Wednesday
Sep052018

Was the Boxer report a cover-up of his office's role in solar scam?

With regards to the on-going problem of the Sussex solar scandal, there are indications that the Sussex County Board of Chosen Freeholders might use its lame-duck session to assign blame and set a legal course in order to tie-the-hands of the popularly elected, incoming Board.  This would explain the rush to sign a three-year contract with a new County Attorney, a lawyer so painfully conflicted that any objectively-minded person would need to question why he was chosen in the first place.  But when you control the lawyer you set the direction of the litigation.   

That’s the first part.  The second part is the Board’s reliance on the report by New York City lawyer Matthew Boxer.  It will be remembered that Boxer himself was a player in the scandal, his office having signed-off on the solar project and so ensuring that it would move forward with the State’s seal of approval.  We all know the result:  Suffer the taxpayers. 

For those of you for whom this is a bit foggy, let’s go through it all, once again.  In February 2011, the Sussex County Freeholder Board authorized a shared services agreement with the Morris County Improvement Authority (MCIA) to implement the solar project.  In July 2011, the project was sent to the Office of the State Comptroller for review. At the time, Matthew Boxer was the State Comptroller and responsible for that office.  After reviewing all the project documents, the following month (August 2011), the project was given the okay by the Office of the State Comptroller. Based on this review, the Sussex County Freeholders went forward with the project.   

Later, in January 2016, Matthew Boxer would be given a no-bid contract to review the solar project that his office had signed-off on in August 2011.  How that contract came to be awarded to Mr. Boxer remains a mystery. 

If you read Matthew Boxer's 62-page report on the solar scandal – which cost Sussex County taxpayers $500,000 ($8,064 per page) – he never once mentions the role of his former office, the Office of the State Comptroller, in the approval process.  The word "comptroller" doesn't appear in his report, even once, despite the central role it played in the scandal and in spite of the fact that Matthew Boxer ran the office when it was responsible for reviewing the solar contract. 

In his 62-page report, Mr. Boxer lays bare his office's misfeasance: 

"The ability of the County to intercede or assist in the dispute between Sunlight and PPM was further hindered by the County’s lack of legal standing in the operative contract documents.  For example, the County had no contract with 

Sunlight, only the MCIA did.  The County was even further removed contractually from PPM; neither the County nor the MCIA had a contract with PPM, only Sunlight did... In short, the County was underwriting the Solar Project, but was not in a position to affect it or protect it. 

Typically, when a contractor on a public construction project is unable or unwilling, for financial reasons or otherwise, to complete the project, the public entity may resort to the performance bond that has been posted by the contractor.  A performance bond is a commitment made by an insurance company or bank, known as a 'surety,' to compensate the contracting entity financially or otherwise carry out the completion of the project in cases where the contractor defaults on its obligations...   In the case of the Solar Project, a surety bond was posted that contained a commitment from a well-known, national insurance company.  While the bond technically complied with legal requirements, the terms of the specific bond that was posted made the County’s invocation of the bond difficult, if not impossible.  First, despite the massive financial commitment the County had made on this project, the County was not listed as a beneficiary (known as the 'obligee') on the bond.  Instead, the MCIA and a Sunlight-related entity were listed as the obligees.  Thus, the County had no explicit standing to invoke the bond or to seek compensation under the bond.  It was reliant in this regard on the MCIA."   

