Dan Hust | Democrat SCCC Board Chair Phyllis Coombe, right, reads from a prepared statement as President Mamie Howard Golladay listens during Tuesday’s meeting with county legislators..

College, county will try to reduce $7.5M tab on windmill project

By Dan Hust
MONTICELLO — April 16, 2010 — Stung by the debacle involving a proposed windmill, the county and Sullivan County Community College have agreed to work together to reduce $7.5 million in payments related to the never-built windmill and to better coordinate efforts involving large contracts.
On Tuesday, County Attorney Sam Yasgur presented college and county officials with a report about SCCC’s $4 million energy savings contract with Atlantic Energy Solutions (AES).
AES, based in Saratoga Springs, is being sued by SCCC, which alleges that AES took but never spent $1.5 million to buy and ultimately erect a windmill behind its Loch Sheldrake campus.
Worried that taxpayers might be on the hook, legislators directed Yasgur to review the matter. On Tuesday, he thanked the college for its cooperation and avoided casting blame.
“If anyone’s looking for fault or blame, you will not find it at all,” he said of the report. “... It’s merely a statement of facts.”
But those facts indicate college officials did not realize what they were signing – binding documents signed without the aid of their own attorney and at least twice without the review of the County Attorney’s Office.
Indeed, Yasgur said SCCC President Mamie Howard Golladay at one point signed blank closing documents given to her by the Bank of New York.
“They never should have had the right to do that,” he said, aiming his criticism at the bank.
“And I think that’s where it belongs,” Golladay told the Democrat on Wednesday, saying she had relied on the bank’s good faith and promise that the documents had the needed supporting documentation attached.
In particular, Yasgur explained that the final equipment lease-purchase agreement the college signed with the Bank of New York was “substantively different” from the one first proposed (but never signed or executed) by another financial firm, Apex Pryor Securities.
Specifically, Apex’s agreement stipulated that payments would be made to AES for equipment actually acquired and installed, while the Bank of New York’s agreement allowed advance payments.
Apex’s parent company, Rice Financial Products, apparently took over as the financing agent in 2007 and handed the deal over to the Bank of New York, said Yasgur.
When Golladay was ultimately asked to sign the equipment lease-purchase agreement, explained Yasgur, she mistakenly thought it was the same as what Apex had proposed.
And while the County Attorney’s Office had reviewed and approved the Apex proposal, it had not seen the Bank of New York version.
In reality, said Golladay, neither had she.
“I was told there were no changes [from the Apex version],” she explained on Wednesday. “I assumed what [the County Attorney’s Office] reviewed was what I was signing pages for. It seems things were added after the process.”
That agreement’s execution thus meant that AES could subsequently get money from the college ahead of any purchase or lease of equipment – which occurred several times over, to the tune of $2.8 million.
College officials, including Golladay, were present Tuesday but did not debate or discuss the matter. Board Chair Phyllis Coombe read from a prepared statement.
“We, too, are upset by this turn of events,” she said. “We thank the county attorney and his office for their diligence in helping to unravel this situation with us.”
Coombe wouldn’t detail the ongoing lawsuit but said the college has a strong case against AES for alleged breach of contract and non-performance.
She also acknowledged that SCCC has now hired legal counsel for regular review and assistance with contracts: the Newburgh-based firm of Tarshis, Catania, Liberth, Mahon & Milligram.
“The college and the County Attorney’s Office intend to work together to develop clear protocols as to what the County Attorney’s Office will and will not be responsible for with respect to contract review and approval,” she added. “We believe that both of these actions will result in improved communication channels with respect to legal review of contracts.”
Such cooperation has been made necessary by the fact that the college is even now making payments to the Bank of New York on the financing for the project. According to Yasgur, those payments will reach the $7.5 million mark by the financing term’s end in 2025.
The college, he noted, has not spent about $322,000 of the $4 million borrowed from a private lender, the Rochester Fund, through the Bank of New York. Additionally, only about $2 million has actually been spent on materials and personnel.
In his report, Yasgur stated that the bank is open to negotiating a reduction in payments.
He added that his conversations with the college’s board and leadership indicate they’ll work more closely with the county in reviewing and approving large-scale, non-educational contracts – though the college legally is entitled to a large degree of autonomy.
SCCC and county leaders are expected to soon hammer out that “written protocol” to define both sides’ roles.
“The bottom line is that while this has been an expensive way to learn, a lot of good lessons have come out of this,” Yasgur concluded.
Legislators seemed to agree, unanimously authorizing the county attorney to work with the college, but County Treasurer Ira Cohen and Grahamsville resident Ken Walter weren’t as quick to move on.
Both men felt accountability should be demanded of college officials who authorized a $4 million project without college-retained legal counsel. In fact, Walter – who has been fighting with SCCC over an unrelated windmill project on the college’s campus near his mother’s home – called for the resignations of the entire college leadership.
“Four million dollars is not a ‘faux pas’,” he charged. “It’s a rape of the taxpayers!”
Cohen’s comments weren’t as dramatic, but he called for more corrective action than had been discussed thus far.
“[The college] has no right to incur this kind of obligation without the consent of this governing body,” he remarked of the AES agreement. “This Legislature was kept in the dark.”
His county colleagues replied that accountability issues could – and would – be handled later
“I’m not going to hide from that,” remarked Yasgur. “That’s going to happen sometime down the road.”
“This is just a beginning of a review of what happened,” added Legislator Ron Hiatt.
“It is public money, any way you slice it,” agreed Legislator Jodi Goodman. “... But that’s another debate completely. ... I think we have to separate the issues.”
Legislature Chair Jonathan Rouis weighed in, saying the county must respect the college’s autonomy but also that the college must respect the county’s need to have a say in an organization to which it contributes millions of taxpayer dollars each year.
Coombe noted that SCCC has realized about $100,000 in savings so far from the other work AES was hired to do, including retrofitting the heating system at the fieldhouse. (AES, however, allegedly stopped paying subcontractors, and SCCC ultimately had to make up the difference itself out of project funds.)
Yasgur anticipated that the college may get a judgment of relief from the courts (which so far have been favorable to SCCC’s side), but with AES reportedly having closed its doors and dealing with more than $7 million in claims from various creditors, no one was ready to suggest that the college will actually see any of that money returned.