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Solar panel leasing deals on LI plagued by consumer complaints

A white-hot market for leased solar energy systems has cooled off dramatically since 2016, in the wake of customer complaints about hard-sell tactics, rising bills, questionable installations and a lack of government oversight, a Newsday investigation found.

During the past decade, the environmental appeal of “going green” and reducing monthly electric bills has been promoted by state and federal governments, which enacted policies and subsidies that opened the door to a surge of solar panel sign-ups.

Today, Long Island is New York’s solar king, with more customers than any region in the state – nearly 40,000 home and small office rooftops at last count. More than $1.3 billion worth of residential solar panels have been installed in Nassau and especially Suffolk since 2000, a Newsday computer analysis of state and utility records shows.

These high-tech rooftop panels allow homes to draw electricity from the sun while displacing the utility’s need to draw power from conventional energy sources. And at a median cost of $35,000, these units have been offered by large companies, including SolarCity Corp., a subsidiary of Tesla Inc. run by entrepreneur Elon Musk.

But the arrival of no-money-down solar lease deals on Long Island also has brought a host of problems.

While the market grew at a steady pace from the first home solar system sales in 2000 with relatively few complaints, a move by LIPA in 2012 to allow solar lease companies to access its popular rebate led to a market explosion.

Hawking systems at shopping malls, Tupperware-styled parties and invitation-only dinners, the solar industry sometimes aimed its efforts at senior citizens and others with limited incomes who unwittingly got locked into long-term leasing agreements for “no money down,” often with add-on costs in the fine print.

‘We are paying more now than we did previously.’ -Edward Maccone, North Bellmore resident

In some cases, homes with newly installed panels were shaded by trees or other obstacles, making them poor candidates to derive sufficient power from the sun to lower their existing electric bill, some critics and customers charged.

“We are paying more now than we did previously,” before his SolarCity panels were installed, said Edward Maccone, 77, of North Bellmore. “I lost all faith in them after seeing the numbers” in his resulting electric bills.

In other cases, customers who signed 20- or 25-year deals for solar panels on their roofs have encountered complications selling or refinancing their homes. Homeowners say they were surprised to learn that little-known documents filed by the solar firms at county clerks’ offices listed them as “debtors,” complicating refinancings and attempts to sell their homes.

Critics, including consumer watchdogs, say solar customers, particularly elderly homeowners, were enticed by hard-sell tactics that didn’t pan out as promised, affecting the public perception of this fledgling industry, originally promoted by government with various tax incentives and rebates.

Word of no-cost solar deals spread rapidly across the Island until 2016 and last year, when the boom in leased and other systems saw a sharp drop-off. Along with fewer customer sign-ups, the solar leasing market suffered from changes in government tax credits and rebates, financial and legal problems faced by some key leasing companies, and the looming prospect of foreign tariffs.

On Long Island, new solar units dropped from a total of 11,444 in 2016 to 6,400 in 2017, a 44 percent decline, according to PSEG Long Island data. PSEG now expects about 6,600 solar connections this year, still far from the market’s peak two years ago. Nationally, for the first time ever, the top 10 states for solar installations, including New York, experienced a decline, experts say, as the rush for solar power has slowed.

“No question the number of complaints and legal cases against solar leasing is contributing to this drop-off” in installations both nationally and in New York, said Tyson Slocum, an energy expert with Public Citizen, a Washington-based watchdog group. “It’s part of the larger factors that are making solar leasing not as attractive financially as it was a few years ago.”

What determines if you’re a good candidate for solar?

1 1ShadingThe more coverage from trees, chimneys and neighboring buildings your system receives, the less electricity that will be generated. The solar company might recommend trimming back branches or cutting down trees. Source: Solar Energy Industries Association 2 2Orientation and pitch of your roof Typically, solar panels perform best on south-facing roofs with a slope between 15 and 40 degrees, though other roofs may be suitable, too. North-facing roofs are viewed as the least optimal, because they do not receive direct sunlight. Sources: Department of Energy, Solar Energy Industries Association 3 3Size of your roof vs. energy consumptionDetermine if your house is large enough to accommodate a system that will support your energy usage based on the roof’s size and your current electric bills. Sources: Department of Energy, Solar Energy Industries Association 4 4GeographyLong Islanders are fortunate that both Nassau and Suffolk counties receive a good amount of daily sunlight hours, more than Westchester and upstate New York, but not quite what the sunniest parts of Arizona, New Mexico and California receive, according to data from the Centers for Disease Control and Prevention. A solar professional can calculate the amount of sunlight expected to reach a planned system over the course of a year. Sources: North America Land Data Assimilation System via CDC WONDER, Solar Energy Industries Association 5 5Rainfall is a factorHomes located near the water may require higher levels of maintenance of solar panels, given ocean and bay breezes. If it doesn’t rain enough in a given year, you may have to have the panels cleaned.

Some industry officials say they believe the drop-off in installations is temporary and express confidence in solar’s lasting appeal. Encouraged by state and federal policies, Tesla’s SolarCity, Vivint Solar and other large firms have promoted themselves as the front line of a new wave of energy for Long Islanders — an environmentally friendly and cost-effective way for customers to get free of the local power company’s monopoly grip.

“Utility rates here are the highest in the country, which means the customers who get solar are going to get some of the biggest savings,” said Chance Allred, chief sales officer for Vivint Solar, which offers mostly long-term deals known as a Power Purchase Agreements.

With PPAs, customers pay for power based on a per kilowatt hour rate, while other lease deals usually rely on an fixed monthly fee.

But even solar advocates, pleased by the industry’s overall growth during the past decade, say they’ve heard complaints of high-pressure sales tactics by some firms and a lack of sufficient oversight to curb abuses.

“There are some bad apples in any industry and any successful industry attracts some scammers, so we have heard complaints from customers,” said Sean Gallagher, vice president for state affairs for the Solar Energy Industries Association, a nationwide trade group promoting solar since 1974. “Where there are mistakes by solar companies, we’re trying to come up with a procedure so that those mistakes aren’t repeated.”

Locally, Newsday found a growing number of complaints in various places ranging from the New York State attorney general to consumer agencies to hundreds of frustrated homeowners seeking help at their local county clerk office. Real-estate experts warn consumer complaints and other problems facing the solar leasing industry threaten to complicate future home sales.

    Among the issues identified in a six-month Newsday investigation:

  • Promises of “no money down” lease deals but little savings. Some consumers who signed up for “no money down” long-term lease agreements, especially senior citizens, say they have been surprised to find escalation clauses that often call for annual increases of up to 3 percent paid to the solar company, amounting to a hefty bill over the deal’s 20- or 25-year life span. These types of leasing deals have fueled the big boom in solar on Long Island during the past decade, often outpacing purchase of solar units.
  • Selling your home can be difficult because of solar leasing agreements. Thousands of Long Island homeowners with solar units on their roofs may find it difficult to sell or refinance their homes because of UCC-1s (Uniform Commercial Code documents) placed on them by solar installers. Solar companies say they don’t consider them liens. But local experts say the little-known financial documents — which list the solar companies as debtors for the value of the systems — can create legal hassles for homeowners, especially those looking to sell to another buyer or refinance their existing mortgage. More than half of the 5,400 UCC-1s filed in Suffolk last year were related to solar panel installations, officials said. Nassau lists nearly 1,000 UCC-1s filed by Vivint Solar alone in recent years, records show.
  • Some large solar installers serving Long Island have dropped out of the business or reported significant business problems. NRG Home Solar, the third-largest installer in New York, bowed out of the residential market in 2017 because of financial pressures. Also last year, Sungevity and Level Solar filed for bankruptcy and their customers were assumed by rivals. Long Island’s biggest installer, SolarCity, often criticized for its leasing agreements, faces criticisms on numerous fronts. The company agreed last September to pay a nearly $30 million settlement with the U.S. Justice Department, which alleged it had inflated “thousands” of claims for federal grants designed to encourage renewable energy.
  • New York’s second-largest solar installer, Vivint Solar, faces fraud and racketeering allegations in New Mexico for allegedly illegal sales tactics designed to dupe the public. According to a lawsuit filed in March by that state’s attorney general, Vivint Solar overstated cost savings to thousands of customers with 20-year deals that will raise their solar bills by more than 72 percent. The suit charges Vivint Solar with bogus offers of a “free” solar system for no money down, a “trap” that hooked “multiple” consumers into paying more for energy, entangles consumers’ property rights and ensnares consumers with a 20-year contract. Vivint denies the charges.
  • Lack of industry oversight. Nationally, the Federal Trade Commission has received more than 2,500 complaints about large solar companies, and New York State’s attorney general says it is conducting a probe of an unspecified solar firm doing business in the state. The state Public Service Commission in October issued rules for oversight of solar installers along with other energy service companies, but the rules haven’t been adopted by LIPA, though a spokesman said they may be considered by year end. Critics say mandatory arbitration clauses found in many solar contracts prohibit consumers from suing for individual problems or complaining to local agencies. Instead, disputes are settled by an arbiter whose decisions are kept confidential.
  • Trouble on the horizon.Though many advocates tout solar’s bright future, the industry’s up-and-down experience so far on Long Island seems indicative of its national problems. Today, the solar residential market faces the steady decline of federal and state tax incentives that fueled its early growth, and a new tariff on imported solar panels ordered by President Donald Trump threatens to raise costs. Despite New York State’s goal of drawing 50 percent of all electrical power from renewable sources by year 2030, solar still exists in only 4 percent of Long Island homes.

