Board of Selectmen/Municipal Electric Power Advisory Board

HOLDEN BOARD OF SELECTMEN

MEETING MINUTES

SEPTEMBER 19, 2017

BOARD OF SELECTMEN/LIGHT COMMISSION

MUNICIPAL ELECTRIC POWER ADVISORY BOARD

7:00PM                                                                                                           HMLD

BOS Present: Chairman Robert Lavigne, Geri Herlihy, Jeremy Kurtz, Anthony Renzoni  (7:31PM)

Not Present:  Tim Ethier

Municipal Electric Power Advisory Board Present: John Shepherd, Peter Elkas, Steven Sendrowski, Scott Carlson, Tom Runstrom, Joe Sullivan, and Gary Harrington

Others Present:            Peter Lukes, Town Manager (7:08PM )

                                    Jim Robinson, Director HMLD

                                    Liz Fotos, Town Recorder

Chairman Lavigne called the meeting to order at 7:06PM.  The Boards stood to recite the Pledge of Allegiance.

Chairman Lavigne stated that after hearing the presentation, the meeting would be open to public comment.   He stated that there was a quorum for both Boards.

Jim Robinson, Director HMLD, stated that this was a joint meeting of the Municipal Electric Power Advisory Board and the Board of Selectmen.  He stated that the Board of Selectmen are also the Light Commissioners so they are the decision making authority for the Light Department.  He stated that the Advisory Board meets to get counsel and insight on various matters.  He stated that today they would be hearing about a solar facility at 412 Shrewsbury Street.

Mr. Lukes entered the meeting at 7:08PM.

Mr. Robinson stated that they were on a fast time line and would need to have the matter move quickly through Town for all the Boards and Committees to hear the matter and be in agreement.  He stated that he would be giving a short presentation, the representative from the developer would speak about the project and then it would be opened up for public comment.  He stated that at the end of the meeting, the two Boards would go into Executive Session to consider the terms specifically.  He stated that these details were still confidential so the Board would meet privately.

Mr. Robinson presented: Holden Municipal Light Department// Proposed Shrewsbury Street Solar Project

Presentation to Board of Selectmen/ Light Commission // Municipal Electric Power Advisory Board dated September 19, 2017

(See Attached Slideshow Presentation)

Mr. Robinson concluded his presentation and turned the floor over to Steven Pearlman and Bill McNamara of Eco Energy Partners, LLC.

Mr. Steven Pearlman stated that his day job was as a project finance attorney and about ten years ago he began working in renewable energy finance.  He stated that Bill McNamara was a retired GE Power Executive.  He stated that the cell tower site at Shrewsbury Street was owned by a company called Vertical Bridge and that Mr. McNamara had a relationship with that company. 

Mr. Pearlman stated that they had executed a 25 year contract and now have site control.  He stated that they wished to build a project that could project up to 5% of HMLD’s portfolio goal.  He stated that solar comes in DC and they would then put inverts to convert it to AC and they would be looking to generate up to 4.5MW AC.

Mr. Pearlman stated that this would project 5.5 million KW/ year so about 5% of the portfolio if approved. 

Mr. Pearlman said that from looking at Mr. Robinson’s slideshow, you could see that renewable was a sliver of the HMLD Energy Sources and this would be a significant upgrade in the renewable energy portfolio.  He stated that one reason to do it was because they would enter into a long-term contract at a fixed price and lock in for that time period.  He stated that it was for a 25 year lease and two 5 year extensions and that could give the Town that stability.  He stated that he believes this would be part of the portfolio long term and that the facility would have to comply with all regulations.  He stated that they have a target date of getting this done by March of 2018.  He stated that the date was relevant because part of why it was working for them and why they were able to offer it to the Town at a lower rate was because the state was subsidizing the risks.

Mr. Pearlman stated that he thought it would be helpful for them to see how it worked for the developer and financial partners.  He stated that the developer would own the solar facility that would give them rights at 30% tax credits for the cost.  He stated additionally they would be entitled to accelerated depreciation.  He stated that normally these panels last but the government allows the developer to write them off quicker.  He stated that these two tax benefits were available anywhere in MA.  He stated that MA was one of the few states that still offered the state subsidy called SREC. 

