Business / Economy

Supes demand cancellation of solar project, threaten litigation against ConEdison

After hearing the Panoche Valley Solar Project will not pay sales tax to the county, supervisors demand project be canceled and litigation initiated against ConEdison.
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After Joe Paul Gonzalez, San Benito County's clerk-auditor-recorder, informed the board of supervisors that the county would not be receiving any sales tax dollars from the Panoche Valley Solar Project, Supervisor Anthony Botelho angrily proposed to come back with a resolution to cancel the project and sue its primary owner, ConEdison, but not before calling the company “a bunch of crooks.” Supervisor Jerry Muenzer had even harsher words for the solar developers in the past, but declined to repeat them, at first.

The moment may have been an "I told you so" one for Supervisor Robert Rivas, who has never supported the project and said he knew something was wrong from the very beginning and accused the original developer of stealing money raised for it.

When the agenda item came up for discussion at the July 18 board meeting, County Administrative Officer Ray Espinosa gave an overview of the project before bringing the supervisors up to speed on expected revenues. He reminded them that the original development agreement was for a 399-megawatt facility in southern San Benito County that would generate millions in sales tax revenues. As of today, Espinosa said the project has been reduced to approximately 129 megawatts. He said an auditing team working with ConEdison and an outside consulting firm tried to evaluate potential sale tax revenues.

He said he had invited a Edison representative to come to the meeting. Instead, the company sent reading points, which Espinosa read to the supervisors. They explained that as of May 2017, ConEdison entered into a settlement agreement with the California Department of Wildlife and various environmental organizations that limited the project to the west side of Little Panoche Road. They reduced the output to 130 megawatts, down from 247 megawatts (a previous reduction from the original 399 in 2015). The settlement guaranteed there would be no further litigation by environmentalists nor any more delays. And approximately 26,000 acres of the valley would be set aside as conservation land.

Espinosa read an email from ConEdison, which said “it looks like there is little opportunity for the county to generate sales tax from the project at this point.’” Then he added, “There’s a lot of physical, taxable material out there. Unfortunately, the sales tax will go to the City of San Francisco.”

The news didn’t get any better when Gonzalez took the podium. He said the 247-megawatt project was not even the project the county originally negotiated, but the size of the permit that was eventually obtained. However, he said even the 247-megawatt facility should have generated $5.5 million in sales tax, in addition to $13.5 million in lieu of unsecured property tax.

“When the project was cut in half to 127-megawatts, we originally calculated that we would be receiving about $2 million in sales tax,” he said. “Because of the failure of the developer to ensure that the vendors created a mechanism in the unincorporated county in order to report sales tax none of that sales tax money will be received in the county.”

Gonzalez did say that the county could expect to receive “about $4.2 million in lieu of unsecured property tax, and zero dollars in sales tax.” Espinosa added, “it’s approximately $100,000 to $200,000 a year versus the $800,000 to $1 million a year. So, we’ll receive a little bit more up front and be reduced over the 20-year period.”

Botelho didn’t hold back in showing his ire at the news.

“I’m really upset at the whole deal and I admire my colleague, Supervisor Rivas, for being opposed to this project from Day 1,” he said. “He saw the crooks walk in this door. He read them, whether it was (Mike) Peterson or ConEdison, which is a bunch of crooks. That money is owed to San Benito County. This county gave up a lot.”

Botelho said, however, that the county’s sacrifices would have been worth it if the revenues that were originally promised were still on the table. He accused ConEdison of taking advantage of the county and using mitigation to help fund a solar project in Southern California.

“I want our staff working on canceling this project and suing ConEdison,” he said. “The sales tax should be coming here. Even if the vendor is out of our county because the equipment is in San Benito County, it (tax) needs to be paid here. They knew this and are obligated by the development agreement that is in place. If they’re going to dishonor the development agreement, we need to fight and get our money.”

“The good news is,” interjected Gonzalez, “in our development agreement the language is pretty clear that the ‘owner shall have a business location and tax resale account, and take any other reasonable steps in an effort to maximize receipt of sales and use tax revenues for the county.”

