Bankrupt solar farm improvements are on their way

Photo by Melissa Diaz Hernandez / The Valley Chronicle
Improvements will be made to the facility along Acacia and Sanderson.

■ Melissa Diaz Hernandez / Reporter

Residents who have been concerned about the SunEdison facility on the southwest corner of Acacia and Sanderson avenues can put their minds at ease… Hemet’s Planning Commission has a plan.
The background: the Hemet Planning Commission in December 2014 approved the lease of 136 acres of land to SunEdison. Six months later, SunEdison’s stock began to tank, falling more than 90 percent. As a condition of the contract with Hemet, SunEdison was required to provide a Letter of Credit for $2,133,111. This was a wise decision as the company filed Chapter 11 in April 2016. According to Bloomberg, it was the largest bankruptcy of 2016.
Funds from the letter of credit are being used to finish the promised improvements along Acacia and Sanderson avenues that are required as part of the contract. A city of Hemet staff report stated the following: “On April 21, 2016 the City sent a Notice of Default to SunEdison indicating that they had 10 days to submit a plan to correct the default situation for not providing the off-site improvements along Sanderson Avenue and Acacia Avenue. After receiving no response, and learning that SunEdison had filed for Chapter 11 Bankruptcy Protection, the City sent a Demand Letter to Key Bank requesting the Letter of Credit in the amount of $2,133,111. After providing some additional documentation on May 16, 2016; the City received the wire transfer of the monies on May 16, 2016.”
SunEdison had until July 2016 to complete the improvements. When the improvements were not completed by the deadline, the city pulled the required funds from the letter of credit to complete the improvements.
While the city is not certain of Southern California Edison’s (SCE) work schedule, the goal is to put the project out to bid and get the construction started in the summer of 2017, with the project completed sometime in September. The city is reviewing the plans and documentation provided to obtain a good bid, aiming to avoid change orders if possible.
While there is good news with the projected timetable, there are variables external to the city that could delay this process.
Just prior to City Engineer Steven Latino leaving in December 2016, the city of Hemet acquired the improvement plans from the original designer. There is a difference in the plans that are created for a private developer versus the plans that are created for a city, says Acting Engineering Director/City Engineer Nino Abad, so the city had to take the existing plans and turn them into a Capital Improvement Project (CIP). The original design was OK but according to Abad, the city found issues that needed to be resolved. Currently, the city is working through those issues. Once completed, the city of Hemet, as a public agency, must create biddable contract documents.
Abad stated that the biggest delay is due to the utility poles being moved by various utility companies. Southern California Edison could not find a permit application on file for the meters and street lights, and most developers would have had all permitting for the electrical done at one time. However, in this case, the only permits pulled were for the poles — not the streetlights or traffic meters. Fortunately, the city has the money to complete the improvement project due to the letter of credit.
In addition to the letter of credit for the improvements, the city also received a Letter of Credit for the solar fees. Deanna Elliano, Hemet’s community development director, said that the “funds from the solar fee agreement were approved by the Council with an annual fee of $66,500, increasing by 1.5 percent every year. That was just an agreement to be able to continue to have the solar field and it was for a 25-year term. Ultimately, over the 25 years, it would generate a total of just under $2 million.”
The fees are guaranteed by a Letter of Credit and were intended to offset the revenue that would have been generated had another business or industry gone into that location. The solar farm is generating power for the city of Riverside. Gerald Buydos, solar program manager for Riverside Public Utilities, confirmed that the only thing they purchase is the power output from the facility.
According to Elliano, the city received the fees the first year, but did not receive any fees for year two. The city is drawing on another Letter of Credit to obtain the fees due. Elliano stated that the city would see if SunEdison pays the fees next year. If they do not, then the city will draw from the Letter of Credit, once again.

Leave a Reply

Your email address will not be published. Required fields are marked *