Mr. Pearlman stated that MA is changing its program which was why the March date was so important.  He stated that deals done before that time would be awarded certain SREC’s and they would be allowed to turn them into money at a certain factor.  He stated that they do not know what will happen after March of 2018.  He stated that they did know that they were going to need a little leeway and planned to go to ask the state for an extension. 

Mr. Pearlman stated that if they did not meet the deadline the economics of the project would change and without the SREC’s there the deal would not work.  He stated that the two tax benefits, SRECS was what allowed them to charge under market value.

Mr. Pearlman stated that the property owned was Vertical Bridge.  He stated that with regards to if the Town could do this on their own, the answer was maybe if they had the property; however, the government could not get the tax benefit of this.

Sel. Renzoni entered the meeting at 7:31PM.

Mr. Pearlman stated that the reason many governments look to private developers to do these projects is because the developer can take the benefits and then get a lower power price to give back to the government.

Mr. Pearlman stated that the property owner still owned it and they have a 25 year lease with two 5 year extensions.  He stated that the owners gave them diligence periods to get approvals.   He stated that they would be responsible for getting the EPC Contractors to design the structures, for installation, and for operation and maintenance for the facilities for the lease term. 

Mr. Pearlman stated that they would be owners of the facilities not the land; however, they were entitled to the benefits and then they were able to sell power to the Town. He stated one piece of this that was critically important to understand was that all the risk was on their side.  He stated that HMLD only paid for delivered power on the contract price so if they do not project, the obligation for HMLD was 0. 

Bill McNamara stated that he worked for GE and ran the power business for China in the 90’s.  He stated that he had done consultant work for a number of municipal light departments in Massachusetts and he worked to get them familiar with what Mr. Pearlman outlined and why solar was significant. 

Mr. McNamara showed the Boards and the public a layout that was being proposed.  He stated that this was the first drawing and there would be modifications made. He stated that one of the things the Town has is a solar ordinance that calls for setbacks and buffers and contractual items that the developer needed to meet.  He stated that the Town calls for 50 ft. setback for solar ordinances; however, because it was a large piece of land, they doubled the requirement to 100 ft. to leave as much buffer as possible in the wooded area so that neighbors were not impacted. 

Mr. McNamara stated that there were wetlands on the site and that the plan was drawn up to conform to the Town’s wetlands requirements.  He stated that all the setbacks met or exceeded the Town’s bylaws.  He stated that they also had taken steps to have an initial discussion with the MA Natural Heritage Foundation with regards to the nesting turtles.  He stated that they would take precautions to protect them during the nesting seasons and that it was something that they had done for multiple projects in MA.

Mr. McNamara stated that the land itself was encumbered by radio towers to there was not one continual solar panel.  He stated that because of the shading of the radio towers they were trying to optimize the areas they could.

Mr. Pearlman stated that there would be a pilot agreement to be negotiated with the Town.

Mr. Pearlman stated for background purposes, he lectured on this topic nationally and himself and Mr. McNamara met and financed a deal in NJ where they took schools, libraries and Town Offices and pooled them together to do a municipal deal.  He stated that they had done solar financing for non profits and used different provisions for urban use.  He stated that they believe in this because they have seen it work and that by using these subsidies they are able to afford the Town with below average prices.

Chairman Lavigne opened it up to the Boards for questions.

Sel. Renzoni asked where it would leave the Town if the conditions that exist today go away or change because it was a federal backed program.

Mr. McNamara stated that the program at risk was the SREC.  He stated that it was changing effective March 2018 and that while there is an SREC II being developed but they don’t have the details on it.  He stated that for purposes of this project, March 2018 was an important date because the project needed to be ready to operate by that date.  He stated that winter was not the best time to work and that was one of the reasons that they had requested the meeting tonight (September 19, 2017).  He stated that assuming the Advisory Board and the Board of Selectmen approve entering into a contract there was a variety of approvals throughout Boards and Committees in Town that they would need to get through (PB, ZBA, Con Com, etc).  He stated the federal incentives were not looking to go away, they were extended, it was the state programs and incentives that were at risk.    