Botelho said what has transpired has to be a violation of the agreement and that it should be canceled “to the point where they should pick up their equipment and get the hell out of San Benito County,” he said.

Rivas recounted how he was first approached by Mike Peterson about the project and asked for his support.

“I refused to give him my support because when he introduced himself by saying he was going to bring his history with Goldman Sachs and put San Benito County on the map, that didn’t ring true,” he said. “As he got approval from the board and skipped town with who knows how much money, he’s left a project in ruins. That’s exactly why I didn’t get behind the project then and I’m very disappointed we’re at this stage now.”

Muenzer commented that in the past he had described out-of-town developers in a most unflattering way, but wouldn’t do it now. Instead, he wanted to address a point Botelho had mentioned.

“They’re taking half of our project down to Imperial Valley, I believe, using our land to mitigate that project. They’ve cut a deal with environmentalists so they won’t sue them down in Imperial Valley while our valley gets wrecked. Panoche Valley had a beauty to it that is now gone, and the rest of the county is not getting any benefit. We’re not getting the power from it. Fresno County got their side of the road improved and we’ve got nothing.”

He said he agreed with Botelho that county staff should move forward on canceling the project and suing ConEdison.

“They (ConEdison) need to be here answering our concerns,” he added. “It’s only a half-hour ride in their corporate jet here. I’m going to say it, they basically raped and pillaged us again.”

Supervisor Jaimie De La Cruz wrapped things up by stating, “I don’t need to say anything more. We all stand together on this one.”

Botelho offered, “I think we need to bring this back in a month’s time with staff bringing back options for litigation against ConEdison and to cancel the project.”

When there were no public comments, Botelho made the motion to do as he had recommended.

After Joe Paul Gonzalez, San Benito County's clerk-auditor-recorder, informed the board of supervisors that the county would not be receiving any sales tax dollars from the Panoche Valley Solar Project, Supervisor Anthony Botelho angrily proposed to come back with a resolution to cancel the project and sue its primary owner, ConEdison, but not before calling the company “a bunch of crooks.” Supervisor Jerry Muenzer had even harsher words for the solar developers in the past, but declined to repeat them, at first.

The moment may have been an "I told you so" one for Supervisor Robert Rivas, who has never supported the project and said he knew something was wrong from the very beginning and accused the original developer of stealing money raised for it.

When the agenda item came up for discussion at the July 18 board meeting, County Administrative Officer Ray Espinosa gave an overview of the project before bringing the supervisors up to speed on expected revenues. He reminded them that the original development agreement was for a 399-megawatt facility in southern San Benito County that would generate millions in sales tax revenues. As of today, Espinosa said the project has been reduced to approximately 129 megawatts. He said an auditing team working with ConEdison and an outside consulting firm tried to evaluate potential sale tax revenues.

He said he had invited a Edison representative to come to the meeting. Instead, the company sent reading points, which Espinosa read to the supervisors. They explained that as of May 2017, ConEdison entered into a settlement agreement with the California Department of Wildlife and various environmental organizations that limited the project to the west side of Little Panoche Road. They reduced the output to 130 megawatts, down from 247 megawatts (a previous reduction from the original 399 in 2015). The settlement guaranteed there would be no further litigation by environmentalists nor any more delays. And approximately 26,000 acres of the valley would be set aside as conservation land.

Espinosa read an email from ConEdison, which said “it looks like there is little opportunity for the county to generate sales tax from the project at this point.’” Then he added, “There’s a lot of physical, taxable material out there. Unfortunately, the sales tax will go to the City of San Francisco.”

The news didn’t get any better when Gonzalez took the podium. He said the 247-megawatt project was not even the project the county originally negotiated, but the size of the permit that was eventually obtained. However, he said even the 247-megawatt facility should have generated $5.5 million in sales tax, in addition to $13.5 million in lieu of unsecured property tax.