Solar’s big boom on Long Island

Solar power has been around for decades. The scientific roots date back to Albert Einstein, who won a Nobel Prize in physics for identifying the photoelectric effect of sunlight, and America’s space program, which equipped spacecraft with solar cells. But generally solar wasn’t commercially viable until the late 1990s, when the sky-high price of panels dropped dramatically.

For most customers today, “photovoltaic systems” on their roofs create electricity from glossy rectangular panels that absorb and convert the sun’s rays. This homemade wattage can be either used by the owners directly, or traded for credit with their utilities, who add the solar power to their grids serving other customers.

On Long Island, solar power started to take off around 2000, spurred by generous Long Island Power Authority rebates and other state and federal incentives favoring environmentally clean energy. Only two units were purchased that year, and another 13 the following year, records show. By 2010, about 1,000 units were purchased on Long Island annually.

In the early years, experts say, generally affluent homeowners bought solar systems, with price tags ranging from $30,000 to well over $50,000, depending on the size and power potential of the unit. A Newsday analysis of solar installations with state incentives since 2000 shows that many units in the early days were placed on rooftops in places such as East Hampton, Southampton, Dix Hills and Gardiners Island.

Local contractors who installed these systems touted them as capable of paying for themselves in seven years — and they often did. Tax credits for buying solar units could be taken off homeowner’s income tax bills. Many found the idea appealing — like having your own power plant on the roof. These state incentive records for Long Island — which reflect about two-thirds of the entire residential marketplace in Nassau and Suffolk — provide specific locales and prices on installed units.

“Back then, it was ‘early adopters,’ as I would call them — folks who believed in the environment and had the ability to pay for a system,” recalls Michael Voltz, director of energy efficiency and renewables for PSEG Long Island, who witnessed solar’s initial growth. LIPA rebates were “fairly generous because they needed to be in order to stimulate the market.”

One of those satisfied solar customers was Harry Kubetz, a 65-year-old business executive whose ranch house in Northport was fitted with a large system purchased in 2005. The total $81,000 price tag eventually cost him about $27,250 out-of-pocket, after he received various federal and state tax credits and utility rebates, he estimated. The solar panels reduced his annual electric bill by half, he said, but that wasn’t his main motivation.

“I didn’t do solar to reduce my bill but because I felt it was the right thing to do environmentally, in being responsibile,” Kubetz said. “I’m really happy I did it.”

By 2012, the doors for solar were flung wide open on Long Island. Federal income tax credits already provided a 30 percent credit for the cost of a system. But that year, Gov. Andrew M. Cuomo extended to the leasing market the same tax credit of up to $5,000 to help finance residential projects that purchasers already enjoyed. Utilities were directed by state regulators to buy excess power created by solar units. And significantly, LIPA provided a boost by extending to leased systems rebates valued at thousands of dollar per customer. As part of these deals, customers signed over their rebates to these leasing companies.

Solar installations peaked on Long Island in 2016

Data from PSEG show the number rose to 11,444 and then dropped the following year.

Cuomo pushed for New York State to become a leader in solar power. Nationally, it now ranks 10th in total installations. “As the federal government abdicates its responsibility to address climate change — at the expense of our environment and economy — New York is leading the nation in advancing a clean energy future,” Cuomo proclaimed last year.

By 2014, some of the nation’s biggest solar firms — including SolarCity and Vivint Solar — had arrived on Long Island with a big marketing push. Some were represented by well-known political names. For example, NRG Home Solar’s parent company hired the lobbying firm headed by former Sen. Alfonse D’Amato to promote its solar business with state lawmakers.

But the biggest change was in the type of Long Island customers signing up for solar. Along with wealthy homeowners buying their panels, many Long Islanders of more modest means agreed to long-term leases or similar power purchase agreements, or PPAs, touted by large national firms that made solar affordable to them as never before.

“On top of the savings that they [consumers] get from cheaper energy, there’s also a tax benefit for them that really incentivizes them to go solar,” explains Vivint Solar’s Allred, watching his workers install solar panels in Islip Terrace. “So we really appreciate the policy makers here. We feel that they’ve given solar a tail wind.”

Sunrun, another national firm offering primarily 20-year lease deals, says many customers are concerned with the reliability of Long Island’s electric grid. The desire for an alternative method of energy is particularly strong “because of how hard Sandy hit” in 2012, said Chris McClellan, regional director for East Coast sales.

Following a national trend, New York’s big solar boom occurred in 2014-15, with Suffolk and Nassau accounting for nearly a third of all installations statewide. While solar units continued to be purchased in wealthier neighborhoods, lease-like solar deals were now found in more modest-income communities such as Lindenhurst, West Babylon, North Babylon, Brentwood and Bay Shore, records show.

However, the terms of these new deals were more complicated than some customers realized. Under these “no money down” leases and PPAs, solar companies owned and operated the rooftop units, collected federal tax credits, and sold the power to the cooperating homeowners. Many of these deals included “escalator” clauses, calling for annual hikes of up to 3 percent. And the solar bill came atop of the regular monthly PSEG bills homeowners still received, particularly apparent during months when there was not enough sunlight for the solar panels to pay for themselves.

‘Often the target customer who is ripe for abuse is somebody who is retired, has a fixed income, and who is taken in by the promise of a constant electric bill.’ -Daniel Stevens, executive director of Campaign for Accountability

Many of the leasing sign-ups started with a knock on the door, a telephone solicitation or salespeople pushing the benefits of solar at local shopping centers. Seniors in retirement communities or living on fixed incomes were particularly susceptible to the clarion call of saving money while being “green” with a nonpolluting power source, critics say. Too often, these older customers were poor candidates for solar and wound up disappointed in the results.

“I’ve seen solar panels being sold to seniors that had 20-year leases and they didn’t even generate enough electricity because the size of the roof wasn’t big enough,” said attorney Sean Walter, a former Riverhead Town supervisor who now practices elder law. “If you can catch some of the seniors in internet scams and phone scams, think about how vulnerable the seniors are when you’re going door-to-door.”

Nationally, Campaign for Accountability, a Washington-based group critical of solar, has tracked a sharp rise in company complaints by consumers in the past five years. “Often the target customer who is ripe for abuse is somebody who is retired, has a fixed income, and who is taken in by the promise of a constant electric bill,” said its executive director, Daniel Stevens. “The individual will wind up being charged more for their electric costs than they were before they installed solar panels. It’s one of the clearest ways that these companies mislead customers.”

Similar complaints of misleading, hard-sell “no money down” tactics are reflected in the fraud and racketeering lawsuit brought by New Mexico Attorney General Hector Balderas against Vivint Solar, a prominent player in Long Island’s market. He said Vivint Solar’s sales force assured New Mexico consumers of cost savings of up to 40 percent compared with their prior utility rates “when, in fact, they will likely pay more.”

“Vivint goes to great lengths to advertise that it will design, install and maintain a solar system for a consumer’s home ‘for free,'” said Balderas in court papers filed in March. “Vivint’s ‘free’ trap, in truth, is not free at all; rather it hooks consumers into paying more for energy.”

Vivint Solar denied the New Mexico allegations and said it offers customers “the opportunity to adopt clean, renewable energy while always adhering to the highest ethical sales standards.”

When Vivint Solar arrived on Long Island in 2012, said Allred, the chief sales officer, the company went door-to-door in neighborhoods to build up its clientele, but now relies mostly on word-of-mouth from satisfied customers. Allred says he hasn’t seen any drop-off in new installations, as reflected in state numbers, and rejects the idea that enthusiasm has waned for solar because of the industry’s tactics.