In August 2011, Matthew Boxer's office (the Office of the State Comptroller) approved the terms of the 196-page contract. Below is a the table of contents of the contract forwarded to and approved by the Office of the State Comptroller: 

THE MORRIS COUNTY IMPROVEMENT AUTHORITY

MORRIS COUNTY RENEWABLE ENERGY PROGRAM 

(COUNTY OF SUSSEX PROGRAM), SERIES 2011

_____________ 

REQUEST FOR PROPOSALS

For a Developer of Photovoltaic Systems with respect to certain Local Government Facilities in the County of Sussex, New Jersey

Dated [Post Date] 

TABLE OF CONTENTS 

EXHIBITS

 

Exhibit 1          Notice of RFP  ............................................................................................... E1-1

Exhibit 2          Respondent Checklist .................................................................................... E2-1

Exhibit 3          Proposed Schedule for Series 2011 Program ................................................. E3-1

  

ARTICLE I

INTRODUCTION, OVERVIEW, FINANCING OPTIONS

AND DEFINITIONS

 

Section 1.1      Introduction and Overview ............................................................................... 1

Section 1.2      Financing Options .............................................................................................. 9

Section 1.3      Authority Financing Option ............................................................................... 9

Section 1.4      Company Services Under the Authority Financing Option ............................. 21

Section 1.5      Company Financing Option ............................................................................. 21

Section 1.6      Company Services Under the Company Financing Option.............................. 23

Section 1.7      Material Changes to RFP.................................................................................. 24

Section 1.8      Definitions....................................................................................................... 24

 

ARTICLE II

INITIAL ACTION BY RESPONDENTS

 

Section 2.1      RFP.............................................................................................................. 28

Section 2.2      Authority Contact Persons ......................................................................... 28

Section 2.3      Respondent Registration ............................................................................ 29

 

ARTICLE III

PROPOSED SCHEDULE

 

Section 3.1      RFP and Notice of RFP ..................................................................................... 30

Section 3.2      Pre-Proposal Submission Meeting................................................................... 30

Section 3.3      Site Tours of Local Unit Facilities ..................................................................... 30

Section 3.4      Proposed Schedule for Series 2011 Program .................................................. 32

 

ARTICLE IV

CERTAIN INFORMATION TO BE INCLUDED IN PROPOSALS

 

Section 4.1      Pricing and Other Terms of Forms A-1-a and A-1-b ........................................ 34

Section 4.2      Renewable Energy Projects ............................................................................. 45

Section 4.3      Reserved.......................................................................................................... 45

  

ARTICLE V

PROCEDURES FOR SUBMISSION OF PROPOSALS

 

Section 5.1      Substantive Requirements for Proposals ........................................................ 46

Section 5.2      Permitted Inclusions in Proposals ................................................................... 48

Section 5.3      Proposals Governed by Applicable Law .......................................................... 49

Section 5.4      Procedural Requirements and Other Matters for Proposals .......................... 50

Section 5.5      Clarification of Proposals ................................................................................. 54

Section 5.6      No Tax Advice Offered ..................................................................................... 55

 

ARTICLE VI

AWARD TO SUCCESSFUL RESPONDENT

 

Section 6.1      Submitted Proposals ................................................................................... 56

Section 6.2      Evaluation Criteria ...................................................................................... 56

Section 6.3      Basis of Award ............................................................................................ 58

Section 6.4      Rejection of Proposals................................................................................. 59

Section 6.5      Conditional Award....................................................................................... 59

 

ARTICLE VII

CERTAIN GENERAL MATTERS

 

Section 7.1      Exhibit 2  Checklist .......................................................................................... 60

Section 7.2      Proposal and Construction Bonding ................................................................ 61

Section 7.3      Insurance......................................................................................................... 65

Section 7.4      Indemnification............................................................................................... 66

Section 7.5      Labor................................................................................................................. 66

Section 7.6      Licenses and Laws............................................................................................. 71

Section 7.7      Background Check……………………………………………….....72

 

APPENDICES 

Appendix A     Attach Forms of Program Documents and RFP Authorizing Resolution........... A-1 

      Company Documents: 

Appendix A-1              PPA....................................................................................... A-1-1

Appendix A-2              Company Lease Agreement................................................ A-2-1

Appendix A-3              Company Continuing Disclosure Agreement...................... A-3-1

Appendix A-4              Company Pledge Agreement............................................... A-4-1

Appendix A-5              Form of Master Local Unit License Agreement................... A-5-1 

