 2011, they each received an initial payment of $500,000 for meeting startup criteria of creating 10 new jobs and building a site in Leon County with a minimum $5 million investment.

SolarSink bought a building on five acres on Yulee Road in January 2011 for $1.86 million from the Florida Community New Markets Fund V, according to Leon County records. Florida New Markets Funds V is a subsidiary of Florida Community Loan Fund, a nonprofit corporation set up to administer federal tax credit and loan programs established under the Community Development Financial Institutions Fund, which was set up to bring jobs to low-income communities.

According to the FLCF website, SolarSink qualified for $12.5 million in New Market Tax Credits and $11.9 million in Qualified Low-Income Community Investment money.

The project described was a heat sink and solar array on a five-acre site using technology developed at FSU

"This project is in a highly distressed census tract with 49% poverty rate and will provide 51 temporary and 14 permanent jobs," the project website said.

Financing came from "NMTC credits from the State of Florida, a federal Energy Grant, and funding from Stonehenge Capital Funding, US Bank CDC, and others," the site said

Sunnyland bought a warehouse on 3 acres on Plant Road in August 2011 for $1.6 million from 2830 Plant Street, a limited liability company owned by Burnette, according to county property appraiser records. The clerk's official records site shows no mortgage recorded.

In August 2011, Sunnyland leased 9.8 acres at Innovation Park from the Leon County Research and Development Authority for $7,000 a year for seven years. The lease was signed by Burnette and Kim Rivers, his longtime business partner with whom he runs Inkbridge, a "financial engineering company."

Rivers, Burnette's registered domestic partner since 2015, also is CEO of Trulieve, one of the state's first medical marijuana companies.

Last week, Rivers' representative told the Democrat that she was not an owner of Sunnyland. But in an email response to a question about her role in the lease with Innovation Park, she acknowledged she was originally an owner when Sunnyland was created but "ceased being an owner shortly after formation."

She said she has no current relationship to Sunnyland.

In July 2012, the Tallahassee Democrat reported that Rivers joined a delegation to travel to Tallahassee’s sister city in China "to seek potential manufacturing partners for components of the 'solar sausage' power generation apparatus." Rivers replied by email that she traveled to China on behalf of another company.

To sweeten the lease deal, Inkbridge agreed to pay $100,000 to the research and development authority. The agreement also was signed by Charles Frazier, managing member of Solar Distributors of America, the company under which the 23-acre site in Madison County was purchased for $175,000.

Frazier also was a member of the Imagine Tallahassee steering committee. Imagine Tallahassee was founded by Rivers and Burnette. The nonprofit was created to make recommendations on how to spend the city/county Blueprint 2020 one-cent sales tax money.

Whitley Contracting, named in the FBI subpoena, was general contractor for the construction of the solar sausages. Frank Whitley is its president.

Deflated dreams

Over the next couple of years, Barton was science adviser to a team of engineers that built the solar farms. Barton labored over making sure the sausages stayed pumped full of air. The sausages are light-focusing balloons, and stormy weather and partly cloudy days wreaked havoc on them because they would heat up and cool down faster than the air outside, he said.

“I spent endless days on all of those sites,” Barton said, making adjustments to the exhaust and air replacement mechanisms.

Inflated, the balloons were durable enough for a man to sit on them, he said. Deflated, they shredded in the wind.

For the first two years he worked on the project, Barton was a paid graduate assistant at FSU who earned $40,000 the first year and $45,000 the second year. For another six months or so he billed Sunnyland $40 an hour for his consulting work on the project, he said.

His supervising major professor, FSU physics professor David Van Winkle, meanwhile, received $140,866 in grants from Sunnyland to pay for equipment, overhead and other costs.

He also received a $152,000 grant from the University of Florida and a matching $152,020 from Hunter and Harp, a company owned by Burnette and Kittrell for “Deployment of a Low Cost Concentrating Solar Energy System Using Solar Sausages.” Hunter and Harp, which bought and renovated the Hotel Duval, is among the businesses named in the federal subpoenas.

FSU received no outside state or federal grants for the project, said Gary Ostrander, the university's vice president for research.

Between July and December of 2012 several pumps at the Madison site failed, causing about 1,600 solar sausages to collapse.

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Whitley Contractors filed an insurance claim for $3.8 million — sparking a lawsuit that pitted Burnette against Kittrell and two other companies, HD Power Supply and Meeks and Sons.

Whitley and Burnette blamed the pump failure on the other three contractors, claiming SolarSink as project manager didn't provide proper supervision when equipment was installed.

In a separate federal lawsuit, Southern-Owners Insurance Company claimed it didn't have to cover the losses since there was a serious dispute about who was to blame.

All claims among the parties were dismissed without prejudice in October 2014.

The damage and subsequent lawsuit derailed the project, and Sunnyland and SolarSink failed to meet their contract requirements for the QTI program. Their contracts were terminated on Sept. 4, 2014, before any funds were paid, said Morgan McCord, press secretary for the Department of Economic Development.

The companies also failed to meet performance requirements for the second HIPI payment, McCord said. On Sept. 23, 2016, “their incentive contracts were terminated and they are not eligible for any remaining funds,” she said.

Because they met their eligibility requirements for the first installment, they get to keep the first $1 million payment, she said.

"Since Governor Scott took office, the DEO has reformed the incentive process to include strict accountability measures," McCord said into an email. "These highly accountable contracts require companies to meet job creation requirements before receiving payments and maintain jobs in order to retain previously awarded incentive funds."

Kittrell is no longer listed as an officer of SolarSink.

State records show Sunnyland Solar spent $6 million and SolarSink spent $8 million for a combined $14 million -- far less than the amount they supposedly received.

The risk of 'pushing the limits'

After the lawsuit, things "fizzled out," Van Winkle said. And it hasn’t gone anywhere since.

The sausages were conceived as a cheaper way to produce solar energy, he said. It's still viable technology, and another FSU professor has picked up the project.

But technical problems and a plummeting cost in solar panels conspired against the success of the solar sausage farms, Van Winkle said.

"These kind of things happen in pushing the limits of technology," he said.

It didn't help that Burnette and team were neophytes at converting a scientific prototype into a viable commercial product.

"They were used to developing properties," Van Winkle said. "Going from a research project to a product without a significant development phase is a setup for failure."

EDITOR'S NOTE: This story was updated at 9 p.m. with major new financial information.

Contact Schweers at jschweers@tallahassee.com. Follow him on Twitter @jeffschweers.