“We have a big customer base that is really happy,” Allred said. “If a customer calls in and they have a concern, we take care of them and we make it right. We take care of them. That’s how we get our referrals and grow our business.”

But for many customers on Long Island, the once-glowing promise of solar energy has not been so easy.

Longtime residents in long-term leases

Mort and Marilyn Kinzelberg, a senior couple in their 80s who live in Commack, first heard about the benefits of leasing from a SolarCity salesman inside a Huntington mall. The Kinzelbergs liked the idea of “going green” by getting solar energy panels put on their roof. But they were particularly enticed by the promise of lowering their electric bills.

Not willing to buy a solar system outright, the retired couple signed a 20-year lease and hoped for the best outcome. Under their agreement, the Kinzelbergs say, they expected to save as much as $1,000 a year.

A former electrical engineer, Mort liked the idea of drawing power from shiny black solar panels on his roof rather than from a local utility plant. “There’s no effect on the environment — I’m conscious of that,” he explained. “I was told it would save me a lot of money.”

‘There’s a certain amount of sentiment I have for this tree, so I was not going to cut it down under any circumstances.’ -Mort Kinzelberg, Commack resident

But there was a hitch. A giant tree in their backyard, draped over the roof like an outstretched umbrella, threatened to block the sun. The Kinzelbergs said they didn’t want to cut down the tree, attached to the second-floor porch of their two-story home.

“There’s a certain amount of sentiment I have for this tree, so I was not going to cut it down under any circumstances,” Mort said. “And he [the SolarCity rep] said the amount effect of this [tree] would be minimal and not to worry about it.””

But the solar savings were not as much as the Kinzelbergs expected. Indeed, some months they even paid more to SolarCity than they used to pay with their old bills to the utility company. “They [SolarCity] were not honest with me and didn’t save me as much money as they said they would,” Mort said. After they signed their contract, they also realized it contained a 2.9 percent annual hike in their leasing fee.

“Over 20 years, it comes to quite a bit that they are benefiting from,” said Marilyn with a rueful smile. “We’re not stupid and we should have gone through it more. But we believed the salesman. He said, ‘Don’t worry about it [the contract terms], it’s a good deal.’ We’re seniors — we don’t think that far ahead.”

Tesla officials, who now oversee SolarCity’s assets on Long Island, declined to be interviewed.

But Jonathan Lane, the lead solar instructor at Farmingdale State College, who examined the Kinzelberg home, said the elderly couple should have been told they were a poor candidate for solar – especially since they were unwilling to cut backyard trees overhanging the south portion of their roof.

“It kills the performance,” said Lane about the trees casting shadows over the solar panels. “The amount of energy generated by the system will be reduced by half and the amount of money collected by the customers will be reduced by approximately half.”

Lane, who installs solar systems privately, says only about 60 percent of Long Island’s 1.1 million residences and businesses are good candidates for solar. He says the rest have some obstacle – such as trees or limited roof space – that keeps solar panels from being a wise choice. Yet, he said, large, aggressive solar leasing firms too often sign up customers despite these obvious warning signs.

“Unfortunately it gives the whole industry a black eye,” Lane said. “There is a lot of profit-potential in the industry and some people are a lot more concerned with taking the profits from customers … than with delivering on promises made.”

Green-energy advocates emphasize that the many solar transactions, particularly those with established, reputable companies, are positive, and that most customers are happy with their systems.

‘My system paid for itself in a few years; it’s paid off and it’s still cranking.’ Gordian Raacke, executive director of Renewable Energy Long Island

Gordian Raacke, executive director of Renewable Energy Long Island, a green-energy advocacy group, was among the first LIPA customers to have a solar system put on the roof of his East Hampton home in 2002. “My system paid for itself in a few years; it’s paid off and it’s still cranking,” he said.

With rare exception, he said, complaints about the early systems were few. But that changed in 2013. “Of course, it became a totally different thing when the lease companies came in. At that point everybody could sign a lease and we know what happened.”

Raacke’s group was often consulted by customers who were contemplating solar, and he began to recognize a pattern. “One thing I was always surprised by was when people sent me their proposals from leasing companies, they [the leasing companies] were often inflating the assumed LIPA annual rate increase,” and tying an annual adjustment clause in their leases to that expected increase. The problem was that LIPA’s actual rate was frozen for many of those lease years and has moved only marginally since. “The numbers just weren’t real-world figures,” Raacke said. “In one case I saw 5 percent annual increase every year. That misrepresented the potential benefit to the customer. It was deceptive sales practices.”

Raacke said by any measure, “A leasing deal is a complex deal for the average customer to understand and get into. And I think a lot of people signed agreements they didn’t understand and that’s a problem. We always told people they should definitely compare a leased option to an owned, and don’t sign on the dotted line until they got multiple proposals.”

He and others were concerned when leases grew to upward of 75 percent of sales on Long Island. “They used very aggressive sales tactics, they went door to door and now we know what happened. From a customer perspective it was so attractive: no money down, get solar installed, but it’s like the Mercedes in the driveway. It looks good …”

He said Renewable Energy Long Island has gotten complaints or calls or emails from people who had “orphan systems from installers who went out of business. It’s very difficult to get someone else to fix. Many installers don’t want to deal with it because they’re taking on a problem they didn’t want to have. Shoddy installations.”

Maccone, who lives with his family in a North Bellmore home, is another senior who says he’s stuck with a long-term, under-performing solar deal. Maccone first considered solar when a telephone saleswoman called his home interrupting dinner. He remembers the saleswoman had the same first name as his daughter.

Speaking with the aid of a oxygen tank, Maccone said he didn’t think he could afford solar. He said the estimated pricetag of nearly $30,000 to buy a unit for his house was always too exorbitant for his family’s finances. The retiree said solar only became affordable because of a promise of no money down under the leasing agreement he signed in 2014.

Maccone said SolarCity promised big savings when it installed panels on the house where his family has lived since the 1950s. But that reduction in electricity costs never happened, he said.

SolarCity officials, now part of Tesla, declined to be interviewed.

Maccone used to pay about $450 a month to the utility company, but now he said he pays on average about $300 monthly for electricity and another $175 a month for a leasing fee.

There were also other factors in the fine print. As an older person who gets around with a respirator, Maccone said he was surprised to learn he’d be responsible for maintaining the heavy solar panels up on his roof, keeping them free of snow and leaves. Without luck, Maccone complained to government agencies and the Better Business Bureau. “There are no oversight people for solar as far as I know,” said Maccone. “They couldn’t help at all. It wasn’t in their jurisdiction.”

Little government oversight for solar

In New York, solar panel installation companies experienced their largest period of growth between 2014 and 2016 as an industry without oversight of the state Public Service Commission, which regulates utilities.

‘The solar industry, to my knowledge, is not a regulated industry and they can sell to whomever chooses to purchase their product.’ -Michael Voltz, director of energy efficiency and renewables for PSEG Long Island

Even though they are connected to the region’s overall power grid and local utilities are required to buy excess power produced by homeowners, the state has only recently undertaken efforts to rein them in. For the past several years, the Cuomo administration has pushed new initiatives promoting solar power, but state regulators refrained from fielding complaints or reviewing the services provided by solar firms.

“The solar industry, to my knowledge, is not a regulated industry and they can sell to whomever chooses to purchase their product,” explained Voltz of PSEG Long Island in an interview earlier this year. “It’s not our position as an electric utility to determine whether the government should have greater regulation or a complaint bureau. It’s just not our role.”

The Public Service Commission in October adopted rules for oversight of energy service companies that for the first time included solar panel installers, but because LIPA isn’t subject to PSC jurisdiction, the rules don’t apply to Long Island. Nevertheless, the commission “anticipates” LIPA will adopt the rules in the future. LIPA spokesman Sid Nathan said the authority’s staff has “reviewed PSC’s consumer protection standards and plans to bring a resolution to the LIPA board of trustees by year’s end.”

The New York Attorney General’s Office told Newsday it has received 48 complaints statewide since 2016 from upset solar unit owners and is reviewing the actions of one particular solar company that it would not identify. “Our investigation remains ongoing and we encourage any impacted New Yorkers to contact our office,” the spokesperson said earlier this month.

“Distributed energy providers, such as solar panel installers, are instrumental in helping build a cleaner, more resilient electric grid,” PSC spokesman James Denn said in a statement. “However, while we encourage these companies to grow in New York, we will also ensure that consumers are protected from fraud and dishonest marketing. Under our recently enacted rules, consumers will be protected.”It’s unclear why the agency didn’t adopt the new rules until this year.