      Other Program Documents:

Appendix A-6              Authority Bond Resolution.................................................. A-6-1

Appendix A-7              County Guaranty Agreement............................................. A-7-1

      Authority RFP Authorizing Resolution:

 

Appendix A-8              Authority Resolution adopted July 20, 2011 

            ........... Authorizing Issuance of RFP................................................ A-8-1

Appendix B     Description of Projects................................................................................... B-1 

Appendix B-1              Renewable Energy Projects................................................. B-1-1

                                          Conceptual Site Plans

                                          Site Roof Warranty Information 

Appendix B-2              Reserved (No Capital Improvement Projects).......................... B-2-1

Appendix B-3              Estimated Load Data by Local Unit Facility.............................. B-3-1

 

Appendix C     Scope of Work and Technical Specifications .................................................. C-1

 

Appendix D     Forms to be Included in Exhibit A of Proposals.............................................. D-1

 

Appendix D-A-1-a[i]      Proposal Form A-1-a;Authority Financing 

                                    PPA Price Quotation Sheet........................................... D-A-1-A-1

Appendix D-A-1-b[ii]      Proposal Form A-1-b; Company Financing 

                                    PPA Price Quotation Sheet ……………….D-A-2-B-1

Appendix D-A-2          Proposal Form A-2; Respondent Information / 

                                    Cover Letter Form……………………………D-A-2-1

Appendix D-A-3          Proposal Form A-3; Consent of Surety and Surety Form..... D-A-3-1

Appendix D-A-4[iii]        Proposal Form A-4; Agreement for Proposal Security 

                                    In Lieu of Proposal Bond.................................................. D-A-4-1

Appendix D-A-5[iv]        Proposal Form A-5; Proposal Bond.................................. D-A-5-1

Appendix D-A-6          Proposal Form A-6; Ownership Disclosure Statement....... D-A-6-2

Appendix D-A-7          Proposal Form A-7; Non-Collusion Affidavit.................... D-A-7-1

Appendix D-A-8          Proposal Form A-8; Consent to Investigation.................. D-A-8-1

Appendix D-A-9          Proposal Form A-9; Statement of Respondent’s 

                                    Qualifications.............................................................. D-A-9-1

Appendix D-A-10        Proposal Form A-10; Acknowledgement of 

                                    Receipt of Addenda (if any)...................................... D-A-10-1

Appendix D-A-11        Proposal Form A-11; Sealed Proposal Checklist 

                                    (See Exhibit 2)........................................................... D-A-11-1

Appendix D-A-12[v]       Proposal Form A-12; Authorization for Background 

                                    Check......................................................................... D-A-12-1

 

Appendix E     Estimated Basic Lease Payment Schedule (including sources and uses)............. E-1

 

                              Estimated Basic Lease Payment Schedule allocable to Series 2011A Bonds

                              Estimated Basic Lease Payment Schedule allocable to Series 2011B Note

                              Aggregate Basic Lease Payment Schedule, allocable to Series 2011 Bonds

                              Estimated Sources and Uses, Series 2011A Bonds

                              Estimated Sources and Uses, Series 2011B Note

                              Aggregate Sources and Uses, Series 2011 Bonds

 

Appendix F     County Deficiency Option.......................................................................... F-1

                              Option F-1

                              Option F-2

In light of his office's blatant failures, Matthew Boxer should be asked the following question: Do you believe that the Office of the State Comptroller let down the taxpayers of Sussex County? 

In April 2015, the Office of the State Comptroller turned down Sussex County's request to review the solar project.  No official reason was ever provided.  However, there is an "unofficial" explanation provided in a May 26, 2015, memo from the MCIA.  It goes as follows: 

"The County is still awaiting a written letter from the Office of the State Comptroller, as a follow up to the phone conference... on April 27, 2015.  In the absence of the written response, and as a reminder, the State representatives (OSC) advised the County that it undertook an internal review of the Solar II Program and conducted its own analysis and evaluation of the Solar II Program.  Following this review process, the Comptroller's Office concluded that, based upon the information... forwarded to them, it was not going to pursue a further review of the Solar II Program." 

