The solar array at the site of the former French’s Landfill off Sally Ike Road will begin generating energy in early October, but the township does not stand to generate any significant future revenue from the project, officials said.
“The financial deal was not great, not even good,” Mayor John Ducey said Tuesday, as the township council approved some of the final resolutions needed to get the project started. “It was the best we could do with what we had left.”
Ducey was speaking about a change to the solar contract made in 2012 that was never signed by then-mayor Stephen C. Acropolis. The contract change stated that Standard Alternative (now known as Brick Standard), the redeveloper, would pay off a township bond issuance at 4.5 percent interest. If the township was able to borrow the approximately $31 million required to fund the project below that rate, Standard would have been locked into the fixed rate, and the township would have pocketed the excess.
Because that contract change was never signed, Brick Standard will simply pay the off the township’s bonds at their actual rate, causing Brick to miss out on $2,627,019 in revenue.
At the time, Acropolis said he felt the contract revision put taxpayers at risk, since interest rates could have risen above 4.5 percent in the following two years. Ducey signed the revised contract when he became mayor in 2014, but legal counsel advised township officials that too much time had passed, and the mayoral administration had changed, thus nullifying the signature.
Ducey said at a council meeting Tuesday night that the entire deal was not in Brick’s favor. For example, on a close reading of the contract language, Brick Standard’s lease of the landfill site only includes the physical space taken up by the solar panels. That, according to Ducey, means the township will be responsible for maintenance work and landscaping across the entire site, including the large hill which makes up the landfill’s cap.
Presently, he said, the township does not have the equipment necessary to maintain the ground up the hill, and the only piece of equipment capable of doing so costs $50,000 and is only available from a manufacturer in Sweden. Since no parts for the piece of equipment – essentially, a remote control mower – are available in the United States, the township will have to hire an outside contractor to maintain the grounds.
Earlier this month, the township council did approve a minor revision in the solar contract, changing the initial rate the township will pay for discounted energy from 9 cents to 8.5 cents per kilowatt hour. A 3 percent escalator clause that was in the original contract will remain.
“We were lucky they changed anything,” said Ducey. “In 2012 we tried to better that deal, but the mayor at the time didn’t sign the deal. If we would have tried to say, ‘no, the one I signed in 2014 was the legal deal,’ we would have almost definitely lost the legal challenge.”
Brick Standard, under its former name, did pay the township initial upfront payments adding up to $2.5 million, plugging budget holes at the time. And the discounted energy will still cut costs for the township and Brick Township Municipal Utilities Authority. The township has yet to hire a company to manage the energy delivery from the site; this company will connect the site to the power grid, sell excess power to the open market and purchase power from the open market for Brick when the demand outweighs the amount of energy being generated.
The rate for the power management contract will be known later this week after bids are open, however the township council pre-approved a resolution on Tuesday authorizing the lower of two bidders – South Jersey Energy and Con Edison – to be awarded the contract.
“We want to be in the position to select the company that gives us the best price,” said Kevin Starkey, township attorney.
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.