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East Providence Budget Commission moves Forbes solar plan forward

By   /   July 3, 2012  /   Be the first to comment

EAST PROVIDENCE — Tentative approval was given to a proposed land lease deal on the site of the former landfill on Forbes Street when the East Providence Budget Commission moved up its every-other week meeting schedule by a day from June 28 to the 27th.

The Commission moved the measure forward, meaning lawyers from both the city and state can enter into final agreement talks with OCI Solar Power LLC. The energy company is seeking to lease the old landfill site with the hope of producing as much as nine megawatts of power each year.

“This appears to be a fairly good deal for both sides,” Budget Commission Chairman Michael O’Keefe said of the proposal.

Mr. O’Keefe explained East Providence and OCI Solar will enter into an agreement in which the city will receive a guaranteed dollar amount as well as percentage of the income generated from the project if all goes well.

Commission member and City Manager Peter Graczykowski outlined the parameters of the deal. Off the top, East Providence will receive $40,000 from OCI on the use of 18 acres of land under the lease agreement. There is an option for OCI to lease an additional parcel of land at the same rate, which could generate $15,000 more income to the city. And in lieu of taxes, OCI has agreed to pay the city $30,600 up front to use the property.

In addition, in the project generates over 95 percent of its potential output, then the city would receive more money at a rate of $20 per megawatt hour up to a total of $31,000.

Said Mr. Graczykowski, “The city would be hard-pressed to find this kind of revenue from anything else for the use of this property.”

Mr. O’Keefe noted at worst, the city would instantly add some $71,000 to its coffers. At its best, the deal could net East Providence an additional $250,000 per year if the solar field generates maximum power. If OCI opts to lease the two other parcels available to it, then the city would at least receive in the neighborhood of $120,000 per year.

While the proposal sounds good on paper, Mr. O’Keefe acknowledged there remained detractors of the arrangement. He emphasized the Commission has yet to sign off on the measure and there is time for those against it come with a better plan.

“This, like any other deal, has second-guessers,” Mr. O’Keefe added. “We have approved this deal, but haven’t signed it yet. If the second-guessers want to give it a shot to find a better deal in the meantime, by all means give it a shot.”

Bond issues

Commission and state legal counsel Karen Grande advised the Commission to approve two bond resolutions. The first authorized the issuance and refinancing of $15 million in school bonds. The second was to authorize the issuance of $17.5 million in wastewater revenue bonds.

The recent good news the city received from bond rating firms Moody’s and Standard & Poor’s allowed East Providence to borrow the money at a lower rate of interest. Assistance from state agencies, likewise, means the city’s interest payments on the bonds will much more palatable.

Tabled business

The Commission tabled a handful of issues with regards to expenditures.

A hold was put on the potential move of the administration of the East Providence School District health care coverage to the Rhode Island Interlocal Trust. Mr. O’Keefe said the majority of the Commission believed the numbers the proposal was based weren’t “good.” Mr. Grazcykowski disagreed, saying he did “not think that was the case.”

Mr. O’Keefe, however, said the overall budget outlook for the city remained tenuous and he didn’t want to be the chairman of a Commission that “closed a fiscal year in the red.” He added the Commission would wait for numbers it believed were more reliable “no matter how inconvenient that makes things for some people.”

Also tabled was the request to hire a full-time nurse who would oversee healthcare programs at the Senior Center. The program has generated little in revenue to date because an able billing firm has yet to be hired. Until that is in place, the Commission opted not to hire any more personnel.

Also tabled was a proposal to delegate authority to Mr. Graczykowski to negotiate and approve settlements on litigation involving accessed property values.

CDBG plan

The Commission, for a second time, overrode City Council approval of a Community Development Block Grant plan for this fiscal year. The plans approved by each body differ by about $50,000 in the amount towards human services.

The Commission’s approved plan will direct upwards of $400,000, to be directed towards enhancing the city’s economic development, funneling the cash towards assisting existing businesses and attempting to lure new ones to East Providence. A little over $72,000 would initially target human services programs.

At its meeting on June 19, the City Council revisited the proposal despite the Commission’s previous decision. It changed plans completely, approving one that gave well over $100,000 to human services while directed around $300,000 to economic development.

Mr. O’Keefe chided the Council, which counts Commission member and Ward 2 Councilman Bruce Rogers among it and who voted aye on the Council’s plan at its last meeting, for wasting the time of all parties involved..

“The Budget Commission and the Council are obviously in places on this issue, but the Budget Commission believes what it approved first is what was approved,” Mr. O’Keefe said. “The Council can beat a dead horse all it wants, but this is where it stands.”

Money matters

Commission staff member Kristy Healy led a discussion of the city’s cashflow and Business Process Reengineering (BPR) status. Mr. O’Keefe said he was acutely leery of the small surplus East Providence is currently running, only just under $800,000.

“I’m extremely nervous about that number,” Mr. O’Keefe said. “It means our work on Fiscal Year 12 isn’t really done and it means we really can get a hold of the numbers for (FYs) 13, 14, 15, 16 and 17.”

He continued, “On every decision before us to hire people and to spend money, we really have to keep in mind what these numbers are.”

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