It seems the Office of the State Comptroller had conducted a review of the solar project it had signed-off on, but was unwilling to share said review. The memo continued: 

"The Comptroller's Office noted several factors in its post-review decision not to review the matter further: 

a. Noting that the Solar Programs and original agreements were a local policy decision, approved by the County Freeholders, and;

b. That in the view of the Comptroller's Office, both the change in the SREC Market, as well as the legal dispute between the developer and the contractor (SunLight/MasTec) contributed to the Solar II Program not proceeding as originally expected." 

A "post-review decision not to review the matter...”  Mr. Boxer needs to explain why. 

The Office of the State Comptroller's refusal to share the review that they had already conducted or to take that review further was a loss to the taxpayers of Sussex County, but a boon to former State Comptroller Matthew Boxer, who was now being touted as the onlyman to do a review that was to be paid for by fresh taxpayer's money. 

In January 2016 a new Freeholder Board in Sussex County – now controlled by the very same individuals who had been for months advocating for the selection of Matthew Boxer as the onlyman to review the solar project – handed Matthew Boxer a contract for $500,000 to conduct said review. 

The manner in which this contract was provided to Mr. Boxer was unusual, and remains unexplained to this day.  In a letter, dated January 19, 2016, a Sussex County Freeholder wrote to Mr. Boxer's firm inquiring how Boxer obtained the contract.  Here is what he wrote: 

"Dear Mr. Boxer, 

On New Years’ Eve, Dec 31, 2015, I received a phone call, about 5:00 PM, informing me that a resolution had been submitted to the Sussex County Clerk of the Board regarding an agreement with Lowenstein Sandler, LLC to provide professional services to conduct a review of the facts and circumstances involved in the Sussex County Renewable Energy Program. 

This was the first time I had any knowledge of this negotiation and agreement. 

I spoke to our Freeholder Director, the other sitting Freeholders, our County Administrator, our County Council, our Clerk of the Board, our County Treasurer, our Director of the Department of Central and Shared Services, our Purchasing Agent, and our assistant purchasing agent. 

None of these individuals, except Freeholder George Graham, admitted to having any knowledge of these negotiations, conversations, meetings or agreements with your law firm before 5:00 PM on New Years’ Eve 2015. 

...I believe that the governing body has had no part in negotiating an agreement with your firm. 

I would like to know, and now ask, who represented Sussex County in these negotiations, especially the negotiation of the 'blended' hourly rate and the understanding that the Board of Chosen Freeholders has provided that fees are not to exceed $500,000.00? " 

To this day, this gentleman – who has since retired from the Freeholder Board – has never received the courtesy of a reply.  Why not? And note that, at the time, this Freeholder – as a member of the Board – was Mr. Boxer's client.  What fears would lead Mr. Boxer to ignore a perfectly legitimate request by his client?

Sussex County taxpayers lost upwards of $20 million in the solar scandal.  Then they paid another half million dollars on a 62-page report authored by one of key players in the scandal – and nobody can say how this lawyer got hired!  Now that report is going to be used as the roadmap for future legal action by Sussex County that could cost taxpayers millions more in legal bills (and maybe let the culprits off the hook).

These are basic questions that need to be answered… before any more taxpayers’ money is spent.  


[i]Required if Proposal utilizes Authority Financing Option.

[ii]Required if Proposal utilizes Company Financing Option.

[iii]Provide EITHER (i) Form A-4 (Proposal Funds) or (ii) Form A-5 (Proposal Bond); found in Appendices D-A-4 or D-A-5, as applicable.  See Section 7.2(a) of RFP.

[iv]See prior footnote.

[v]Provided by Successful Bidder only.  To be supplied upon award of Successful Bidder.

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