“When the project was cut in half to 127-megawatts, we originally calculated that we would be receiving about $2 million in sales tax,” he said. “Because of the failure of the developer to ensure that the vendors created a mechanism in the unincorporated county in order to report sales tax none of that sales tax money will be received in the county.”

Gonzalez did say that the county could expect to receive “about $4.2 million in lieu of unsecured property tax, and zero dollars in sales tax.” Espinosa added, “it’s approximately $100,000 to $200,000 a year versus the $800,000 to $1 million a year. So, we’ll receive a little bit more up front and be reduced over the 20-year period.”

Botelho didn’t hold back in showing his ire at the news.

“I’m really upset at the whole deal and I admire my colleague, Supervisor Rivas, for being opposed to this project from Day 1,” he said. “He saw the crooks walk in this door. He read them, whether it was (Mike) Peterson or ConEdison, which is a bunch of crooks. That money is owed to San Benito County. This county gave up a lot.”

Botelho said, however, that the county’s sacrifices would have been worth it if the revenues that were originally promised were still on the table. He accused ConEdison of taking advantage of the county and using mitigation to help fund a solar project in Southern California.

“I want our staff working on canceling this project and suing ConEdison,” he said. “The sales tax should be coming here. Even if the vendor is out of our county because the equipment is in San Benito County, it (tax) needs to be paid here. They knew this and are obligated by the development agreement that is in place. If they’re going to dishonor the development agreement, we need to fight and get our money.”

“The good news is,” interjected Gonzalez, “in our development agreement the language is pretty clear that the ‘owner shall have a business location and tax resale account, and take any other reasonable steps in an effort to maximize receipt of sales and use tax revenues for the county.”

Botelho said what has transpired has to be a violation of the agreement and that it should be canceled “to the point where they should pick up their equipment and get the hell out of San Benito County,” he said.

Rivas recounted how he was first approached by Mike Peterson about the project and asked for his support.

“I refused to give him my support because when he introduced himself by saying he was going to bring his history with Goldman Sachs and put San Benito County on the map, that didn’t ring true,” he said. “As he got approval from the board and skipped town with who knows how much money, he’s left a project in ruins. That’s exactly why I didn’t get behind the project then and I’m very disappointed we’re at this stage now.”

Muenzer commented that in the past he had described out-of-town developers in a most unflattering way, but wouldn’t do it now. Instead, he wanted to address a point Botelho had mentioned.

“They’re taking half of our project down to Imperial Valley, I believe, using our land to mitigate that project. They’ve cut a deal with environmentalists so they won’t sue them down in Imperial Valley while our valley gets wrecked. Panoche Valley had a beauty to it that is now gone, and the rest of the county is not getting any benefit. We’re not getting the power from it. Fresno County got their side of the road improved and we’ve got nothing.”

He said he agreed with Botelho that county staff should move forward on canceling the project and suing ConEdison.

“They (ConEdison) need to be here answering our concerns,” he added. “It’s only a half-hour ride in their corporate jet here. I’m going to say it, they basically raped and pillaged us again.”

Supervisor Jaimie De La Cruz wrapped things up by stating, “I don’t need to say anything more. We all stand together on this one.”

Botelho offered, “I think we need to bring this back in a month’s time with staff bringing back options for litigation against ConEdison and to cancel the project.”

When there were no public comments, Botelho made the motion to do as he had recommended.

John Chadwell

John Chadwell is a BenitoLink reporter and an author. He has many years' experience as a freelance photojournalist, copywriter, ghostwriter, scriptwriter, and novelist. He is a former U.S. Navy Combat Photojournalist and is an award-winning writer who has worked for magazine, newspapers, radio and television. He has a BA in Journalism and Mass Communications from Chapman University and underwent graduate studies at USC Cinema School. John has worked as a script doctor and his own script, God's Club, was released as a motion picture in 2016. He has also written eight novels, ranging from science fiction to true crime, which are sold on Amazon. To contact John Chadwell, send an email to: [email protected]