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County rejects $290K for law firm, sends notice of default concerning solar project

Board of Supervisors lowers payout to lawyers to $60K while sending Con Edison a notice of default on the Panoche Valley Solar Project

The San Benito County Board of Supervisors rejected a resolution Aug. 8 to pay an additional $290,000 to the law firm providing legal services in connection to the county’s efforts to secure sales and use taxes owed by Con Edison on the Panoche Valley Solar Project. Instead, the contract was amended to not exceed $60,000.

“The contract is basically to cover any mitigation that we would have with Con Edison,” said Supervisor Mark Medina. “They wanted us to approve ‘not to exceed $290,000,’ but I said it isn’t an open check that I want to give someone.”

Medina said the other supervisors agreed with him—Jerry Muenzer was absent—and when Jaime De La Cruz suggested $60,000, the board passed a resolution with the lower figure. The contract with the firm runs from July 1, 2017 to June 30, 2019. The firm's latest effort on behalf of the county was on July 24 to assist with writing a “notice of default” to Con Edison.

“They haven’t paid the sales taxes (to the county) because they paid San Francisco instead,” Medina said of Con Edison. He said the only reason he could think of for doing that was because San Francisco was possibly the port-of-entry for the solar equipment that was most likely made in China. “Once it entered the port, that’s the taxing agency. They were supposed to have some type of entity that would show it was coming here and the sales taxes were due here.”

Since the letter was sent, Medina said the county has been negotiating with Con Edison in an attempt to resolve the issue.

“They have loosely said that they would pay all the sales tax involved in the transaction,” he said. “First of all, we’re trying to look at the monies that are owed to us per the development agreement. Then we’re trying to look at the difference between what we have now versus what we voted on years ago.”

Medina said there probably is not a chance of receiving taxes based on the original design of the solar farm, but he contends the county should receive something close to it. If Con Edison does not honor the original agreement, then he believes the company needs to compensate the county in some fashion.

“When the project was passed, most of the decisions made by the supervisors were based upon the projected revenue stream,” he said, adding that he believed the original agreement stipulated that no matter if the company built-out the site as originally designed or not, it still would owe the agreed-upon amount of taxes. “It’s like having a lease. Say, if you have a 10-year lease on a building, it doesn’t matter if you have something in the building or not. You still have to pay the lease.”

The solar project was recently reduced in size from 247 megawatts to about 130 megawatts after a drawn-out legal battle with environmental groups. Additionally, some 26,000 acres that the company had secured for the project were set aside as wildlife habitat.

The notice of default was sent to the principals involved with the solar project: Panoche Valley Solar (PVC), LLC; DEGS Solar, LLC; Duke Energy Corporation; and Con Edison Clean Energy Business, Inc., regarding the development agreement between the county and Solargen Energy, Inc. The county contends that as the successor to Solargen, PVC is in breach of the agreement.

The letter spelled out what the county contends are the specific breaches, including the relocation of part of the project hundreds of miles away, a move that goes against the original design on which the county voted. In moving and reducing the size of the project, it also meant the 150 to 200 jobs that were promised would not come to fruition. And PVC is accused of not operating in good faith to have all sales and use taxes go to the county. For additional details, see to the PDF file below.

Both a spokesperson for Con Edison and Barbara Thompson, San Benito County's interim county counsel, declined to comment for this story.

PDF or other file: 
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Submitted by (Ray Cano) on

Panels made in China?? Why not American made??

Submitted by (Joshua Golisano) on

It said possibly, it will take a bit more investigating on where the panels were made.

Solar panels from China rather than the U.S. was one of many reasons locals opposed.

The FEIR, which shows the plans for project build-out, including how many solar panels/from where, clearly shows the panels coming from China. That is what the Board of Reb Monaco, Jamie De La Cruz, Anthony Bothelo, Margie Barrios, and Pat Loe unanimously approved.

A more substantial reason locals opposed this project is because there was no way to establish San Benito as the Port of Destination for the solar panel import, which would have allowed the County to collect the import taxes as Supervisor Medina suggests. What he has failed to do is actually read the Development Agreement. If he had, he would know it only requires the Developer to make a "Best Effort" to have the taxes collected here in San Benito.

I worked in International Shipping & Receiving, and understand  how import taxes work, including how this schem wouldn't.  I repeatedly asked my District 4 Supervisor, which changed from Reb Monaco to Jerry Muenzer, how exactly this import tax shell game would be pulled off: he couldn't answer.  My neighbors and I have continued to ask Supervisor Muenzer over the years since the project was approved, "When is the County going to see those taxes Jerry?  Have they figured out how they're going to do it yet?"  until he finally brought the question before the Board this year. 

And here we are today.  All this grandstanding about how San Benito is going to force PVC et al. to pay those import taxes on the solar panels, let alone based on the original size of the project vs. the size it is today, is all for naught because the Board approved a DA with absolutely no guarantees. 

Read the DA.

Let me get this straight, if the development agreement were perfect and the solar panels were made in the failed $500 million government funded solar panel plant oin Fremont that never made a thing (remember that one?), the opponents in Panoche Valley who teamed up with the environmental radicals to kill the project would have supported it?

I do not believe that for one second, much less one minute.

I have a reasonably good memory for an old man, but it can use some refreshing.  Will someone please remind me where the opponents wrote that?  You know, something to the effect of "fix the tax issues in the development agreement and we'll be statisfied."  I remember writing, "fix the funding source and I'll be satisfied", they did and I was, but I'm not the type to take a pass on any taxes legitimately due us.

I do not forgive PV2 for failing to do what they agreed to, in fact I have proposed that they pay what they owe us AND an appropriate stiff penalty just like those who fail to pay their property taxes.  But no amount of fixing will get us the funds that we lost from the reduction in plant size, that is not on them.  It's not their fault they were stymied, it was the radical environmentalists supported by locals who did what was best for THEMSELVES.  They are entitled to do it, they are not entitled to try and make irrelevant excuses for their actions.

Marty Richman


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