Freeholders settle solar suit

By Nathan Mayberg
NEWTON — The Sussex County Board of Freeholders decided to settle, rather than continue fighting a lawsuit over $24 million that a solar energy company has been unable to pay back to the county.

With some mayors from around the county calling on the Board of Freeholders to delay a vote to settle, county freeholders decided on Wednesday that the risks of prolonging the suit were too risky.

In one of the strangest twists of agreements, the county was never sued for payments and was not a party to arbitration hearings but found itself not only liable for the attorney fees of the solar power company but also liable for the payments it had to make to the contractor since it had guaranteed $27.7 million in bonds.

The county had guaranteed the bonds issued by the Morris County Improvement Authority, and essentially now owes itself the remaining $24 million, which is around $26 million with interest, County Administrator John Eskilson said.

If that weren’t confusing enough, the settlement agreed upon Wednesday will require the county to pay $12.3 million to Power Partners Mastec LLC, the contractor which was responsible for installing solar panels on municipal buildings throughout Sussex County.

Sussex County’s independent counsel David Weinstein, said the money represented funds owed to Power Partners Mastec by SunLight General Capital which had been placed on hold through liens against the solar company.

According to the settlement agreement approved by the freeholders, the county will have to bond $6.75 million bonds to pay the funds due to Power Partners Mastec LLC.

The county will still owe $26 million on the bonds it took out through the Morris County Improvement Authority.

County leaders are hopeful that the settlement will allow for the completion of the rest of the project that wasn’t done by SunLight General Capital. A a new firm, Vanguard Energy Partners, would finish solar panel work at buildings and schools in the county.

The freeholders also are banking on settlement provisions which give it title to solar energy certificates and access to federal tax credits, which they expect will allow the county to gain revenue to offset the majority of its debt burden.

In the end, the county’s ultimate exposure could be in the $6.5 million range, according to financial estimates made by the county’s financial advisors, which include Gabel Associates. Gabel Associates reviewed the original agreement between the county and SunLight General Capital.

Some speakers on Wednesday raised questions as to why the county was listening to some of the same advisors on its newest agreement.

Board of Freeholders Director Phil Crabb (R-Franklin) described what happened with the solar company and contractor as being out of the county’s control, calling it “a train that went off the tracks.”

“It turned out to be a dispute between two private companies,” he said.

Freeholders Gail Phoebus (R-Andover) and George Graham (R-Stanhope) voted against the settlement and attacked the lack of transparency in the board’s decision to withhold details of the settlement until after the vote.

Graham questioned the financial forecasts by the county's financial advisors, who he said were the same ones who did the original estimates.

The whole deal, he said was based on "speculation" over future electricity rates.

Crabb said he decided to withhold disclosure because he “didn’t want to do anything that would destroy the benefits of the agreement.”

Crabb said the deal was “complicated,” though he said that didn’t mean the public “couldn’t understand it.”

“We just wanted to ensure that there was no chance to derail it,” Crabb said.

Joining Crabb in voting in favor of the settlement were freeholders Richard Vohden (R-Green) and Dennis Mudrick (R-Sparta).

"I am not in favor of financial uncertainty" and "costly chaos," Mudrick said in explaining his vote in favor of the settlement

"A no vote would create a series of disastrous consequences," Vohden said.

Vohden said the deteriorating situation between SunLight General Capital and Power Partners Mastec and three counties was the result of "poor management" and "bad decisions."

Weinstein said that by not agreeing to the settlement, the county would simply spend more money on attorney fees and that the settlement would not change.

Phoebus said she wanted to table the vote and delay, saying the language of the agreements had changed in recent days and she didn’t have time to read it all.

“The only people who have not had their say are the people who are being asked to pay for this,” Phoebus said.

Dick Fitch, of Vernon, told the board, “I’m at a little loss for the information that’s come forward how we got into this mess.”

“Was there no legal oversight?” Fitch asked. “Was there no financial oversight?”

"Do we have to wait until you guys vote to get some information from counsel?"

A message left with an attorney for SunLight General Capital was not immediately returned. Sussex County had to pay $920,000 to the attorney for the solar power company as part of an arbitration decision last year.

Like the original agreements, in which Morris and Somerset counties agreed to contracts with SunLight General Capital, both counties over the past week agreed to settle the lawsuits along with Sussex County.

Power Partners Mastec will receive a total of $66 million from the three counties, Weinstein said.

A message left with Power Partners Mastec attorney Louis Madugno was not returned as of press time.

"This is a cost containment project," Weinstein said.

"This is not perfect," he said. "Not everybody is making out like bandits," Weinstein said.

"We're supposed to learn from our past mistakes, we're not supposed to repeat them," Graham said.

What mayors from around Sussex County told freeholders before they approved a legal settlement in which the county will pay $12.3 million to Power Partners Mastec LLC, the contractor hired by SunLight General Capital to install solar panels around the county.

Fredon Mayor Carl Lazarro compared the original decision by the Board of Freeholders to guarantee $27.7 million bonds to the solar power company and the latest decision to spend more money to complete the project to him going to the freeholders homes and asking them to let him invest with their 401K. "You'd throw me out the door," he said.

Lazarro said he makes payments to SunLight General Capital for solar panels on his town's civic center but can't get answers when he calls the company's offices. "They are quite rude," he said.

"I am upset with this Nancy Pelosi you have to pass it so you can see what's in it attitude that is pervading the nation and it's going to local government all the time," Lazarro said.

"I've spent the last week with every department in our town pushing them to the wall that they can't spend anymore money. I've been to both schools...and now I've got to go back to my town and say we're on the hook for $25 million in taxes and nobody's going to tell us where it came from, where it went, where it's going. We've got nothing to show for it. We've got a bunch of panels on the roof and I can't even find out whether I'm saving a dollar or spending a dollar. I know I send a check every month to SunLight and I can't even find out what the check I sent to SunLight is for."

Frankford Mayor Gary Larson, a former candidate for the Board of Freeholders, said he supported the settlement. Frankford's elementary school was one of the buildings where solar panels were installed. The school district has seen some energy savings but not what was projected.

Still, he supported the deal.
"There are times when you have to spend money to save money," Larson said.

Stanhope Mayor Rosemarie Maio called for the settlement to be tabled "until there are explanations."

"How we got into this is as important as how we get out of it," Maio said.

"I think you're moving too quickly on this issue and I think it could come back to haunt you."

Andover Township Committee member Tom Walsh called on the board to table the matter for two weeks. "I do believe the public is owed an explanation for everything."

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