The school board will likely assign a project that would bring
solar panels to both high schools Tuesday.
The school board will likely assign a project that would bring solar panels to both high schools Tuesday.
The project would build solar panels atop carports in the parking lots at Live Oak and Ann Sobrato high schools, and would provide all the electricity for the two schools, thus saving the district on its power bill. The project will be paid for by the Qualified School Construction Bond that Morgan Hill Unified School District won in August.
While the idea behind the bond is that the district would pay no interest on it when it pays it back to the federal government, the school construction bond itself isn’t attractive enough for investors at the moment. So the district would have to offer to pay between a 1 and 3 percent interest rate to get buyers, said Bruce Kerns, of Stone & Youngberg, the district’s financial advisor. This is still below the 4 percent savings that could be realized, he said.
The $12 million project – a tentative number that is still being worked out as negotiations are ongoing – would be paid for with the bond, which would be sold to an investor.
Chevron Energy Solution and Blach consortium are interested in contracting. District staff recommend Chevron. Their proposal, based on data from last Monday night, was almost $1 million less than Blach’s.
The district would pay the investors back in 15 or 16 years – another detail that has yet to be worked out. The district could sock away money year by year, and earn interest on it, Kerns said.
But tacking on interest in what was supposed to be an interest-free loan – enticing to investors only for its tax credits – puts a major dent in the viability of the project, Trustee Julia Hover-Smoot said. Hover-Smoot especially took issue with the projected rise in electricity costs used by Stone & Youngberg. Using an average of the past 25 years, Stone & Youngberg expect a 3.3 percent price increase in electricity costs, making the solar project viable. Hover-Smoot said the Internet research she’s done, including an article in the Wall Street Journal, indicate a decline in electricity costs.
But Kerns said that PG&E has already placed an application with the state public utility commission requesting an increase more than the 3.3 percent rate.
Hover-Smoot sees the solar project as a financial product being paraded as a money-saving, eco-friendly choice for the district when it might not turn out that way.
“I most certainly won’t be voting for this project,” she said. “It’s a huge risk of a huge amount of money. We were arguing over $15,000 and $20,000 just eight months ago, and we’re putting at risk $12 million? It’s wishful thinking.”
Trustee Bart Fisher had reservations as well.
“Is 25 years the right timeframe to be looking at? That’s an awful long time frame. And the technology undoubtedly keeps evolving,” Fisher said.
But most trustees like the looks of the project, and say that they’ve got to take advantage of the cheap contract price and the nearly-free money while it’s here.
“I think we have a very good handle on it. We’ve been very, very lucky in winning the loan,” Trustee Kathy Sullivan said. “I’m really hopeful. I think everything has aligned itself so that it looks good. It will give our children some needed shade, and it shows we’re taking energy use very seriously, and can potentially save the district money well past the time I’ll be here.
“I really don’t think that it’s likely that there’s going to be such a dip in the market that we will lose money on this.”
