The concept behind the massive solar project sounded simple enough: borrow $88 million to install panels on public buildings in Morris, Somerset and Sussex counties and then sell excess electricity, using the revenues to pay off the debt.
The concept was called the “Morris model,” held up nationally as an example of how to produce renewable energy through public-private partnerships. It was the second project of its kind and the previous one was hailed as a success.
But now, nearly four years later, taxpayers could be on the hook for tens of millions of dollars the counties owe bondholders, after work ground to a halt amid cost overruns and lawsuits.
What’s more, the $88 million that must be repaid to bondholders for the 71 projects could cause “unmitigated disaster” to the three counties, according to court filings.
Negotiations are under way involving “more attorneys than could fit on a bus” to ease the financial pain of the incomplete projects and to possibly salvage the work, officials said.
“The bondholders will be paid, regardless of how,” said John Eskilson, the Sussex County administrator.
The administrators of the three counties all say they could reach an agreement on how to pay the millions owed to the contractor, after months of negotiations, officials said. That agreement, some said, could come in weeks, if not days.
The ambitious plans called for a developer, SunLight General, to use $88 million in borrowed money to erect thousands of solar panels atop schools and other public buildings in the three counties. They would repay the counties with the future solar revenues and local governments would get cheaper electricity.
But the market for state solar-energy tax credits — a key part of the deal — plummeted in the months after the deal was struck. Cost overruns mounted, and the developer and contractor became embroiled in a dispute that ended in lawsuits. Work ground to a halt. And while the projects in Somerset were mostly completed, only about half were completed in two of the counties, Morris and Sussex.
“This was really considered to be a unique model,” said Irfan Bora, a professor of Governmental Accounting at the Rutgers Business School. “Apparently, things didn’t work out. “The question is, what happens now? The counties are still on the hook for that $88 million.”