Brick officials have held off on returning $462,668 to the developer of the solar farm built at the former French’s Landfill site off Sally Ike Road.
The money is being held in an escrow account, placed there by Brick Standard, LLC, the developer of the solar farm, as a performance guarantee to ensure the company fulfilled its obligations in getting the plant up and running. The solar array began producing energy in October 2014, but council members held off on returning the bond after resident George Scott questioned whether the township was protected in the event that Brick Standard ever runs into financial trouble and is unable to pay for the solar array.
Under the deal signed with Brick Standard, township officials agreed to float $34 million in bonds to fund the project, though that entire amount was to be paid by Brick Standard. The company requested Brick float the bonds since a municipal government could receive a lower interest rate than a commercial enterprise. The township’s taxpayers were protected since Brick Standard’s obligation to pay back the $34 million was guaranteed by Iron State Development, a large commercial real estate developer.
Scott, however, questioned whether Iron State’s guarantee is still in effect following the completion of construction on the solar array. He pointed to language in a redeveloper’s agreement signed in 2011 that states the guarantee “shall remain in place until the commercial operations date,” which could be construed as October.
Scott said he had been provided conflicting answers by township officials on whether a separate agreement expounded on Iron State’s obligations, and recommended the council hold off returning the performance bond until the matter is sorted out.
“I want to make sure that Iron State is still on the hook for this,” Scott told council members. “They started producing electricity in October, therefore I read this as saying they’re not on the hook anymore.”
Township attorney Kevin Starkey agreed with Scott, who brought his concerns to him before the April 7 council meeting began.
“He raised a couple of these points with me just before this meeting,” said Starkey. “So we can sort out these details that he’s raised, I recommend that this be held until the next meeting.”
Council President Paul Mummolo, responding to a question from Scott as to whether he has seen a document indicating Iron State remains the guarantor of the bond, said he has not and agreed that the matter should be researched further.
“It’s a tremendous amount of money,” Mummolo said.
Brick Township’s municipal government, as well as the BTMUA, is purchasing energy from Brick Standard at a rate of 8.5 cents per kilowatt hour, a discount from what the township would pay from a normal energy provider. The company also paid Brick about $2.5 million upfront. But Mayor John Ducey and council members have criticized the deal, which was modified a number of times over the past five years, at one point causing Brick to miss out on more than $2 million in additional revenue that could have been generated.
The landfill itself was purchased from a private company by the township in the 1970s and shut down by 1979. It was capped in 2012 under orders from the federal government after it was declared a federal Superfund site.