Solar Panel Contractor in Default in Improvement Authority Project

August 28, 2014 at 10:00 AM

SOMERSET COUNTY, NJ - Developer SunLight General Capital and its affiliates have received defeault notices and have been dropped from the second-phase solar programs for Somerset and Morris counties, along with the initial program for Sussex County, according to a release from Somerset County.

Among the properties that have had solar panels installed through this program with the Somerset County Improvement Authority are the Bridgewater-Raritan High School, TD Bank Ballpark and the Bridgewater Commons Mall.

According to the release, SunLight was appointed as the developer for the three programs in 2011 after a competitive procurement process in the county. But, the release said, separate default notices were issued after public meetings held by the Somerset County Improvement Authority, which was handling the project locally.

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SunLight, the release said, was in an ongoing dispute with contractor Power Partners MasTec about who was responsible for major delays and cost overruns.

According to the release, procurement documents from the three counties involved said that the contracts and bond funding provided by the county improvement authorities had a guaranteed maximum price, and there would be no payments for delays or cost overruns.

In private arbitration, MasTec was awarded a judgment against SunLight that rendered the developer insolvent, the release said. The award does not apply to the county authorities or the counties themselves.

According to the release, although the counties were not allowed to participate in the arbitration, MasTec has sought recovery by placing liens on the county authorities’ remaining bond funds to satisfy what was a potential arbitration award.

Trial and appellate courts in New Jersey have ruled against MasTec in the lien cases, the release said, and said the contractor has no rights to the bond monies. The New Jersey Supreme Court will hear MasTec’s appeal at an unknown time.

MasTec, the release said, is in federal court also seeking further relief on other matters, and the two county improvement authorities and three counties have reached out to the company to resolve all litigation.

In addition, the release said, the three counties have contacted the agencies that rate their bonds, and, as required by law, the counties have notified the bond-rating agencies that if insufficient program revenue is available because of ramifications from the default notices, the county will honor respective guarantees of debt-service payment on the bonds, beginning with ones due in 2015.

The release said the improvement authorities have also notified the municipalities because the three series of improvement-authority bonds are not in default even though the developer is in default.

The developer, the release said, is required to operate and maintain the existing sites until a successor is found, but the timetable is on hold during settlement discussions.

Construction for the sites that are not finished is on hold as well while arrangements are made. The release said that all but two of the sites have been constructed in Somerset County at this point, and half the sites have been built in Morris and Sussex counties.

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