McAllen’s plan to retrofit three buses with cutting-edge electric technology collapsed Oct. 4 after the city’s partner couldn’t meet several financial hurdles.
Working with OLEV Technologies of Boston, the city planned to retool three buses with electric technology developed in South Korea. Under the plan, bus stops would have been upgraded with electric charging pads, which would have allowed buses to charge wirelessly while pausing to load and unload passengers.
McAllen Mayor Richard Cortez and U.S. Rep. Henry Cuellar, D-Laredo, announced the pilot project last November after McAllen received a $1.9 million federal grant to support the partnership.
OLEV Technologies, though — OLEV stands for On Line Electric Vehicle — couldn’t meet McAllen’s financial requirements and decided to cancel the project on Oct. 4, according to a letter from company CEO Hikyu Lee to McAllen City Manager Mike Perez.
“We deeply regret that we have come to this result, and are open to suggestion to any alternatives we may have overlooked,” Lee wrote. “We wish to express our sincere appreciation to all your efforts and patience during this lengthy process.”
Both city officials and OLEV Technologies described the deal’s collapse as disappointing, and the result of factors outside their control.
The drawn-out federal grant and contractual arrangements with McAllen depleted OLEV’s operating cash, according to the letter, and the start-up didn’t have enough money to put aside more than $555,000 to meet McAllen’s requirements.
McAllen, which obtained the federal grant, would be “on the hook” if something went wrong, said OLEV Technologies Executive Vice President David Bernstein. To guard against that possibility, city officials asked OLEV for a $277,000 performance bond and required the start-up to place another $278,000 in a third-party trust.
“I mean, the City of McAllen was willing to put its reputation and its people and some of its own cash at risk,” Bernstein said. “And you’ve got this FTA grant. And this brand new technology. And the city is on the hook to return the money if it doesn’t all work out in the end.”
OLEV Technologies didn’t have that kind of liquidity, which killed the deal.
Dave Hendricks covers McAllen and general assignments for The Monitor. He can be reached at email@example.com and (956) 683-4452.