Across the nation, critics say, customers with solar problems are similarly at a loss about whom to complain to — other than the solar firms themselves.

“Because state utility commissions do not regulate the leasing contracts, consumers may find themselves in a regulatory-protection limbo should a dispute arise,” explains Public Citizen’s Slocum. The solar leasing company “in effect becomes the utility for the consumer,” he said.

Slocum said seniors and other consumers are often surprised by the fine print in solar contracts calling for mandatory arbitration, eliminating the chance to file a lawsuit for alleged wrongdoing, or to file class-action suits to help defray litigation costs. “They are poorly equipped to deal with these companies because they are denied the ability to go to court,” Slocum said.

Instead of pleading their case before a judge, Slocum said, these consumers usually are strapped by contract terms that “require use of a company-friendly arbitration process that advantages the solar leasing company and leaves the consumer unable to appeal.”His group has asked the Federal Trade Commission to ban mandatory arbitration and to allow solar customers to go to court if necessary.

On Long Island, Newsday found consumer watchdogs rarely investigate or even receive solar complaints. Responding to a Newsday Freedom of Information Law request last year, Suffolk’s Department of Consumer Affairs reported eight complaints from 2014 to 2016. Most were marked “satisfied after mediation” or unresolved by some factual dispute. Nassau said they didn’t receive any complaints. Local officials said they didn’t know if solar contracts, which often require mandatory arbitration, had affected the number of complaints they received.

But on Long Island, there’s one place receiving plenty of inquiries from upset solar homeowners – the county clerk’s office. And the problem usually involves a little document known as a UCC-1. Most homeowners had no idea that these documents had been filed by their solar companies, listing them as “debtors,” until they tried to sell or refinance their home.

“We get daily calls with reference to UCC statements in regards to solar panels,” said Christopher Como, Suffolk County special deputy county clerk. “On a daily basis people inquiring where it came from, what do I have to do to dispose it? Just trying to get information about it. And those are usually people who are making some type of financial change or looking to sell.”

In the past four years, 23,525 UCC statements were filed in Suffolk alone, the majority reflecting the big upsurge in sun-powered renewable energy during the past decade. In Nassau, the number of UCC-1s filed nearly doubled from 2012 to 2016, officials said. One firm alone, Vivint Solar, had nearly 1,000 UCC-1s filed in Nassau in recent years, records show.

Solar companies say they file these certificates as a way of protecting their ownership of the “fixtures” installed on the roofs of their customers. But they can cause unforeseen hassles for solar homeowners.

Just ask Barry Geller. He said the UCC on the solar system attached to his West Hempstead house created a nightmare when he tried to refinance.

Battle of the rooftops

Geller said he was attracted to leased solar power when he saw a TV ad for a company called NRG Home Solar, which promoted itself during the Super Bowl. Its slick Hollywood production values and futuristic message were impressive.

“Enough sunlight hits Earth every hour to power everything on it for an entire year…,” said one of the company’s commercials, over images of the sun and houses equipped with solar panels. “…All you have to do is let it in.”

Geller said this commercial for NRG Home Solar spurred him to look into leasing panels from the company.

Geller decided to let it in, in October 2014. “We were watching the Super Bowl and there was NRG solar,” he remembered. “I figured if they can afford that they must be in business for a while.”

But various complications left the system installed but not hooked up for a year. And while NRG gave him $800 to remove a tree in his front yard, the total cost for the job was $2,000, and he had to pay the balance himself.

Geller said he’s been dissatisfied to learn that his system is only saving him around $50 a month on his electric bill, and that in some months, the bill is even higher than it was prior to his having the solar installed.

But his biggest nightmare came when he tried to refinance his home to do some costly remodeling.

‘If they told me they were going to put a lien on my house for solar, I would have told them to take their panels and put them somewhere else.’ -Barry Geller, West Hempstead resident

“The day after we hired contractors, we went to the bank to refinance, because the mortgage was just about paid,” he said. “And [a bank official] gave me a call back and said they can’t finish the refi because there’s a lien on my home. And I said, who has a lien on my home? We didn’t owe anybody anything. And he said, ‘The solar company.'”

That left the Gellers stunned. “I said, Really, a lien?” He’d worked with three different sales people from NRG, he said, and the “only thing they didn’t tell me was that they were going to put a lien on my house.” He suspects why they may have left it out. “If they told me they were going to put a lien on my house for solar, I would have told them to take their panels and put them somewhere else.”

The UCC problem was compounded by the fact that the Gellers had already hired contractors to rebuild their house, so they couldn’t wait for the delayed refinancing to go through. Instead, they put tens of thousands of dollars on their personal credit cards to pay for contractors and materials.

“We maxed out our charge cards waiting to close, because now the title company lawyers and the bank lawyers were discussing with them to get a paper to take this lien off temporarily and put it right back on after we close, which I asked them not to, but it’s on.”

Geller’s stress level only increased when NRG announced in February of 2017 that it was exiting the home solar market on Long Island. “I think they came on the island, they got what they wanted … and left. They don’t care.”

NRG declined to comment.

Geller said he’s been told he can permanently remove the lien on his house – if he pays the full value of the solar system, which he said is $32,000. But as far as he’s concerned the system is worth only $12,000, given his estimated savings of only $50 a month.

Five tips for avoiding solar pitfalls

  • Don’t rely on the promises of just one solar company to make a decision. Get a variety of price quotes and talk to people who have bought and leased their systems.
  • Read the fine print. Often, the most controversial elements of solar leasing agreements are buried in there, and some customers say salespeople either didn’t mention or breezed past them. Consider having a lawyer review the document before you sign.
  • Ask about escalator clauses. These can increase the cost of your system by hundreds of dollars a year if your contract allows the company to adjust them upward by as much as 3 percent annually.
  • Make sure your house is right for solar. If your rooftop isn’t facing south, and there are trees and other obstructions that block out the sun all or part of the day, your home may not be a good candidate. Check out the NY Solar Map website to get an initial indication of your home’s appropriateness for solar.
  • Once you’ve narrowed the list of solar companies, do some research to find out whether others have filed complaints against them, they’ve had financial troubles or have been sued. Check the Better Business Bureau’s website, which allows you to search by company, as well as other online review sites, and contact your county’s consumer protection bureau to see if complaints have been logged.

    Sources: Federal Trade Commission, NY attorney general

Geller said he didn’t realize how much trouble the UCC could cause. “There’s so many pages they sent me time after time after time with new contracts. I read it. I saw something that said UCC. I never heard of it. I didn’t know what it was. I actually thought it was something that they did. Not a lien on my house.”

Nationally, critics like the New Mexico attorney general say UCCs have created unexpected headaches for solar homeowners around the country. Potential buyers, mortgage companies, title searchers and their attorneys may balk at purchasing property with UCCs attached to them, they say.

Solar firms contend that UCCs are not liens and say they cooperate with homeowners who want to sell their homes. “We are aware that lenders prefer not to see anything on the title so it’s common practice for us to release the UCC-1 fixture filing for financing purposes and re-file later,” said Solar City on its website, with a team dedicated to this task.

But this fine-print distinction may be enough to scare away potential home buyers. “I can see an average consumer being confused by that language,” said real estate law expert Peter Marullo of the Uniondale-based firm Ruskin Moscou. “People get caught up on whether it’s a lien on the house or on the [solar] fixture. But bottom-line, as a buyer, you have to realize that you’re going to be taking over these lease payments.”

‘We do see that there is a potential disaster looming for home buyers who are stepping into these transactions not aware that there are potential leases.’ -Susan Hamblen, owner-broker at Exit Realty Achieve

While leasing companies say UCC filings can be temporarily lifted for refinancing transactions, new owners of a home with a leased system must either qualify for and assume the lease, or the seller must buy it outright.

Real estate agents are bracing.

“We do see that there is a potential disaster looming for home buyers who are stepping into these transactions not aware that there are potential leases,” said Susan Hamblen, owner-broker at Exit Realty Achieve in Smithtown, who, like other firms, now requires her agents receive extensive solar training to navigate the complex transactions.

Walter, the former Riverhead supervisor and a real estate lawyer, said he’s had at least three clients in the past year who’ve had a home closing set back by a solar contract. “The solar lease is a debt,” said Walter. “The solar companies are not telling people that if you are not planning to live in their homes for 20 years, it becomes a drain.”

