Jul. 5--VICTORVILLE

--Some of the very "milestones" toward the development of the Victorville 2 power plant that the city and its consultant, Inland Energy, boasted about over the past year have become roadblocks to interested buyers, according to those involved.

Now buyers say the city could face hefty termination fees in order to make the project viable, plus a challenge to find its way out of a contract that guarantees Inland Energy $5 million annually in perpetuity.

Last spring the council unanimously approved a recommendation from Inland Energy to enter into contracts with Goldman Sachs to finance the plant's development and with Kiewet to

design and build it.

With developers now saying they'll only consider the plant if it's free and clear -- with their own builders

and financing mechanisms in place -- the city could be asked to cover $9 million in termination fees to buy out the Goldman Sachs and Kiewet contracts.

"It's hard to believe that the city attorney and City Council accepted those contracts as being beneficial to the city," said one consultant for an international client seriously interested in the plant. "They're basically gifts to friends and family, as far as we can see."

However, city insiders and potential buyers (who spoke on the condition of anonymity because of confidentiality agreements and deals still in the works) have said the biggest obstacle to a sale is the project's obligations to Inland Energy itself.

A contract signed by then-Mayor Mike Rothschild in 2005 guarantees Newport Beachbased Inland Energ y 5 percent of annual profits, projected to equal $5 million each year. The payment is "in recognition of the unique value of the experience and expertise" Inland brings to the project, the contract says, plus "ongoing management services, which Inland may perform after the project has begun operation."

When asked to comment on the $5 million fee and how it's affected potential sales, Miguel G o n z a l e z , s p o ke s -- man for Inland Energy, e-mailed over a statement about how the company will continue to work on developing VV2 in the best interest of the city.

Tom Barnett, Inland Energy's vice president and point person on the project, declined to respond in more detail because of the delicate nature of the ongoing negotiations.

"It's unclear why a company like Inland would be entitled to a fee like that," said an attorney who evaluated the project for an energy client who eventually walked away.