NEWBURYPORT — Investors of the solar array slated for installation atop the Nock Middle School this month appear to be getting cold feet, leaving the future of the project unclear, Mayor John Moak said.
Moak signed a 20-year power purchase agreement (PPA) between the city and EyeOn Energy of Colorado in late September that allowed EyeOn to install 2,600 solar panels atop the Nock and Department of Public Services buildings. The project would offset approximately 34 percent of the school's energy costs.
The panels were expected to be delivered and installed by Nov. 4, but Moak released word yesterday that EyeOn has been unable to secure funding for the $3.5 million project — the result of a general "halt" of projects by the bank serving as EyeOn's investor due to the nationwide credit crisis, Moak said.
"(EyeOn) said (banks) have halted all projects related to PPAs and other types of projects that they haven't actually funded yet," Moak said. "We were told their investor has asked all their clients to hold their projects until they have a better idea of what the financial picture is going to be."
Under the power purchase agreement, EyeOn would finance the purchase of the solar panels and would be repaid by the city at an agreed-upon per-killowatt rate for the power they generate. The Triton Regional School District pulled out of a similar agreement when EyeOn representatives went strangely silent last month.
While EyeOn Vice President Kent James wouldn't verify last night the identity of the commercial bank involved, he didn't dispute the mayor's assumption that EyeOn's planned investor was Morgan Stanley. Moak himself said he's never been certain of who's backing the project, but conversations have led him to believe the Wall Street bank has been holding the purse strings on this deal.
"We don't have anything that documents who the investor is, but I was told (Morgan Stanley) was the investor," Moak said.
James was mum on what the reported funding freeze means for the Nock project going forward, intimating there may still be hope the project could come together. Asked to clarify, he offered a "no comment."
Beyond the financing hurdles, EyeOn, an upstart company from out of state with few clients to its credit, could be facing other problems, as well.
Boulder County records show the building owned by EyeOn owner and President Alex Kramarchuk — the company's official address, according to the Colorado Secretary of State's Web site — is slated for foreclosure due to mortgage default. It's the fifth time Kramarchuk's residential property has been threatened with foreclosure for nonpayment since 1996. Kramarchuk did not return a call for comment yesterday.
Moak is holding out hope that the federal bailout bill could rescue EyeOn's solar panel financing.
Moak said he was told in a conversation with EyeOn Wednesday night that the bailout bill may benefit projects like this one, especially now that the money is being applied to bank's bottom lines instead of to purchase failed mortgage assets as originally intended. But that is not guaranteed.
"My optimism is not a level that I'd like it to be," Moak said. "Does it mean it might not even happen? At this point I don't know. The only thing that might still happen is that the government's decision to put money into banks might turn out to be a good thing. But I'm reading tea leaves right now to tell you the truth."
Moak said he was told the city still has rights to the panels and will for the next "few days" if the funding somehow comes through. And if it doesn't, the city would have to look into other options if it wants a solar array on the Nock building. The rebate funding approved by the Massachusetts Technology Collaborative will remain the city's as long as a system of comparable size and structure is up and running within one year.
"I have a decent degree of confidence that (the solar project) will happen," Moak said. "Will it happen next week? I don't have a lot of confidence in that.
If the deal doesn't work out with EyeOn, Moak said he would pursue a power purchase agreement with another company through a full bid process. He said the city will know more on that score early next week, when EyeOn says it will have more answers on funding.
"We have to then make a decision, whether we're going to cut out of this project, or look for new panels, or whatever we're going to do," Moak said. "They have to get me some answers soon. We won't be able to continue in a holding pattern."
The delay is the latest issue to plague the project since it was first unveiled by the city's lead negotiator and Energy Advisory Committee member Jeffrey Wootan. Questions regarding conflict of interest arose when Wootan helped the city obtain a waiver of Chapter 25A bidding laws and then negotiated a no-bid deal that benefited a company he was being paid to consult with at the time.
The Daily News received a copy of a complaint filed with the Massachusetts Ethics Commission charging Wootan and Moak with conflicts of interest in the matter.
