When Komuna Capital agreed in 2015 to install solar panels on four Palo Alto garages, city officials lauded the move as a signal of the city's efforts to promote sustainable energy and smart economics.

Now, however, the projects are becoming a sign of something else: the city's famously extensive and burdensome approval process. That, at least, is the contention of Komuna, which is now seeking more than $500,000 from the city to compensate it for the cost of delays. The City Council is scheduled to discuss Komuna's claim against the city in a closed session on Monday night, March 4.

The company filed a claim against the city in July, seeking $469,484 in damages that it attributed to the city's "delays, mistakes, failures to disclose, and breaches of its promises and contractual obligations" in connection with the projects at two garages on Cambridge Avenue and two others in the downtown area (445 Bryant St. and 520 Webster St.). The company claims that the city's actions raised the cost of these projects from about $4 million to more than $4.4 million. This, according to the company, undermined the city's assurance that Komuna would get an internal rate of return (IRR) of at least 8 percent from the projects.

Under the city's agreement with Komuna, which the council approved in February 2016, the city would lease the four sites to Komuma for 25 years at a price of $5,000 per site. Komuna was required to install the solar panels, as well as car chargers, at the sites. It would then sell to the city the entire energy output from the four facilities.

In 2017, Komuna transferred its obligations for the Cambridge garages to a different entity, VS Komuna PA, a subsidiary of Valta Energy LLC. The company did so because of "cash flow issues" stemming from city delays, the claim states. The consideration Kopmuna received from these companies was "substantially less than it would have received" from the city under the Palo Alto Clean contracts that were originally signed.

The company is now trying to recoup some of these funds from the city charging officials with "multiple failures to meet its obligations to expedite the Projects and to provide critical support necessary to allow Komuna to complete the Projects on time and within the cost estimates that were the basis for proceeding with the transactions."

The company is specifically objecting to the city's failure to disclose that existing transformers at the Cambridge Avenue garages were so old that they needed to be replaced. Once the construction of the solar-panel projects was underway, Utilities Department informed the company that it had to install a new transformer and associated infrastructure, which ended up costing a total of $214,367.57 for the two structures. In the two downtown garages, the cost was only $4,308, according to the claim.

"The exorbitant costs of the interconnection costs for the two Cambridge Projects was incurred by Komuna as the result of the City's failure to disclose the aged and poor condition of the existing transformers and associated infrastructure," the Komuna claim states.

The company argues that the city should pay for these charges because they were not part of Komuna's submitted plans; because the city didn't disclose the age of the transformers in its request for proposals and because the new equipment will now offer "substantial unanticipated benefit" to the city, independent of the solar-panel projects.

Permitting delays caused further cost increases, Komuna claims. Despite early assurances that the city will expedite the approval process, officials required Komuna to meet "a series of unexpected hurdles, which led to both delay, and cost overruns." Notably, the city did not inform Komuna that the Cambridge Avenue garages were not zoned for solar construction, a finding that required the company to go through a 17-month process of obtaining the proper permit (it was issued in July 2017). The city also instituted a "construction moratorium" in the downtown and California Avenue areas during the holiday season between Thanksgiving 2017 and Jan. 1, 2018, which kept the company from meeting its scheduled completion date of Dec. 12, 2017.

Because of these delays, Komuna claims, the solar panels didn't start operating until March 2018. As a result, the company was not eligible to claim federal "investment tax credits" for the projects for the year 2017, which cost it about $126,084, the claim states.

"The delay in completion of the project from 2017 to 2018 resulted in Komuna having to wait a year to monetize the total tax savings, and Komuna therefore incurred a one year carrying cost on the total tax savings," Komuna's attorney Paul S. Jasper of the firm Rimon Law wrote in a letter to the city in January.

In that letter, Japser informed the city that the company has raised the amount of damages it's seeking from $469,484 to $522,330.62, plus the revenues from the power-purchase agreements.

While most of the problems cited by Komuna pertain to the Cambridge Avenue structures, the company is also accusing the city of making an engineering error on another solar project: Komuna's installation of solar panels at Unitarian Universalist Church at 505 Charleston Road. As with the garage projects, the city had agreed to purchase energy from the church's solar panels, which Komuna was charged with installing.

Komuna claims that the city violated its agreement with Komuna by placing an electrical vault in a different location than construction plans had called for. The city reportedly changed its planned location after the church complained that trees were in the way of the proposed location and there was "no clear path for the trench that would not impact the church." The change was not approved by Komuna, but the company ultimately paid its subcontractor $30,649 for the change of plans. Komuna also paid $36,000 for landscaping work relating to the trenching and other disturbances in the area.

Komuna is claiming that these costs, as well as $38,826 it had failed to receive in federal tax credits for the Charleston Road facility, entitle it to $105,475 from the city.