CUSDWatch: CUSD Approves Solar Panel Project at a cost of $26 million dollars - Good Deal or Unscrupulous Wasting of Taxpayer Funds? 

Students Learn a Lesson from CUSD's Solar Project. 

The Capistrano Unified School District is proposed to spend $115 million for electricity over the next 25 years. 

In an effort to reduce electricity costs, on December 6, 2017 the CUSD Board of Trustees approved Resolution No. 1718-28 to enter into an energy services contract with REC Solar Commercial Corporation to design, construct and operate a solar project at six high schools and the District Offices:

Aliso Niguel High School: 1,099 kWdc photovoltaic system

Capistrano Valley High School: 975 kWdc photovoltaic system

Dana Hills High School: 1,081 kWdc photovoltaic system

San Clemente High School: 745 kWdc photovoltaic system 

San Juan Hills High School: 894 kWdc photovoltaic system 

Tesoro High School: 1,167 kWdc photovoltaic system

District Offices: 832 kWdc photovoltaic system  

Total kWdc = 6,793 

With the Solar project installation the District is projected to reduce electrical costs from the projected $115,301,649.00 down to $94,069,778.00 saving CUSD $21,231,871.00 over 25 years

CUSD chose to purchase the photovoltaic system using CREB financing (Clean Renewable Energy Bonds) rather than lease the system.

On November 8, 2017 Trustees approved $26 million in CREB bonds and a Lease- Lease Back financing arrangement using Capo Valley High School and Los Flores Middle school as collateral to finance the purchase of the system.

Board Meeting Agenda November 8, 2017 at page 788

Board Audio at 188:16

Board Audio at 189:00 Superintendent and Board Comments 

Trustees were having trouble understanding Lease - Lease Back Financing

Board Audio at 193:00

Motion by Trustee Pritchard

Second by Judy Bullockus

Resolution No. 1718-24 passes 5-0-2 (Trustee Reardon Absent - Trustee Jones left the room unannounced)

See: CUSDWatch: Resolution No 1718-24 Authorizing $26 million in CREB Bond Financing

According to a presentation by Government Financial Strategies, the solar feasibility study estimated net project cash flow benefits of CREB Bond financing and the Lease Lease back arrangement would generate approximately $100,000 - $200,000 per year in cash flow for CUSD over 25 years.  Cash flow of $3.7 million over 25 years.

Board Meeting Agenda October 11, 2017 Agenda Item #25 at page 783

Board Audio at 238:39

Superintendent Vital recommended that this be treated as an INFORMATION ITEM ONLY and be brought back to the Board for Discussion. 

No Action was taken

See: CUSDWatch: BOT Meeting Agenda Item #25 Financing Solar Energy Projects

   

Trustees approved Resolution 1718-28 on December 6, 2017 which awarded the Energy Service Contract to REC Solar for the design , Installation and commission of Solar energy projects.

Board Agenda December 6, 2017 Agenda Item #34 at page 534

Board Audio at 3:34:27

Presentation by Clark Hampton- Open Transparent Process.

If approved CUSD would sell CREB Bonds tomorrow Dec 7, 2017

Students saw total transparency in the process as opposed to power purchase agreements that other districts do.

Board Audio at 3:35:45 

TRUSTEE COMMENTS

None.

Motion to Approve Resolution by Trustee Hanacek

Second by Trustee Bullockus

The Resolution 1718-28 was approved 5-0-2 (Trustee Reardon and Jones absent)

The total cost approved in the resolution is $18,372,631.00

Capital Cost $17,563,660.00

O&M $713,788.00

Performance Guarantee $95,184.00

Total Cost = $18,372,631.00 

However- documentation in Agenda Item #33 showed a Total Cost of $20,622,124 excluding OEM of $713,788.00.

There seems to be a cost discrepancy of $2,963,281.00?

The December Board Agenda had three separate Items related to the Solar Project:

Agenda Item #8  PUBLIC HEARING: ENERGY SERVICE CONTRACT FOR SOLAR ENERGY PROJECTS: Supporting Documentation is in Agenda Item #34 page 35 (There was no mention of Agenda Item #33 Up-date on Solar Energy Projects and Request for Proposal Results which showed that the total cost for the Solar Project was $20,622,124 excluding OEM 

Agenda Item #33 ARC states that the total cost of the project is projected to be $20,622,124.00 excluding OEM.

The Resolution stated that OEM was $713,788.00 so according to Agenda Item #33, CUSD is spending $21,335,912 for the solar project not the $18,372,631 as stated in the resolution.

In addition to the above, CUSD amended the Agenda Item by provided the following Handout at the meeting which was NOT included in the original documentation for the Public Hearing Agenda Item #8 or Agenda Item #33 and #34. Brown Act Violation?

In addition to the $43,830 paid to ARC Alternatives, CUSD has also paid Government Financial Strategies $250,000 as a financial Consultant on the Solar Project and $50,000 to Danis Wolver Kelly for work on the CREB Bond financing even after Staff represented to Trustees that there was NO EXPENSE in applying for the CREB Bonds.

see: October 11, 2017 2017 Complaint to DA for Brown Act Violations

Were these costs (paid for from Pacifica San Juan Mello Roos payments) included in the cash flow projections? 