Despite claims to the contrary, Walter said solar leases most definitely encumber homeowners with financial liens against their homes. “It’s absolutely a lien,” he said. “They [leasing companies] file a UCC and a financing document in the clerk’s office.” In one case, Walter said, a client actually had a second mortgage on his home tied only to the solar panels and installation costs.

More broadly, Walter said, the contracts give the solar companies all the leverage.

“They are putting a lien on the solar panels,” he said. “They can come up on your roof and take back their solar panels.”

With a solar lien attached to a home, a new buyer of that home has to be creditworthy to assume the lease — if they want it at all. If not, the seller has to make an accommodation in the price, or buy the system outright and essentially give it away as part of the sale.

“You have to be creditworthy in the solar company’s book in order for the lease to be transferred,” Walter said. And your credit score can actually be lowered by the amount of cost tied to the solar lease. “You can borrow less money” with a UCC solar lease on your credit record, he said. In one case, a client paid around $20,000 for the solar system that didn’t increase the value of the home proportionately when he sold it. “He’s basically gifting these solar panels” to the new owner, who gets a free electric system and a zero energy bill, Walter said.

Real estate agent Hamblen said she’s become so aware of the pitfalls of lease or power-purchase agreement transactions that she now trains and certifies all her agents on solar’s potential impacts

“Leases have potential increases as well as very faulty guarantees in some circumstances,” she said. “The buyer really has no knowledge of what they’re getting into, what they’re signing up for. Unfortunately, we’re also finding that some of the vendors in the field, the real-estate attorneys, the mortgage people, are not yet brought up to speed with the things in solar. So we’re trying to educate buyers.” She’s also conducting educational programs for the attorneys, mortgage managers and even other Realtors, she said.

Sunny or cloudy days ahead for solar?

Overall, experts offer a number of reasons for the recent drop-off in solar panel installations on Long Island — and what it might mean for the future.

Some point to state and federal incentives — such as rebates and tax write-offs that fueled the industry’s rapid rise earlier in this decade — that are now on the decline. A national study for the trade group SEIA found solar installations in 2017 fell 30 percent from the year before and predicts sign-ups will be lower through 2022 because of new tariffs on imported panels and changing tax laws.

Another reason for the dropoff is that Long Island’s largest installer, Solar City, is moving away from lease deals for solar panels toward cash sales and loans, and promoting a full solar roof model considered more profitable.

The overall market decline in Solar City’s panel installations in recent years is compounded by the departure of other large solar companies that once competed in the Long Island market. Word-of-mouth among solar customers with long-terms leases — angry about such controversial issues as “escalator clauses,” UCCs and other factors in the fine print — has also taken its toll.

But looking toward the future, some like PSEG’s Voltz say Long Island’s once booming solar market has plateaued rather than fizzled, reflected in a slight upturn expected this year. “We think it’s been a healthy market,” he said. “It maybe got a little overheated for a couple of years from many leasing companies — that’s just my perspective.”

-With Tim Healy

LIPA: Northport power plant pays the highest taxes in the nation

LIPA is number one–in property taxes.

During a board meeting in Uniondale on Wednesday, LIPA chief executive Tom Falcone provided context for the sky-high taxes the utility’s ratepayers shell out each year for just the Northport power station: The property ranked at the top of a recent listing of all commercial property taxes across the country.

The $82 million LIPA paid in 2017 taxes for that National Grid-owned plant ranks it ahead of such blue-chip properties as the Empire State Building ($39.9 million), the Waldorf Astoria ($19.2 million) the Mall of America ($30 million), even Disneyland ($35.6 million), according to LIPA-supplied research by the firm, Commercial Cafe.

For Falcone, who has two young daughters, the high taxes provided an opportunity for tongue-in-cheek context at the board meeting, where he noted the difference in taxes in proposing an alternate location for his family’s next summer vacation.

“I went home and I told my little girls, Hey, I’ve got some place for you,” he recounted. “You can go to the happiest place on earth, that would be Disneyland. … Or you can go someplace twice as good: We’re going to Northport!”

The comparison was timely, if opportunistic. The Long Island Power Authority’s nearly decade-long legal battle with towns and school districts to reduce the taxes on the Northport plant and three other National Grid-owned plants is coming to a head. The utility is currently working to reach settlements in and out of court to lower the taxes for each of the plants. Brookhaven Town has reached an agreement in principle to settle.

The amounts are significant, not just for the Northport plant. Around 15 percent of each customer’s LIPA bill goes to pay taxes. In addition to the Northport plant, LIPA customers pay $42.6 million annually in taxes for the EF Barrett plant in Island Park, $32.6 million for the Port Jefferson power station, and $23 million for a Glenwood Landing site where a plant no longer exists. Each would have made the list of top-ranking commercial taxes but weren’t included.

Municipalities and school districts have alternately argued that former LIPA officials agreed not to challenge the taxes when LIPA took over the system in 1998, and that tax payments were promised as a way to compensate homes and businesses located near the plants and for their emissions.

Utility officials stressed at the board meeting that the utility has seen notable improvements in customer satisfaction and reliability in recent surveys, including the finding that PSEG Long Island has ranked as the “most improved” utility in a JD Power customer satisfaction survey. The utility recently ranked second from last in satisfaction among large eastern utilities in surveys taken during the past year.

And the company continues to show improvements in reliability, hitting targets for average customer outage duration and frequency thus far in 2018, among others, after just missing those targets last year. Dan Eichhorn, president of PSEG Long Island, said reliability scores are improved 25 percent to 40 percent over 2017.

Highest taxes

A look at some of the properties that paid less in taxes in 2017 than the Northport power plant, according to research by Commercial Cafe. The full list of 100 commercial properties is available here.

Northport power plant

2017 taxes: $82,093,239

Suffolk’s plan to clean its waterways could cost about $20,000 per household — and that’s just one hurdle

Suffolk County has launched an ambitious plan to clean the region’s waters by getting homeowners to abandon cesspools and septic systems in favor of advanced and more costly treatment technology, but the effort is hitting technical and political hurdles, a review by Newsday/News 12 has found.

County-ordered tests show that only one of the four advanced systems approved by Suffolk in 2016 and 2017 has routinely met the threshold county officials set for reducing nitrogen, a key contributor to the polluting of Long Island’s waterways.

A fifth system, approved this year, also met the standard, although in a single round of the ongoing testing, county officials said.

Additionally, county officials have encountered resistance from legislators who say they fear a voter backlash over the increased per-household cost of improving wastewater treatment.

“Alternative on-site wastewater treatment” systems — in essence, mini sewage-treatment plants that would be placed in thousands of yards across Suffolk County — are more effective than traditional cesspools and septics but, at an average of just under $20,000, are also at least twice as costly and require more maintenance.

“Clearly we want to see the whole universe of these performing better,” Walter Dawydiak, Suffolk’s director of the Division of Environmental Quality, said during a February conference call with environmentalists, builders, officials and others involved in the effort.

But he emphasized that the results were still encouraging

“Even the worst of these systems is showing 50 percent removal [of nitrogen],” he said later.

Most homes and businesses in the counties surrounding New York City, including Nassau, are connected to sewer systems. Nearly 75 percent of Suffolk homes, though, do not have sewer service. Suffolk officials estimated that some 252,000 cesspools — holding tanks that eventually leech untreated waste directly into the ground — are in place in the county. An additional 108,000 properties are served by traditional septic systems, which offer better overall treatment but do little to reduce nitrogen.

That decades-long legacy of nitrogen-rich waste moving from homes largely unfiltered to the ecosystem has in part led to harmful algal blooms, loss of shellfish stocks, degraded wetlands and lower oxygen levels in Long Island’s surface waters, including its bays, rivers and Long Island Sound.

Individual systems

Nearly 75 percent of Suffolk County relies on cesspools and septic systems to treat its waste. Officials say the nitrogen from those systems is degrading water quality. Here’s a look at what is in use now and the advanced technology the county is pushing. Dollar figures are the initial costs of each system.

Suffolk County Executive Steve Bellone labeled nitrogen as “public water enemy No. 1” in 2015 and released a wide-ranging water-resources management plan to reverse declining water quality, which included the advanced systems. That same year, the county started a pilot demonstration program to test some of these systems, selecting homeowners via lottery to get equipment installed at no cost.

In 2016 Bellone and the legislature amended the county sanitary code, outlining how the advanced systems would be tested, and setting rules for the average amount of nitrogen the new technology could release before being approved for widespread use.

