The value entered for the spatial reference parameter is invalid.
Verify that the value entered for the spatial reference parameter is valid. Typing this value in a scripting language like Python, the spatial reference is quite long and difficult to "type" in. A good trick is to create a new model, add a spatial reference variable into it, then set the spatial reference properties using the dialog box. Then use the Export to Script option, specify a new file, then finally copy/paste from the exported script to your script.