Background

May 10, 2017 CUSD BOT Meeting Agenda Item #5 page 79

CUSD paid Arc Alternatives $43,830.00 for the Solar Feasibility Study 

July 26, 2017 CUSD BOT Meeting Agenda Item #26 Solar Feasibility Study page 611

This was an Information/Discussion Item only. The Board took no action.

Arc Alternatives presented the findings of the Solar Feasibility Study so that the District could determine if it should move forward to implement the Solar Project and if the District should submit an application for CREB Bonds to finance the solar project.

Note: CUSD Staff had already submitted the application for the CREB Bonds prior to receiving Board approval (CREB Application was submitted in June 2017)

September 25, 2017 CUSD released and RFP for proposals for solar and battery storage at seven sites.

When was this approved by Trustees?

October 11, 2017 CUSD BOT Meeting Agenda Item #25 Financing Solar Energy Projects page 783

Presentation by Government Financial Strategies on using CREBS to finance Solar Energy

"The solar feasibility study estimated net project cash flow benefits of approximately $100,000 - $200,000 per year totaling nearly $3.7 million over 25 years." at page 783

CUSD had to put up Capo Valley High School and Las Flores Middle School as Collateral in a Lease - Lease back arrangement for the management of the system.

November 8, 2017 Up-date on Solar Energy Project

This was an Information/Discussion Item Only - No Action Was Taken

November 8, 2017 CUSD BOT Meeting Agenda Item #36 RESOLUTION NO. 1718-24 authorizing the issuance of $26 million in CREB Bonds. 

Data: The Solar Feasibility Study estimated project cash flow benefits of $100,000 to $200,000 per year, totaling $3.7 million per year over 25 years.

December 6, 2017 BOT Meeting Public Hearing Agenda Item #8 PUBLIC HEARING

Why did Clark Hampton ask Trustee McNicholas to read a 4- Item Statement into the record without providing that documentation to the Public? 

Board Audio at 1:52:01

Open Public Hearing at 9:08 pm

No BLUE CARDS

Trustee McNicholas starts to close the Public Hearing but Clark Hampton Deputy Superintendent for Business Services interrupts the Public Hearing and request that a statement must be read into the record... four Items.

Board Audio at 1:53:02

Trustee McNicholas reads a very long statement containing four items.

Close the Public Hearing at 9:11 pm

Why did CUSD give students Extra Credit for attending a Board meeting to advocate for a particular Board Item... Solar Power? 

Board Audio at 2:21:20

Max Student Representative on the Board: Raise your hand if your her for Solar? Keep your hands raised if you are also in an AP class? Ah Ha I see you guys... get that extra credit AP Environmental Science.

IT IS INAPPROPRIATE FOR STUDENTS TO RECEIVE EXTRA CREDIT FOR ATTENDING BOARD MEETINGS TO ADVOCATE FOR A SPECIFIC AGENDA ITEM- Solar Power

While I appreciate the work that all of the students did on this project - I cannot help but feel that students were used by CUSD. 

I would hope that students would go back and revisit the economics of this project with an INDEPENDENT 3rd party and verify the actual cost. Then look at the financing arrangement to make sure it is based on what was represented keeping in mind the following:

CUSD is going into debt (it is borrowing $26 million dollars). CUSD also hopes to get another $889 million dollar school facilities bond on the next ballot. How much debt should taxpayers accumulate at the hand of CUSD and for what benefit.

In addition to the costs stated above- CUSD received $8.13 Million in Prop 39 Energy Grants which could have been used to purchase new HVAC Systems for schools. Instead $5.9 million went to a single company- Schneider Electric for Energy Audits and an Energy Conservation Project. 

Rather than increase the Base Funding Grant which would allow local districts to use more money in the classroom, the State uses grants to promote political agendas like "Green Energy".  

These are only 2 examples and look at the money spent for very little return $26 million in CREB Bond Debt + $8.9 million in Prop 39 Grant Money + $1.67 million for 5 electric busses that can't drive across the entire District without stoping for a charge.

And also consider the assumptions made to receive the cost savings on the $26 million dollar solar project:

1) It appears that these panels will be purchased from companies outside the US because there is a contingency in the Annual Cost of 5% because the current administration may increase tariffs on panels purchased outside the United States. See Board Agenda at page 529 

" The “module trade case contingency” is a reserve to account for additional costs, if any, related to the Federal Section 201 solar trade case currently pending a final decision by the Administration. Any unspent funds will be used to pay down the outstanding bond balance, as required by law.  

CUSD did not include this in the Resolution Cost that it approved. That is part of the cost discrepancy.

2) Was there any discussion about health and safety differences in panels and batteries made outside the United States? Why not buy from an American company- Tesla was one of the bidders and not only are they based in America- they are a California company.

3) The Rate structure that the estimated savings grandfathered SCE and SDG&E Rates for 10 years. Annual Escalation in Rates is projected to be 3% per year- CUSD may loose substantial money for the remaining 15 years of this project. And the granfathering is not in place yet- what if it is not received?