A revised redeveloper's agreement with Standard Alternative, LLC to build a solar farm at the former French's Landfill site has the potential to generate more revenue for the township, but also adds more risk, some say.
The township council last week voted 5-1 in favor of the new agreement, which sets a fixed interest rate at which Standard Alternative must pay back money the town bonds for the construction of the solar array, lowers the price at which the township and BTMUA will buy energy generated by the array and allows the township to share in the profits of solar renewable energy credits generated at the site at a certain price.
The township has always agreed to borrow the money to build the solar farm, with Standard Alternative paying the debt service. That, for the most part, hasn't changed.
Previously, however, Standard Alternative would have been required to repay all of the money the township borrows to construct the solar array at whatever interest rate at which the township borrowed it. Now, Standard Alternative will repay the money at a fixed 4.5 percent rate regardless of the rate at which the township borrows the money.
The township will bond $34 million total for the project. If the interest rate is below 4.5 percent, the township will generate revenue since Standard Alternative will be required to pay the town back at a higher rate.
The concern with the new plan, according to Mayor Stephen C. Acropolis, would be what would happen if interest rates rise by the time the bonds are financed. He said taxpayers would be "on the hook" if interest rates rise above 4.5 percent by the time the final financing is completed.
"They put something through that puts the taxpayers at risk," said Acropolis. "There are people who are just trying to put their mark on things, and they are not listening to the professionals."
Business Administrator Scott Pezarras said the bonds would be financed for good once the solar array is completed, which could take 15 to 18 months after construction begins. In the mean time, financing will be done through a number of short-term measures, similar to a bridge loan homebuyers can receive. The purpose of the short-time financing is to make sure the solar array is actually built before the bulk of the money is borrowed.
The township stands to generate revenue if the price of solar renewable energy credits, or SRECs, jumps above $600 in the open market. Brick would get 25 percent of the revenue from SRECs sold based on the power generated at the site if they reach that price level. Also, if throughout 15 year period that Standard Alternative owns the solar array, the average SREC is $400 or more, the township will receive money in an escrow account.
The price of New Jersey SRECs were about $155 before the Independence Day holiday, according to SRECTrade, Inc.
"We basically, now, are a partner, whereas before we were a landlord," said Pezarras.
Acropolis said he may refuse to sign the new redeveloper's agreement, though his signature is considered honorary in nature. He also said he may speak with the township attorney about having Council President John Ducey sign the new agreement instead of himself.
Ducey said he had not heard about the mayor's potential refusal to sign the agreement, but defended the revised plan, saying it would generate more revenue for the taxpayers.
"We were able to lock in Standard Alternative to paying 4.5 percent," said Ducey, of the bond rate.
Ducey also said taxpayers will save money by paying less for the electricity produced by the array.
Under the agreement, Standard Alternative will pay for the array and own it for 15 years, during which time the company will sell energy to the township at a reduced rate. Brick will take ownership of the array after the 15 year period.
Councilman Jim Fozman was the sole council member to vote against the revised plan. Councilman Domenick Brando was not at the meeting.