Monorail officials resurface, jump into biodiesel project

Less than a year after Seattle's monorail project imploded, some of its key players are turning their attention to a new enterprise — making biodiesel.

A Seattle-based company, Washington Biodiesel, is planning to build a biodiesel plant in the small Grant County farming town of Warden, south of Moses Lake, with the help of $2.5 million in public money from the recently passed state budget.

The president of Washington Biodiesel is Daniel Malarkey, an economist and former finance chief for the Seattle Monorail Project, which was killed by voters last fall after a financing plan revealed skyrocketing costs and a controversial funding scheme. The company's lobbyist is Kevin Raymond, the former government-affairs director for the monorail.

And Joel Horn, who resigned as the monorail project's executive director in the midst of the political uproar, is working part time as a consultant for Washington Biodiesel, said its vice president, Jeff Stephens. An official in Grant County said Horn has played a prominent role in the "nuts and bolts" of the biodiesel project.

"We're doing work on biodiesel here and that's what our focus is," Stephens said. "We're not associated with the monorail."

Washington Biodiesel has won enthusiastic support from some state and local leaders, who say it appears to have one of the biggest and best proposals they've seen in the state's fledgling biodiesel industry.

"It's a good company," said Tim Stearns, a senior energy-policy specialist for the state's Department of Community, Trade and Economic Development. "I don't think Washington Biodiesel should be tainted by the monorail and Joel and Joel's experience there."

Nonetheless, the failed monorail project still casts a shadow.

"It raises my eyebrows a little," said state Rep. Hans Dunshee, D-Snohomish, one of the legislators who put together a plan to use state money to jumpstart construction of biodiesel plants in Washington. He said he knew of Malarkey's involvement but not Horn's, until asked about it by a reporter Tuesday.

Neither Malarkey nor Horn was available for interviews Tuesday.

Washington Biodiesel's proposal was one of five on a list of biodiesel projects that will share $10.5 million in low-interest loans from the state to help build factories that crush canola seeds or other plants into oil that is then processed into fuel that runs in most diesel engines.

Dunshee said the rules for the loans were written to help prevent money being lost on speculative business plans. At least half of each project's funding has to come from private investors, and the state money goes to a public agency that works with those investors.

In the case of Washington Biodiesel, that's the Port of Warden. Also, the port agency won't get reimbursed from the state loan until the work is done.

Currently, there is no crushing factory for biodiesel in Washington. But recently about 10 different factories have been proposed, spawned by the fuel's recent popularity and a new state law requiring all diesel fuel to contain 2 percent biodiesel by the end of 2008.

Stephens said he founded Washington Biodiesel a year ago, after leaving his job as a chemistry professor at Seattle University. Stephens said he asked Malarkey, an acquaintance who attends the same church, for advice and Malarkey agreed to join the new company.

Malarkey had stepped down from the Seattle Monorail Project in December 2003, citing a desire to work less and spend more time with his family. He later worked for the monorail project as a consultant.

While at the agency, he was embroiled in a controversy about how much tax revenue would actually come from car-tab taxes. Mistaken estimates, which Malarkey had helped assemble, left the agency millions of dollars short and set the stage for the financial crisis that eventually brought down the project.

Horn headed the monorail agency for nearly three years, resigning last year shortly after revealing that it could cost more than $11 billion to build and finance the line from Ballard to West Seattle.

Critics charged that the project was mismanaged and that Horn kept cost overruns secret. Horn defended the monorail project as vital and affordable, but he accepted responsibility for not communicating enough with the public about the project's finances.

Several officials in Grant County said Horn and Malarkey have appeared to have equal roles in the biodiesel project. Horn typically handles more of the "nuts-and-bolts" preparation such as arranging for studies of the property, while Malarkey does more of the "high level" work, such as speaking to groups of public officials, said Terry Brewer, executive director of the Grant County Economic Development Council.

Stephens, Washington Biodiesel's vice president, said Horn has done some of the "negotiating and contract work that we need to have done that Daniel and I just don't have the time for."

Mike Conley, manager of the Port of Warden, said he has been impressed with Washington Biodiesel representatives, including Horn and Malarkey, and has been fairly confident that the project will be a boon for a town with few new businesses.

"I don't think they're radical guys," Conley said. "I think they're trying to be careful."

But Conley said he hadn't known that Malarkey and Horn were involved with Seattle's monorail project.

"That's not good," he said. "Well, not good from what I know of the monorail, anyway."

Staff reporters Mike Lindblom and Craig Welch contributed to this report.

Warren Cornwall: 206-464-2311 or wcornwall@seattletimes.com