Renewable Energy Fiasco – Official Story

Just as Union County will eventually pick up the bond payments for the $50 million Roselle Mind & Body Complex, the Official Statement for the additional $7.86 million in bonding needed for another Union County Improvement Authority (UCIA) fiasco (finishing up the Family Courthouse – a story we will look into in detail shortly) is out and it includes on pages A-21 and A-22 a description of yet another UCIA fiasco (the blow-up of the UCIA Renewable Energy project) – as follows:

Lease Payment Default in County Guaranteed UCIA Renewable Energy Bond Issue

On October 15, 2016, the UCIA paid the principal and interest due on the UCIA’s “$15,190,000 County of Union Guaranteed Renewable Energy Program Lease Revenue Bonds, Series 2011 (Federally Taxable)” (the “Renewable Energy Bonds”) from a combination of Project Revenues and County funds made available pursuant to the County Guaranty. Prior to such date, on April 15, 2016, the UCIA paid the interest due on the UCIA’s “$15,190,000 County of Union Guaranteed Renewable Energy Program Lease Revenue Bonds, Series 2011 (Federally Taxable)” (the “Renewable Energy Bonds”) from Project Revenues.

History of the Renewable Energy Bonds transaction:

On August 31, 2010, the Authority issued a “Request for Proposals for a Developer of Photovoltaic Systems with respect to certain Local Government Facilities in the County of Union, New Jersey” (the “RFP”) to design, permit, acquire, construct, install, operate and maintain solar Renewable Energy Projects at multiple municipal and board of education facilities located throughout the County. The Authority selected and designated Tioga Solar Union County 1, LLC (the “Company”) as the successful respondent to the RFP and thereafter entered into a Lease Purchase Agreement, dated as of May 1, 2011 (the “Lease Agreement”) , a Power Purchase Agreement and certain other agreements with the Company and others in furtherance thereof.

On May 4, 2011, the Authority issued its Renewable Energy Bonds, of which $10,115,000 is presently outstanding, to finance up to 70% of the costs of the Renewable Energy Projects, with the Company financing the balance of such cost. The lease payments made by the Company pursuant to the Lease Agreement are equal to and secure the payment of the principal of, and interest due on, the Renewable Energy Bonds. The County, in accordance with the terms of the County Guaranty, has fully, unconditionally and irrevocably guaranteed the timely payment of the principal of, and interest due on, the Renewable Energy Bonds. In addition, Tioga Energy, Inc., the parent of the Company (“Tioga Energy”) provided a parent guaranty, capped at $4,000,000, of the Company’s obligations under, among other things, the Lease Agreement.

The Renewable Energy Projects procured under the Renewable Energy Program are, in all material respects, complete, lien free, in service and generating energy and revenues, with such revenues being principally derived from (i) the sale of electric energy to the local unit hosts under a Power Purchase Agreement, and (ii) the sale of Solar Re newable Energy Certificates (“SRECs”) to utilities.

Tioga Energy, which was engaged in the solar energy business throughout the United States, advised the Authority that on April 30, 2013, it (not the Company) initiated an assignment for the benefit of creditor’s under California Code of Civil Procedure Sec. 493.010-493.060 and 1800-1802 (similar in effect to a liquidation under Chapter 7 of the United States Bankruptcy Code) (“ABC process”) in order to liquidate and dissolve its business (after the initiation of such process, Tioga Energy is referred to as “Tioga ABC”). Effective May 1, 2013, the Company discontinued making full lease payments under the Lease Agreement, and on May 4, 2013 the Authority declared the Company in default thereunder. On May 17, 2013, the Authority filed a Notice of Material Event pursuant to Rule 15c2-12 relating to the failure of the Company to pay the May, 2013, lease payment and the consequent declaration of default by the Authority.

Shortly thereafter, most of Tioga ABC’s assets were sold in an auction process. Tioga ABC still holds the membership interests in the Company. Available proceeds from liquidation of Tioga ABC’s assets were used to pay Tioga ABC’s creditors, including a $333,000 payment to the Authority under the parent guaranty.

The revenues generated by the Renewable Energy Projects are principally proceeds from the sale of SRECs and proceeds from the sale of electric energy to various governmental entities in the County. Under the Lease Agreement, the revenues generated are credited against the Company’s obligation to make the lease payments. Due principally to the drop in SREC prices since the time the Renewable Energy Bonds were issued, the Renewable Energy Projects are not currently generating revenues sufficient to satisfy the Company’s lease payment obligations under the Lease Agreement in full and, therefore, are not sufficient to pay the full amount of debt service on the Renewable Energy Bonds.

All debt service payments due from the time the Authority declared the Company in default under the Lease Agreement, through and including the April 15, 2015, interest payment, were paid by the Authority, in full when due, from a combination of accumulated revenues, other amounts held under the Renewable Energy Bonds bond resolution (the “Bond Resolution”), and funds provided by the Authority. The October 15, 2015 payment of principal and interest was paid from the same sources along with County funds made available by the County pursuant to the County Guaranty.

The County appropriated sufficient monies in the 2016 budget to pay the entire $1,255,021.00 principal and interest payment on the Renewable Energy Bonds due on October 15, 2016 (as well as the $240,021.00 interest payment due on April 15, 2016 which did not require any payment under the County Guaranty). Pursuant to the County Guaranty, the County paid an amount of $946,723.32 that, together with $168,200.48 of available monies on deposit in the Debt Service Fund and $140,097.20 of available monies on deposit in the Revenue Fund of the Bond Resolution, was sufficient to pay the principal of, and interest due on, the Renewable Energy Bonds on October 15, 2016.

The County intends to appropriate sufficient monies in the 2017 budget to pay all debt service due on the Renewable Energy Bonds in 2017, regardless of the availability of Project Revenues.

The Renewable Energy Bonds are not in default, and the principal amount of the Renewable Energy Bonds has not been accelerated. Accordingly, the debt service payment schedule for the Renewable Energy Bonds upon original issuance remains in effect.

Was this foreseeable?
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3 responses to this post.

  1. Posted by JOeJOe on June 23, 2017 at 8:05 pm

    ReadsLikeAMafiaBook

    Reply

  2. Posted by JOeJOe on June 23, 2017 at 8:29 pm

    Shit for Brains Lying Lawyer Jonathan Williams referred to your questioning of this solar scheme as specious. Now it is crystal clear that his pushing this bullshit was, indeed, specious, and a way to line his own pocket at the expense of Union County taxpayers. Shit for Brains Lying Lawyer Jonathan Williams also was part of the reason why the SREC market got flooded … he was selling this bullshit scheme to other counties which, in reality, were competing against each other for the best SREC price. The other Shit for Brains, former freeloader Dan Sullivan, referred to PSE&G as getting in on the solar action not even realizing that PSE&G was FORCED to either produce solar or be punished by being FORCED to purchase SREC. It all BACKFIRED. No worries … the DeCotiis law firm is still the County’s darling no matter how badly they operate. Keep the donations coming. A fucking disgrace these half ass freeholders have become.

    You should post the video where Shit for Brains Lying Lawyer Jonathan Williams claims it will cost taxpayers NOTHING. If that’s not malpractice then malpractice does not exist any longer. Hell, even posting a bond is moot in Union County, i.e., the new family courthouse. New slogan for Union County “COME FUCK US … WE DON’T CARE … TAXPAYERS WILL PICK UP THE TAB”

    Reply

  3. […] This was Sussex County as something like this would never happen in Union County. The investigation part I mean. The scam we got and Union County taxpayers, through another bailout of the Union County Improvement Authority, are now paying. […]

    Reply

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