Civic activist Kevin Gaughan’s non-profit, which has been tied to the Nicklaus firm for a proposal to turn a former landfill into a public golf course since 2016, has fallen behind on the mortgage for the site. Source Renewables has applied for rezoning so a community solar farm can be put up on the entire site, but Gaughan says his organization holds title to the land and has only authorized a partial rezoning, while still intending to proceed with the golf course project.
Plans for a Jack Nicklaus-designed golf course in South Buffalo, N.Y. are in jeopardy after the nonprofit of civic activist Kevin Gaughan fell behind on the mortgage for the site, The Buffalo News reported. Instead, a renewable energy company that originally had an option for the property before Gaughan, came along plans to put up a community solar farm on the entire former landfill site.
Source Renewables has submitted its application to the city Common Council to rezone the property to accommodate its plan, The News reported. Gaughan insisted March 4 that can’t happen, because he holds the title to the land through his organization and still intends to proceed with his nonprofit venture.
Gaughan told The News he only authorized Source Renewables to rezone the northern part of the land, not the entire site.
“Better Parks Buffalo remains owner of the parcel,” Gaughan said. “We fully intend to proceed with our charitable project.”
Work on the first phase of a proposed public golf course designed by Jack Nicklaus has begun, The News reported. C+RB reported on work beginning in January. C+RB first reported on the proposed golf course in August 2016.
But Source Renewables says it clearly sought authorization to use the full site and has every right to proceed, regardless of Gaughan’s wishes, after his group failed to make payments on the mortgage for the past two years, The News reported.
“We filed the rezoning application because we’re moving forward with the solar project. His deal is dead,” said Corey Auerbach, a land-use attorney at Barclay Damon in Buffalo, who represents Source Renewables.
Gaughan has led a multi-year effort to redevelop the former slag landfill along into a public golf course adjacent to South Park, The News reported. The goal was to allow the Olmsted Parks Conservancy—which was never fully on board with the plan—to remove an older golf course inside the park, so that Frederick Law Olmsted’s original design and arboretum could be restored.
Gaughan lined up some prominent local supporters to lend their names and help with fundraising, and even drew the attention of Nicklaus, the 81-year-old golf pro, whose company agreed to plan the new signature golf course, The News reported. Just two months ago, designers from Nicklaus Companies toured the site with Gaughan and others, and Gaughan announced plans to begin construction in May.
But Gaughan never disclosed the financial challenges he faced with fundraising, nor his failure to make any principal or interest payments on the mortgage loan for the past two years, The News reported.
“It’s been a difficult task to raise the funds,” he said.
And both Source Renewables, who took over Gaughan’s mortgage, and Steelfields Ltd. of Pittsfield, the former property owner that holds that loan, have had enough, The News reported.
“There are no circumstances under which Steelfields will work with Kevin Gaughan. None,” said Rich Palumbo, a partner of Steelfields.
The proposed solar project would take up nearly two-thirds of the 107-acre property, which includes 13 parcels, The News reported. The venture—actually two separate projects on adjacent land—entails installation of 31,800 solar panels across 62.8 acres.
Upon completion and connection to National Grid’s infrastructure, the project would generate 10 megawatts of power, enough to power about 1,500 residential households, The News reported. Municipal reviews of the rezoning and the development plan will begin later this month.
“I think it’s pretty cool that you take a landfill and you turn it into green energy. I think that’s a great thing,” Auerbach said.
Meanwhile, the Olmsted Parks Conservancy doesn’t care either way, The News reported. Executive Director Stephanie Crockatt said that the organization hasn’t heard from Gaughan since 2019, and is already moving forward with groundbreaking and fundraising for its own city-approved plan to bring back the arboretum.
“It has no effect on our ability to restore the arboretum,” she said. “It really doesn’t matter.”
Based in Greenwich, Conn., Source Renewables is a community-solar developer and an alternative energy services company, The News reported. The four-year-old firm is developing projects in Silver Creek and in Oswego, St. Lawrence, Cortland and Onondaga counties, totaling 150 megawatts of power, and late last year sold a portfolio of three projects generating 17 megawatts of power to a subsidiary of BlackRock.
“Our investment in South Buffalo will bolster the economy and be good for the environment,” said Andrew Day, partner at Source Renewables.
Known as the Marilla Street Landfill, the sprawling property is actually 13 parcels of land. It was used by Donner/Republic Steel and Hanna Furnace to deposit the slag generated from the steel manufacturing process, The News reported. Steelfields, a brownfields investment company created by Palumbo and partner Gary Smith, bought the land in October 2002 to continue remediation efforts after the collapse of much of the U.S. steel industry.
Source Renewables first approached Palumbo about a community solar project on the site in 2017, and signed a long-term lease option agreement, The News reported. But before it could proceed, it had to work with National Grid for feasibility and interconnection studies. That process took more than a year, exceeding the timeframe in the contract, even with an extension.
That’s when Gaughan came along and offered to buy the land for his golf course project, The News reported. He had already recruited Nicklaus, who sealed the deal with a personal phone call to Palumbo from Palm Beach, Fla., overcoming Palumbo’s previous skepticism.
In 2018, Gaughan’s nonprofit, then known as Nicklaus Olmsted Buffalo, agreed to pay $650,000 for the property, which had been independently appraised at $1.95 million. Steelfields agreed to use the $1.3 million difference as an in-kind donation, The News reported. Gaughan’s organization paid $150,000 upfront, and signed an 18-month mortgage with Steelfields for the remaining $500,000, starting Aug. 7, 2018.
But after making the first six interest-only payments, Palumbo said, Gaughan failed to repay any of the principal on time, defaulting on the loan terms by January 2019, The News reported. The parties negotiated a forbearance or settlement agreement in July 2019, in which Gaughan admitted his breach of contract and renewed the total debt of $541,834—including interest, late charges and legal fees—with catchup and principal payments starting Sept. 30, 2019 through April 2020, according to documents provided by Palumbo.
Palumbo also provided copies to The News of a “confession of judgement” and a deed-in-lieu-of-foreclosure signed by Gaughan, which were held in escrow by Palumbo’s attorneys in case of another default. Those documents would allow Palumbo to reclaim the property once filed with the Erie County Clerk’s office.
After Gaughan again defaulted on the payments, Palumbo called Day to see if Source Renewables was still interested, The News reported. Since Gaughan’s organization now held the title, Source Renewables dealt directly with him, reaching a new option lease agreement in April 2020 to take over the site.
Terms called for Source Renewables to pay off the mortgage, while gaining Gaughan’s authorization to proceed with National Grid and municipal approvals for the solar project, The News reported. That’s the provision that Source Renewables now says gives it all the authority it needs.
The agreement also included a provision allowing Gaughan and his nonprofit, now known as Better Parks Buffalo, to cancel the agreement and retain full control of the site, if it could prove its own ability to pay off the loan and also pay a breakup fee to Source Renewables by Sept. 1, 2020, The News reported. But even with a two-month extension on the deal until Nov. 1 to allow more time, Gaughan was unable to follow through, and no further extension was signed.
Gaughan said he hopes to do so later this month, but would not explain where the money will come from, The News reported.
“We fully intend to proceed with our charitable project, and as well expect to partner with Source Renewables,” Gaughan said. “I have every expectation that we’ll resolve it and both parties will amicably move forward.”
Auerbach acknowledged that the parties had talked about doing both projects on the property, but that time had passed, The News reported.
“There was a point in time when the parties were working toward that idea,” Auerbach said. “However, Kevin could never follow through with his end of the bargain.”