Suffolk officials settled on 19 milligrams of nitrogen per liter, limits also used in Massachusetts and Rhode Island, where officials have been battling for more than 20 years to reduce nitrogen levels in wastewater. That level of nitrogen is less than a third of what is usually found in raw sewage, but also nearly twice the state’s standard for what can be released by a large municipal sewage-treatment plant — the type to which sewer pipes are connected.

Supporters hailed the change, saying it had been a long time coming and necessary. They noted that for more than 50 years it’s been known that disposing of waste into groundwater is not wise for the environmental and economic well-being of an island where tourism and recreation are big business.

“This is as big or bigger than any other major policy issue that the Island has confronted,” said Kevin McDonald, conservation project director for public lands at The Nature Conservancy on Long Island. “Any of these systems on their worst day can’t be worse than what we have now,” he added. “Even if they only perform at 50 percent that’s better than what we’re doing now.”

Bellone declined to be interviewed, instead referring questions about the Newsday/News 12 review to Deputy County Executive Peter Scully.

The county’s so-called water czar, Scully said manufacturers will be given a chance to make adjustments to make their systems more effective, but over the long-term, if they can’t meet the standard they won’t be approved for general use in Suffolk County.

“It’s very early in the process and the dataset is small but the county is forcing the manufacturers to meet a standard that is very difficult to meet,” he said. “But the standard is in place for a reason.”

As the county studies how the technologies perform, five systems that made it through the first round of testing are provisionally approved for sale. Read the rest of the story.

Where is the money for these systems coming from? Grants and loan programs are available to help with the added expense, but that money is limited.

Expense is a major concern when it comes to the advanced wastewater treatment systems that are a big part of Suffolk County’s program to reduce nitrogen heading from homes to waterways and drinking aquifers.

The units cost two to four times more than a conventional wastewater system to install and hundreds of dollars extra each year to operate and maintain.

County and state governments have set up grants to offset about half the initial costs, and made loans available to cover the other half. East End towns, funded by town-approved taxes on real estate transactions, have their own grant programs.

That money is limited, though, and additional funding sources will have to be found; the money set aside so far will cover only a couple thousand of the systems in a county where an estimated 252,000 properties still rely on low-tech cesspools.

The added costs

Suffolk County officials say average installation costs of the innovative and advanced systems run $19,200. Builders, installers and engineers said the price tag can be as high as $25,000 to $30,000 for some houses where soil composition and other site conditions might make the work difficult.

That’s compared to about $5,000 to $10,000 to install a traditional septic tank and cesspool, installers said, and as little as $2,000 for a cesspool alone.

In addition to upfront costs and maintenance, the advanced systems also have electrical components that add to utility bills.

In general, the first three years of maintenance costs are included by manufacturers in the installation price. But after that, residents will be required to have an annual contract that will cost between $250 to $300 a year, according to the county.

“If you want to optimize your performance you have to take care of it,” said Justin Jobin, environmental projects coordinator in the Suffolk County health department.

Operators in other states where the systems are already in place say costs can run significant higher.

Annual maintenance contracts range between $500 and $2,000 at Cape Cod, Massachusetts-based Bennett Environmental Associates Inc., according to Samantha Farrenkopf, wastewater program manager for the company, which maintains systems for homeowners and files necessary compliance documents. Joe Martins, owner of Accu Sepcheck in Cape Cod, said contracts are between $500 and $1,800 a year.

The pumps, blowers, air compressors and other equipment use electricity — from $57 to $266 per year, depending on the model, the system manufacturers have told Suffolk officials.

Those parts can also break, and replacements can cost from $11 for a Fiberglas air blower to thousands of dollars for some components, according to out-of-state operators.

Homeowners can kill off the microorganisms that play a key role in nitrogen reduction in the systems by using excessive bleach or flushing chemotherapy drugs, for example. Jobin said systems typically rebound on their own and pumpouts aren’t normally needed.

Under the rules established by county officials, once the systems receive final approval, they will have to be tested every three years for water quality, which will cost about $200, according to local installers. Suffolk officials said that they believed the price for testing, which they said was closer to $100, is included in the price of the operations and maintenance agreement.

Not all systems have the same demands, maintenance needs or costs. A Fuji Clean USA system, which was approved by the county in January, has barely any moving parts and uses technology developed in Japan in the 1960s.

Where is the money coming from?

For installation, purchase and other upfront costs, the county will provide $10,000 to $11,000 for about 1,000 homeowners who receive grants — up to $10 million over five years.

New York State has also allocated $10 million to help the county expand its grant program and pay for up to half the costs of a system. East Hampton, Southampton and Shelter Island are also offering grants of up to $16,000 for residents who qualify based on need, funded from town-approved taxes on real estate transactions.

Mitchell Pally, CEO of the Long Island Builders Institute, a home-builders industry group, said given the increased costs of the advanced systems, homeowners — especially those of modest means — will need help.

“You need the subsidy to make it palatable to people, especially if you’re going to require them to do it,” he said.

How to fund that subsidy in a sustained way is likely to be the subject of policy debates among officials leery of adding to the burden of property owners.

County Executive Steve Bellone in 2016 proposed asking voters to institute a fee on water usage, which would have cost an average family between $73 and $126 a year, to help fund water-improvement projects including advanced systems and sewers. The idea was quashed when state lawmakers in both parties worried the money could be diverted and said they weren’t consulted until shortly before the executive’s administration announced its plan.

County officials, environmental advocates and business groups are discussing the creation of a Suffolk-wide district to administer and fund water-quality programs, including advanced systems and sewers. How it would collect money is to be determined, Scully said.

Proponents of the systems say they expect the costs per unit to go down as more of the units get approved for sale in the county, more installers get certified and engineers get accustomed to putting them in the ground.

“Why wouldn’t this market behave like any other market, that went from emerging to infant to very mature?” said Kevin McDonald, policy and finance adviser to the Long Island branch of The Nature Conservancy, an environmental conservation group.

The East End is already embracing the new septic technology. Local officials say the move shows the county and residents that clean water is a priority.

Officials on Long Island’s East End are moving aggressively to require the installation of advanced nitrogen-reducing septic systems, even as Suffolk County assesses the effectiveness of the technology in cleaning the region’s surface waters.

The Town of East Hampton began in January of this year mandating that advanced systems be installed in all new residential and commercial construction sites or where an existing structure is undergoing an expansion of at least 50 percent.

Southampton is requiring them to be installed in new residential construction or expansions of existing homes in designated areas near bays and streams. Farther to the west, Brookhaven Town has a similar rule, although one limited solely to new construction.

The Shelter Island Town board in May will discuss a proposal to require the advanced systems in construction of all new homes larger than 1,500 square feet.

Advanced on-site wastewater treatment systems are key to Suffolk County’s ambitious plan to reduce the nitrogen pollution that leads to harmful algal blooms, loss of shellfish stocks, degraded wetlands and lower oxygen levels in Long Island’s bays, rivers and Long Island Sound.

But rather than requiring their installation, the county has so far relied on government grants and other financial incentives to persuade homeowners to abandon the cesspools and septic systems that predominate in the region. The advanced systems have an average price of nearly $20,000, at least twice the cost of traditional waste-disposal systems, which do little to limit nitrogen.

The local officials say that their support for a mandate is as much about pushing the county to act as it is about getting residents to participate in programs to restore the environment. Read the rest of the story.

How did a place like Suffolk County end up with such a subpar septic system? Cost overruns, a scandal and a murder, for starters.

Suffolk County officials had plans half a century ago for sewers throughout much of the county, from Smithtown and Huntington to Southold and East Hampton.

The reality today is that nearly 75 percent of homes in Suffolk County — some 360,000 residences — are not connected to sewers and rely instead on septic tanks and/or cesspools, through which wastewater flows into the ground and Long Island’s bays, rivers and the sound.

What happened? How does Suffolk — an upscale suburban area just outside one of the world’s major cities — find itself struggling with a problem the rest of the region handled decades ago?

The answer lies in the history of the Southwest Sewer District project of the 1970s, one of Long Island’s biggest scandals. It was supposed to be a first step in establishing the county’s sewer infrastructure, but the program was so plagued by cost overruns, mismanagement and corruption that until 10 years ago, all proposed sewer projects had become politically toxic, observers said.

And by the time elected leaders started discussing the topic again, the federal government, which along with the state paid for 87.5 percent of the costs of the Southwest Sewer District, stopped regularly funding sewer projects.

“The Southwest Sewer District scandals hit and shortly thereafter, the federal funding went away. You had the one-two punch right there,” said Dennis Kelleher, senior vice president with Melville-based engineering firm H2M Water.