Chairman Lavigne asked if anything was grandfathered in.

Mr. Pearlman replied that if they do not get the federal tax benefit there was no transaction.  He stated that they have an out-clause in the lease if the federal government pulled the tax credit then he doubted the economics of the project would work and there were provisions in the lease that supported that.

Sel. Renzoni asked what would happen if in three years things changed, he asked if the Town would be stuck with and inoperative solar field.

Mr. Robinson replied that there were defaults in the agreement.  He stated quite frankly the risk of this project not happening was in the next 6-9 months. He stated that if it was in place and operable, the risk of anything was very low.  He stated that one thing they will speak about later was price.  He stated it would be fixed for a long time and the Town would only pay for power that was delivered which meant on a day that there was three feet of snow, the Town would not pay for anything but on a nice sunny spring day, the Town would get locally generated solar power.

Mr. Pearlman stated that the government could not change the rules once they have entered into a contract.  He stated that they can change a tax benefit going forward but constitutionally they could not change something once a contract was entered into.

Sel. Renzoni stated that the state had constantly changed things on the Town so he needed to ask these questions.  He stated that it was a huge chunk of residential land.

Mr. Pearlman stated that the program was going to change but that was why the date was important.

Sel. Herlihy stated that she had done some research and that it looked like a lot of solar projects had stalled, she asked if that was due to SREC.

Mr. Pearlman stated that they were going to go to the state with Mr. Robinson and request additional time.  He stated they would know soon if that was approved.

Sel. Herlihy asked if the stalled projects were waiting on approval.

Mr. Robinson stated that there was a variety of issues that could be causing problems.  He stated that some of the stalling that Sel. Herlihy had heard about could have been the issues with larger companies such as National Grid. He stated that National Grid was only obligated to do so much so it could be challenging for a developer to get an agreement in place. He stated that Holden did not have those restrictions on the investor side and was not limited. He stated that they (Holden) could have as much solar as we want in town and it was up to HMLD to decide.  He stated that because we were a municipal light department we made the rules.

Chairman Lavigne asked on the days that the panels were producing a lot of power, anything that was not used would get bundled and sold.  He asked who would get those credits.

Mr. Robinson replied that the way it worked was that we were always open to the market at 10-15%.  He stated that we have not had to sell the power it is just used elsewhere.  He stated that some facilities generate more than the light department uses so we act as a battery.  He stated that we were never in the position to put it back in, it just meant that less was purchased from the market.

Sel. Lavigne asked what the initial investment was and how much it cost to maintain it.

Mr. McNamara replied that they owned it and the cost to the Town was zero.

Sel. Lavigne asked if there was a dissolution of contract who cleaned the site.

Mr. McNamara stated that they would have to post a bond to bring the site back to the original state.

Tom Runstrom, HMLD, stated that if the contract was in place nothing could change but he asked if it needed to be completed by March for it to move forward.

Mr. Pearlman stated that if the contract was approved it would say signed by contingency and that if all the contingencies were met by the date then the deal and pricing would be made.

Mr. Runstrom asked if an agreement had been reached.

Mr. Pearlman stated they could not get investors until they had all their pieces in place.

Joe Sullivan stated that he was interested in the numbers.  He stated that he was concerned with the quality of life for the people that lived there and the fact that it was a public entrance to town.  He stated that he wanted to make sure that due process was being done and that whatever was being asked with respect of development was being completed.  He stated that those assurances needed to be made to ensure that the citizens’ quality of life was held high.

Mr. Pearlman replied that the Town required a 50ft buffer and they doubled it.  He stated that if they do a poor job, it would be the last deal they did.

Mr. McNamara stated that their incentive is that they need to make the plant run for the amount of time otherwise it was on their back to continue to pay for the lease and the investment. He stated that they were incentivized to put in high quality and to run and operate the facility.

