An epidemic of single-bidder contracts

As prosecutors get down to unraveling the complex web of relationships behind the "solar gold rush" that resulted in some politically-connected firms getting a lot of money while taxpayers in counties like Sussex were left holding the bag, they will no doubt focus on who knew whom way back in 2005 when these political alliances were forming.  The social circles these people travelled in -- gatherings in upscale Manhattan and the political cocktail circuit of some of the more expensive communities in Morris and Somerset Counties.  And let's not forget the hot tub parties hosted at a multi-million dollar shore house.  All gathering grounds for the chic and well-connected to play, exchange information, and make deals.

The result of all this was a notable absence of competition to facilitate the "solar gold rush" in New Jersey.  While some states saw scores of engineering and other vendors line up for a taste of taxpayer dollars, too often New Jersey saw a single bidder looking for a too narrowly-written contract.  This trend was getting noticed even before Sussex County decided to try its hand at going solar.

Consultants get a cut from North Jersey solar energy projects

JULY 24, 2011    LAST UPDATED: MONDAY, JULY 25, 2011, 6:37 PM

BY JOEL SCHECTMAN

STAFF WRITER | 

THE RECORD

Two politically connected firms at the front of the solar energy development gold rush are teaming with North Jersey improvement authorities to sell projects to local governments and school districts.

In the latest push, the firms, together with the Passaic County Improvement Authority, are pitching a no-money-down solar-paneling solution to the county’s municipalities and districts to help reduce electricity costs. It’s asking them to sign on to a 15-year pact in which a developer would install the panels and then charge the government entities rates lower than those currently paid.

Bergen County is using a different approach — private financing and smaller scale.

So far, Passaic County’s efforts have met with mixed results after numerous presentations. For instance, Clifton has signaled interest, and both the borough of Ringwood and the Lakeland school district signed on to the plan this month, but North Haledon’s Borough Council recently heard the pitch and took a pass, expressing concern about unknowns of the cost structure.

"The advantage of the program is having an outside agency look at the proposals and make sure there are real cost savings," said Clifton Mayor James Anzaldi.

But the project would include layers of professional fees from the collaborative efforts of the legal firm of Decotiis, Fitzpatrick and Cole LLP based in Teaneck and New York, and the engineering firm Birdsall Services Group of Sea Girt. The two firms have already spearheaded the same solar development model in Morris, Union and Somerset counties and are now helping evangelize the plan throughout Passaic County.

Decotiis is responsible for the legal side of the project, writing the contracts with the developers and drafting the wording of resolutions to bind local governments to agreements. Birdsall Services Group is responsible for the engineering side — helping governments select sites for the construction and vetting developers to build the panels once bids are sought.

 Former Decotiis partner Steven Pearlman, called the "godfather" of the plan by one county administrator, created the concept when he was general counsel for Morris County in 2008. The $21.6 million project is estimated to save the county $3.8 million over the 15-year life of the project. The plan became known as the "Morris Plan," and Pearlman pitched it to the Somerset County freeholders in 2009, signing the county onto the plan in 2010. Over the next year Union County brought the same team in to develop the plan for its towns.

Somerset County Improvement Authority project manager Yvonne Childress said that although the county went through a competitive selection process before signing on with the firms, the three companies selected were the only ones to apply: Birdsall; the Decotiis firm; and Inglesino, Pearlman, Wyciskala & Taylor LLC — a firm Pearlman helped found after leaving Decotiis.

Pearlman’s new law firm handled the bonding for the project, obtaining credit through the county. Birdsall, Decotiis and Pearlman did not respond to requests for comment.

"We have learned that more law firms are starting to model this program, so going forward, there may be more players in this game," Childress said in an email.

Both firms have contributed generously to election campaigns statewide, and have received impressive contracts from state and local governments.

Birdsall has contributed at least $669,910 to state and local elections since the solar push began in 2008 through 2010, the last date for which complete contributions are tallied. During that same period, the company received $70 million on all its state public-works contracts. The improvement authorities have not yet provided The Record with contract amounts for the solar projects.

Decotiis employees gave at least $200,000 to state and local campaigns, according to state election records. The firm received $45.7 million in New Jersey contracts in the same three years, according to public records.

In Passaic County, the group of consultants, along with the PCIA, has pitched the proposal to towns that include Hawthorne, Woodland Park and West Milford.

Nicole Fox, PCIA executive director, said she would not be available for comment by deadline.

In the solar-paneling project, the construction costs would all be paid by the developer, using cheaper credit from bonds written through the county. The builder would make back his money by charging the governments involved for the electricity produced and used by those governments. The firms pitching the deal are offering significant savings to government over the life of the program — Clifton, for example, would save as much as $85,000. Bonding through the county could, presumably, offer a lower rate than private financing and help the developer to pass on the savings to taxpayers.

In Passaic County, the developer, which hasn’t yet been selected, will have to charge governments enough to recoup construction costs and make a profit over a 15-year contract, and it also will have to add in the fees for Birdsall and Decotiis, according to the PCIA.

John Bonanni, commissioner of the Morris County Improvement Authority, the first to use the plan, noted those add-ons as significant.

"But someone has got to pay them," he said. "[The fee] gets baked into the cake."

Passaic County’s local governments and school districts have until the beginning of August to sign on — the PCIA will request proposals from developers by the end of that month, Fox said. Construction would start in fall and last one year.

Bergen County’s solar projects are of a smaller scale and without financing through public bonds. Instead a private solar financing company, Sunlight General Capital, is putting up the money and charging for the electricity. Bergen has built panels on the  Prosecutor’s Office in Paramus and the parking garage of the County Administrative in Hackensack.