An ambitious 1967 plan had sewers crossing from the South Shore of western Suffolk to Huntington, Smithtown and Commack. Voters rejected it 6 to 1.

Two years later, officials put forward a scaled-down version and ran an aggressive campaign warning that residents would otherwise essentially be drinking from their toilets.

“Long Island is the outstanding example in the world where a major population discharges sewage in groundwaters. Even people in underdeveloped countries tell me they can’t understand it,” said Dwight Metzler, New York State’s deputy health commissioner for environmental services, in a Sept. 26, 1969, Newsday article.

Voters narrowly approved it, creating the Southwest Sewer District, covering Babylon and parts of Islip.

The project was originally estimated to cost $291 million, but within four years the price was $588 million. Ultimately, the Southwest Sewer District would cost more than $1 billion and take 14 years before the first flush went through the system.

Keep reading about the history of the failed Suffolk sewer project, including the “natural-born master criminal” who was leading the project and the county official who was murdered just after he promised to reveal all the project’s secrets. Read the rest of the story.

Edward Walsh investigation: Brushes with the law

Edward Walsh, the Conservative Party’s Suffolk County chairman and a county correction lieutenant, has risen to positions of power and influence despite incidents that could have derailed his career.

Civil service and sheriff’s records from Walsh’s background check show in 1988 he tested positive for the barbiturate phenobarbital in a failed bid to work for the NYPD and was arrested in 1984 as a University of Maryland student and sentenced to 12 months’ probation for a misdemeanor sex offense. Walsh did not disclose the Maryland arrest on his application, as is required.

Walsh was arrested again on a felony criminal mischief charge in 1989, less than a year before he applied to work for the sheriff’s office. He ultimately pleaded guilty to a violation, according to the documents.

Two years ago, Suffolk County law enforcement officials raided a Medford business and discovered illegal gambling, drugs and more than two dozen people, including Walsh. Although he was not among those arrested, Walsh’s presence amid illegal activity sparked an investigation, the results of which have never been made public.

Now, Walsh, 48, is among the targets of a sheriff’s investigation into whether correction department employees stole wages by padding their salaries with hours they never worked.

In interviews with Newsday over the past six weeks, Walsh denied he had done anything wrong and blamed political enemies for trying to undermine the positive work he does for Long Island and the Conservative Party.

“It is what it is, and there’s nothing I can do about that,” Walsh said. “I go to work every day. I do my job. I’m passionate. I try to help my community. I try to make a difference in the world. That’s what I do by being in the Conservative Party.”

The Smithtown News in December 2011 first reported about Walsh’s Maryland sex offense charge and the challenge he faced later in applying to the sheriff’s office. The story was based on documents widely circulated by Lawrence Gray, a former state prosecutor and frequent Walsh critic, who called on Walsh to register as a sex offender.

Newsday obtained those same documents and is writing about them for the first time.

Walsh emerged from the roughly yearlong vetting process with an offer to join the sheriff’s office, despite its initial objection to his eligibility because of the information uncovered during his background check. The reason for reversing Walsh’s planned removal from the applicant pool is not indicated in the documents.

Walsh — whose father, Ed Walsh Sr., served as a committeeman alongside fellow Islip Conservative Michael Mahoney, the brother of then-Sheriff Patrick Mahoney — has worked for the sheriff’s office for the past 23 years. He made more than $200,000 in 2013, according to payroll records, and at least another $62,000 as the county’s Conservative Party chairman, a position that has made him an influential political figure in Suffolk County.

Michael D. O’Donohoe, a longtime Suffolk County Conservative Party committeeman, former county legislator and Suffolk’s current commissioner of jurors, said high salaries inside the sheriff’s office and allegations of stolen time have “tainted” the Conservative line. O’Donohoe supported the investigation into Walsh and other employees by Sheriff Vincent DeMarco, who, like Walsh and O’Donohoe, is a member of the Conservative Party.

“He has to square this up,” O’Donohoe said of DeMarco. “This isn’t going down well with Joe Six-Pack.”

DeMarco declined to discuss the specifics of the probe but confirmed that Walsh had been officially notified about two weeks ago that he is the target of an ongoing internal affairs investigation.

Asked whether he would have hired Walsh given his past issues, DeMarco said: “We have sought to have people disqualified for less.”

Maryland arrest

Mary Salins said she didn’t need to call the police the night she was attacked outside a University of Maryland dorm. They came running to her.

“I screamed, and that’s what alerted the security police,” Salins said.

A December 1984 police report from the incident shows that cops arrested 18-year-old Edward Walsh, a former star athlete at East Islip High who was then a 6-foot-6, 250-pound freshman on a Maryland football scholarship. Salins said she had been walking on campus when Walsh suddenly knocked her boyfriend down and then groped her between her legs.

As frightening as that was, Salins said what stays with her to this day is going to court to testify and seeing Walsh, flanked by several of his football buddies, making fun of her and directing a vulgar comment her way.

Court records show Walsh was charged with a misdemeanor fourth-degree sex offense and that the disposition of the case was 12 months’ probation before judgment. Years later, after Walsh applied to join the Suffolk County sheriff’s office, a Maryland judge granted his request to have the records expunged.

Walsh did not respond directly to questions about the Maryland case. His attorney, Frank Tinari of Central Islip, said Walsh denies that he committed a sex offense and says that the charge against him had been dismissed.

John Kudel, a criminal defense attorney and the immediate past president of the Maryland State Bar Association, said probation before judgment does not mean a charge has been dismissed.

Kudel, who was not involved in Walsh’s case, said probation before judgment indicates the defendant pleaded guilty or no contest or was found guilty at trial. Either way, “the judge finds that person guilty,” Kudel said.

William Welch, a Maryland criminal defense attorney who has been practicing law for 21 years, agreed that a “finding of guilt” precedes probation before judgment.

“You get a conviction,” said Welch, who also was not involved in Walsh’s case. But the conviction is temporary, and once the defendant agrees to waive his right to appeal, “the court strikes the conviction,” Welch said.

Salins, whose last name was Hughes at the time, had not spoken to the media about her encounter with Walsh until she was contacted by a Newsday reporter. She said she didn’t know Walsh before the incident and was unaware that he had gone on to become a Suffolk County political figure and law enforcement officer. Salins does not live in New York.

Tinari said that the way the Maryland case ended suggests that Salins’ credibility was in question.

“I want you to consider the fact that maybe the prosecutor in Maryland, after the prosecutor interviewed this woman or this person who made these allegations, didn’t believe the person or didn’t feel that the person’s allegations made any sense or were believable in any shape or form,” Tinari said.

The disposition of Walsh’s case does not indicate doubt by the prosecutor, Kudel said.

“The prosecutor may very well be opposed to a probation before judgment, but the judge granted it anyway,” Kudel said.

Background check

Besides records related to the Maryland case, the documents Gray circulated from Walsh’s background check included letters between sheriff’s investigators and the Suffolk County Department of Civil Service.

According to an October 1990 letter from Frederick Brotschul, the commanding officer of the sheriff’s personnel investigations unit, Walsh did not mention his Maryland arrest on his candidate questionnaire.

“Mr. Walsh denied that he has been arrested until certain specifics of the arrest were brought to his attention,” Brotschul wrote.

Another letter, from Administrative Lt. Frank Jenkins, states that in 1988 the New York City Police Department found Walsh “not qualified due to an unauthorized substance in his system during his health examination.”

The drug for which Walsh tested positive, phenobarbital, is a central nervous system depressant with a potential for abuse, according to the U.S. Food and Drug Administration.

I can’t tell you how disturbing this is and how upset I am to see something like this.” — Suffolk County Legislator Kate Browning, on Walsh’s 1984 sex offense arrest

Walsh said in an interview that he doesn’t use recreational drugs and had been prescribed the phenobarbital but couldn’t remember why.

Jenkins wrote in his letter that Walsh had “the opportunity to submit a valid prescription to overturn his disqualification” for the NYPD job but was “unable to produce one.”

Walsh said he missed the deadline to submit his prescription.

“I have chronic sinus infections and to this day, when I go to the doctor, I’m always on Claritin and everything else,” Walsh said. “It had to be something like that, and when I sent the appeal back I was too late. I was an idiot kid.”

Joseph Nathan, an associate professor of pharmacy with Long Island University, said the FDA approves of the use of phenobarbital as a sedative and for the management of seizures. He could not find any information suggesting it could treat chronic sinus infections.

“Although medications are commonly used for non-FDA-approved uses, I am not aware of such a use for phenobarbital,” Nathan said.