John Shepherd, MEPAB/ HMLD, asked if they had a preselected group of EPC firms and a selection process.

Mr. Pearlman stated that he had seen projects fail and this was not the place that you skimped.  He stated that this was the most important piece and needed to be done properly so they only use specific firms.  He stated once they were further down the road, they could share names with the Town and answer any questions that arose.

Mr. Lukes asked if they had an onsite management team.

Mr. McNamara replied they did.

Scott Carlson, MEPAB/HMLD, asked if that team was part of his firm or the contractors.

Mr. McNamara replied it was part of the contractors but they needed to have local presence.

John Shepherd, MEPAB/HMLD, asked who did maintenance.

Mr. Pearlman replied that maintenance was not a huge deal in solar and a lot of it was self controlled because it was in a field.

Mr. McNamara replied the output was monitored remotely and was critical to them because that was how they were paid.

Mr. Shepherd asked if they were looking to have it fully commissioned by March of 2018.

Mr. Pearlman replied they were unless they received an extension.

Mr. Shepherd replied it seemed aggressive.

Mr. Pearlman agreed.

Chairman Lavigne asked if they had investors lined up.

Mr. Pearlman replied that there were several investors that they had worked with in the past and they know their parameters and what they would accept.  He stated that their biggest issue was the timeline.

Sel. Renzoni asked what they were doing to preserve the aesthetics and he also wanted to know how much homework the Town had done on the developers and what the Town knew about them.

Mr. Robinson replied that Eco Energy came highly recommended by a number of towns including Holyoke, Peabody, and Middletown.  He stated that they had done the due diligence that they have access to. He stated that aesthetics was going to have to be determined with the other Boards and Commissions in Town.  He stated that from what they say, they were focused on the aesthetics and that the Town plans to hold them to it.  He stated that there was only so much that could be done but that they could mitigate the visual aspects.  He stated that is where they can look to other towns to see what they did as this was not their area of expertise. 

Chairman Lavigne stated that as you drive up the street there are 12-15 abutters that share the property line.

Mr. Pearlman replied that it was 100ft wooded.

Sel. Renzoni replied that it was MA and it was wooded until it wasn’t.  He asked if the panels were shiny.

Mr. Robison replied they were not shiny.

A member of the public asked about the 25 years with two five year extensions.

Mr. Pearlman replied that all parties needed to agree to the extension.

Sel. Herlihy asked how many acres.

Mr. McNamara replied a little more than 30 acres and about half the existing parcel. 

A member of the public asked that if all the depreciation was written off in five years what was to keep them from selling and if they did sell did the terms of the agreement with the Town have to be maintained.

Mr. Pearlman replied that there was a federal tax recapture period so the developer could not sell to someone that did not qualify.

Public asked what happened after five years.

Mr. Pearlman replied it would be governed by the contracts.

Chairman Lavigne asked if they chose to sell the contract to a private firm, could the conditions change.

Mr. Pearlman replied that there is a consent provision for the owner.  He stated that they could be there long term or not but what they can’t do is sell it or walk away leaving the Town with people they don’t know.

The Public asked how the solar farm on the way to Providence, RI compare to these.

Mr. McNamara replied that this will be one of the larger ones in MA.

The Public asked what the highest point of the racks would be.

Mr. McNamara replied about 10FT.

Dave White asked about the pilot and the property tax.

Mr. McNamara replied that the rate of burden was on the developer.  He stated that if they take the property tax and if solar in MA was taxed then they would not be able to offer an attractive price.  He stated that they find the right balance and create incremental revenue and offer competitive rates. 

Mr. White stated that because they were not being charged the property tax rate, the light department was receiving the benefit.  He stated that in communities like ours, which happens to be higher power uses, they get the benefit of lower electric rates and then tax payers are subsidizing. 

Mr. McNamara replied that it was an incremental tax and you won’t get it if they were not there.

Mr. Pearlman stated that Vertical Bridge told them that there was nothing else being done with that property if this did not happen; he stated the Town would not be receiving any additional taxes.