Walsh: Spota cleared me

Jenkins also wrote that Walsh “attempted to mislead the investigation process by supplying deceptive information which contradicted the factual information supplied by other governmental agencies.”

In an October letter to Walsh, Alan Schneider, the county’s Civil Service chief, wrote: “The Suffolk County Sheriff’s Department has submitted a formal challenge to your eligibility to remain” on the list of candidates. Walsh was given nine days to offer an explanation and submit facts to help his cause but never did, according to a source involved in vetting his candidacy.

Still, the sheriff’s office dropped its challenge to Walsh’s eligibility before the nine days expired and then-Sheriff Mahoney hired Walsh two months later. Mahoney did not respond to a call for comment.

After the Smithtown News wrote about Walsh’s background investigation, Suffolk County Legis. Kate M. Browning (WF-Shirley) announced during a February 2012 meeting of the Public Safety Committee she chairs that she thought an independent, state investigation into Walsh’s hiring might be appropriate.

“I can’t tell you how disturbing this is and how upset I am to see something like this,” Browning said to sheriff’s office Chief of Staff Mike Sharkey. “Again, if you lie on a Civil Service application, you don’t get the job. And I want to know how this person got the job, if, in fact, any of this is true.”

Sharkey told Browning that Sheriff DeMarco and Suffolk District Attorney Thomas Spota’s office were already investigating the matter.

Before Browning ever raised the issue, Spota had already concluded his review and informed Walsh in a letter that the Maryland case ended “without a finding of verdict, or, in other words no conviction for a criminal or noncriminal offense was entered.”

Therefore, Walsh did not need to register as a sex offender, as Gray had suggested, according to Spota’s letter.

“Since you have never been convicted, no registration under the Sex Offender Registry Act is contemplated or required in this State or another. A plain reading of the Sex Offender Registry Act makes that abundantly clear,” the letter states.

Browning said Tuesday she doesn’t believe that her request for an investigation was handled adequately. She said she wants state Attorney General Eric T. Schneiderman to investigate whether Walsh lied on his civil service application and determine if he should have been “eligible for the job.”

“I think the attorney general needs to step in,” Browning said. “I think that’s where it should go.”

Walsh said that Spota’s letter exonerated him of wrongdoing.

“I did nothing wrong,” Walsh said. “I’m telling you that that cut-and-paste stuff and all that other junk is garbage. Just talk to the district attorney. They don’t give anybody a free ride.”

Robert Clifford, Spota’s spokesman, wrote in an email Wednesday: “This office did not exonerate any person. We simply recited the fact that after review, Mr. Walsh does not have a criminal conviction.”

Gambling raid

Four months after Browning’s call for an investigation into Walsh, the Suffolk County Police Department raided an illegal gambling operation in Medford. Court records show about 30 people were present at the June 12, 2012, event.

Though he is not named in the court papers, Walsh acknowledged to Newsday that he was there to play cards.

Police arrested at least three people on illegal gambling charges, according to court records. Two of them have been convicted of promoting gambling in the second degree, a misdemeanor. The case for a third defendant is ongoing.

Walsh said police did not handcuff him or arrest him. He said after a period of time they told him, “OK, Mr. Walsh, have a good day” and sent him on his way.

“It’s absolutely not illegal to play cards,” Walsh said. “If you want to write a story that says Eddie Walsh plays cards, he definitely does.”

Browning sent a letter to DeMarco 10 days after the raid asking whether Walsh had been drug-tested or suspended pending an investigation.

“It is the duty of a law enforcement officer to report any crime in progress if it is observed by that officer regardless if they are on duty or not,” Browning’s letter states.

Walsh’s presence at the illegal card game led to an investigation by the Suffolk Police Department and District Attorney Spota, according to a source informed of the investigations.

I play cards. I own up to that. Politics is the biggest card game I play.” — Edward Walsh
On May 5, Newsday filed requests with the police department and Spota’s office for records related to the investigation into Walsh.

The police department acknowledged the request on May 9, within the five-day deadline required by law, but has yet to produce any records. Spota’s office has not responded to the records request at all, a violation of the state’s public records law.

Suffolk DA spokesman Clifford wrote in an email Wednesday that his office had responded and that there was “clearly a failure on the part of Newsday to properly sort and deliver mail.” Clifford refused Newsday’s request Wednesday to provide the communication he said his office had sent.

DeMarco said the Suffolk County Police Department informed his office that Walsh had been present at the card game and that his office requested all pertinent records. No records were provided, DeMarco said.

“We were told by them that he was there and we said, ‘OK, can you send us a copy of the report, incident report or a field report?’ ” DeMarco said. “And we never got one, and we still don’t have a report.”

Walsh said he did nothing wrong that night in Medford.

“If I’m guilty of anything, I’m guilty of playing cards,” Walsh said. “I play cards. I own up to that. Politics is the biggest card game I play.”

Minor party, major influence

Walsh took over the leadership of Islip’s Conservative Party after Michael Mahoney died in 2002.

Walsh’s father, a longtime Conservative Party activist and committeeman, served four years in the 1970s as chairman of the Islip Town Conservative Party. Michael Mahoney later assumed the same position shortly after his brother hired the junior Walsh to work for him at the sheriff’s office.

Walsh became the Conservatives’ Suffolk County leader in 2006 with a promise to end the party’s infighting and a vision to assert the party’s power in political races beyond the judiciary.

O’Donohoe said at the time he had high hopes for Walsh.

“He’s looking to re-establish the party’s credibility and show we’re not just for sale,” O’Donohoe said, according to a September 2006 Newsday story.

With more than 21,000 registered Conservatives in Suffolk County, Walsh chairs the party’s largest constituency in the state.

As party chairman, Walsh can allow candidates not registered with his party to run on the Conservative line. That can be worth 8 percent to 15 percent of the vote, said Suffolk Democratic chairman Rich Schaffer, who has made endorsement deals with Walsh.

“In many elections they have the ability to determine who gets elected,” Schaffer said. “The Conservative Party’s influence is much larger than the raw number of registrants in the county.”

Republicans believe they can’t win without the Conservative line, and a Democrat who also holds the Conservative line is viewed as unbeatable, said Nassau County Democratic Party chairman Jay Jacobs.

Republicans “are desperate for it,” said Jacobs, who has negotiated with Walsh on judgeships. “If they don’t have the Conservative line, they’re not going to win.”

‘His word has been good’

Both allies and critics describe Walsh as a brash negotiator who uses his influence to secure for his supporters well-paid patronage positions and elected slots during cross-endorsement deals with other political party leaders.

For example, he negotiated a top position at the Suffolk County Board of Elections for Michael Torres, the Islip Conservative chairman, according to two sources familiar with the negotiations. And Walsh pushed Republican County leadership to have Islip Town Councilman Anthony Senft, a Conservative, be the Republican nominee for the competitive open State Senate seat in the 3rd District, according to a source with knowledge of the discussions.

Walsh is also surrounded in the Suffolk County sheriff’s office by those linked to the Conservative Party. The top eight paid employees in the sheriff’s office — and 17 of the top 30 — are all either Conservative town committeemen or have contributed to Conservative candidates or committees since 2009. Their contributions total more than $52,000 since 2009, including a $25,000 contribution Walsh made to his own committee, the Suffolk County Conservative Chairman’s Club, according to campaign finance records.

But much of Walsh’s focus has been on the judiciary, where he has bargained with party leaders in Nassau and Suffolk to pick judges and law clerks.

Newsday found that at least nine of the 27 Suffolk Supreme Court justices have Conservative law clerks or senior staff members, positions that are often a stepping-stone to judicial jobs.

Newsday has previously reported that Nassau Republican chairman Joseph Mondello punched a locker and broke a finger during a telephone argument with Walsh over 2012 judicial cross-endorsements.

Mondello declined to comment for this story. Suffolk GOP leader John Jay LaValle did not respond to requests for comment.

Jacobs said Walsh has “always been straight up” in negotiations with him.

“I only have good things to say about him,” Jacobs said. “Whenever he has dealt with me, his word has been good.”

O’Donohoe, the Conservative committeeman, spoke of Walsh in less favorable terms.

He said he supported Walsh’s rise to chairman in 2006 but was unaware of the sex offense charge, and that could have changed his mind.

If Walsh wants his support again in September, he needs to answer questions about his past, O’Donohoe said.

O’Donohoe said there’s a growing frustration among the party members who believe in conservative principles, and he’s concerned they will abandon the county party if it’s known for bloated salaries and political connections.

“We’re supposed to be the party of less government,” O’Donohoe said.

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