Mr. White stated that the light department was getting the lower power cost.  He stated that personal property tax was not dollar for dollar for equipment and any other business would pay.  He stated that he was on Fin Com and that is why he questioned it.  He stated that they need to be fair to property owners in Town and property owners versus rate payers was a concern.

Mr. Robinson stated that he thinks this is the thrust of when the pilot goes to Town Meeting.  He stated that the light department doesn’t get the benefit it all gets rooted back to the customer.  He stated that the two largest rate payers in Town are the schools and the Town so to some extent they can keep it stable and make predictions but that is the thrust of the decision.  He stated that he thinks this line of thought comes further down the road when the matter comes before Town Meeting.  He stated that if the sense is that the Town wants to fully tax the property, or if the Town wants the assessed value, it can be worked out.  He stated that it was only for a short time because of the deprecation.  He asked what the balance was that he wanted to strike; he stated that his objective was to keep rates as low as he could for as long as he can. 

Mr. White replied that he was not arguing it but suggesting that the Board of Selectmen needed to look at it.  He stated that the school district was one of the largest payers in Town and they were selling inexpensive power to Wachusett School District.  He stated that 60% of the lower rates go to other towns and the reality was that they needed to be concerned with Holden and not giving the benefits of lower rates to surrounding communities.  He stated he was not saying it was a bad deal, he was just suggesting that it was something to look at and he hoped that the Board of Selectmen would take it seriously. He stated that they should not be doing this if it was being subsidized through the tax payers because other businesses don’t get the same sweet deal.

Mr. Robinson replied that if the Town wanted to get the full value of the property this would not work.

Mr. White stated that there needed to be a balance struck.  He stated that the Board of Selectmen needed to look at what the balance was for the tax payer not just the rate payer.

The Public asked if the map was on the Town’s website.

Mr. Robinson replied it was not yet.

The Public asked if abutters would be notified.

Mr. Robinson replied that abutters would be notified through the hearing process.

The Public asked where equipment would enter the site from.

Mr. McNamara replied the main gate.

The Public asked if there was room for extension.

Mr. Pearlman replied there was not.

The Public asked how much of Town power did solar panels provide.

Mr. Robinson replied about 5%

The Public asked about the environmental impacts of cutting down trees.

Mr. McNamara replied that they did not plan on disturbing many trees.  He stated that they wanted to stay away from the wooded area.

Mr. Pearlman replied that they would also appear before the Conservation Commission and would need to have detailed plan however they were not there yet.

The Public asked once the permits were approved how long it would take to build.

Mr. Pearlman replied that they hoped to have it by year end which would mean winter construction but they also planned to go to the state for an extension.  He stated that they wish they found this opportunity sooner but that they had seen other projects receive an extension.

The Public asked if they did not get an extension would they move forward.

Mr. Pearlman replied they did not know.

Mr. McNamara replied they also needed the local Boards approval as well; ZBA, Con Com, Planning Board and Town Meeting.

Mr. Robinson replied that Town Meeting needed to approve the pilot.

The Public asked if any testing had been done to see if the old dump could be used for solar panels.

Mr. Robinson replied that it was something that he had been looking at for several years and DEP was reviewing the site itself.

The Public asked if the panels moved or were stationary.

Mr. Pearlman replied they were stationary.

The Public asked if there was a reflection on them.

Mr. McNamara replied that it was minimal because the design was to minimize reflection.

The Public stated that the plan showed the layout of the panels but he asked what the transmission lines in and out would look like.

Mr. Robinson replied that HMLD was contemplating doing a separate dedicated circuit to connect this.  He stated that for electric stability purposes it would make sense to take this as an injection into the system.  He stated that they were concerned about frequency and it was only a mile away from the Bullard Substation.

The Public asked if this was something that could run on the lines.

Mr. Robinson replied that they may replace some poles anyway.

The Public asked if there was a shelter or structure on site.

Mr. McNamara replied that there would be a small house for invertors and electrical equipment that was needed to convert DC to AC.

Mr. Lukes asked about the timing and Town Meeting.

Mr. Robinson replied that they would need it within 150 days of effective date, so before May.

Sel. Kurtz asked about burying the poles.

Mr. Robinson replied that they would be underground up to the street and then go up and over.

Chairman Lavigne stated that the next step was to go into Executive Session to discuss details.  He asked if Mr. Robinson was looking for a supporting vote tonight.

Mr. Robinson replied that in Executive Session he was looking for recommendation from the Advisory Boards and he had some handouts for the Board of Selectmen as well.  He stated that it was authorization for the Town Manager and Light Department Director to execute contracts. He stated the pilot was a different matter and would go before Town Meeting.

Motion by Sel. Kurtz, seconded by Sel. Renzoni, it was VOTED TO ENTER INTO EXECUTIVE SESSION BY UNANIMOUS ROLL CALL VOTE PURSUANT TO MGL CHAPTER 30A, SECTION 21(a), PURPOSE 7: “TO COMPLY WITH, OR ACT UNDER THE AUTHORITY OF, ANY GENERAL OR SPECIAL LAW”, SPECIFICALLY MGL CHAPTER 164 SECTION 47D, WITH RESPECT TO A POTENTIAL POWER SUPPLY AND CAPACITY OPPORTUNITY, AS NECESSARY FOR PROTECTING TRADE SECRETS, CONFIDENTIAL, COMPETITIVELY SENSITIVE OR OTHER PROPRIETARY INFORMATION PROVIDED IN THE COURSE OF PROCEEDINGS THAT SUCH DISCLOSURE WILL ADVERSELY AFFECT ITS ABILITY TO CONDCUT BUSINESS IN RELATION TO OTHER ENTITIES MAKING, SELLING, OR DISTRIBUTING ELECTRIC POWER AND ENERGY, PURSUANT TO SAID CHAPTER 164 AND TO RETURN TO OPEN SESSION FOR THE SOLE PURPOSE OF ADJOURNMENT.  (Renzoni: yes; Kurtz: yes; Herlihy: yes; Lavigne: yes).

A Motion was made by John Shepherd and was seconded by Joe Sullivan, it was VOTED TO ENTER INTO EXECUTIVE SESSION BY UNANIMOUS ROLL CALL VOTE PURSUANT TO MGL CHAPTER 30A, SECTION 21(a), PURPOSE 7: “TO COMPLY WITH, OR ACT UNDER THE AUTHORITY OF, ANY GENERAL OR SPECIAL LAW”, SPECIFICALLY MGL CHAPTER 164 SECTION 47D, WITH RESPECT TO A POTENTIAL POWER SUPPLY AND CAPACITY OPPORTUNITY, AS NECESSARY FOR PROTECTING TRADE SECRETS, CONFIDENTIAL, COMPETITIVELY SENSITIVE OR OTHER PROPRIETARY INFORMATION PROVIDED IN THE COURSE OF PROCEEDINGS THAT SUCH DISCLOSURE WILL ADVERSELY AFFECT ITS ABILITY TO CONDCUT BUSINESS IN RELATION TO OTHER ENTITIES MAKING, SELLING, OR DISTRIBUTING ELECTRIC POWER AND ENERGY, PURSUANT TO SAID CHAPTER 164 AND TO RETURN TO OPEN SESSION FOR THE SOLE PURPOSE OF ADJOURNMENT.  (Shepherd: yes; Sullivan: yes; Elkas; yes; Sendrowski: yes; Carlson: yes; Runstrom: yes; Harrington: yes).

The Boards adjourned Executive Sessions by unanimous roll call votes.

The MEPAB/HMLD adjourned their meeting at 9:09PM.

Motion by Sel. Renzoni, seconded by Sel. Kurtz, it was UNANIMOUSLY VOTED TO ADJOURN THE SEPTEMBER 19, 2017 BOARD OF SELECTMEN MEETING AT 9:09PM.

APPROVED: ___November 6, 2017______________