The Union County Commissioners are meeting with solar farm developers to discuss finances and tax incentives.
Officials with Invenergy, the company hoping to develop the Cadence Solar project, recently asked the Union County Commissioners to consider approving the facility’s application as a qualified energy project.
That approval would allow the project to make an annual payment in lieu of taxes (PILOT).
The Cadence Solar project is a proposed 275-megawatt solar-powered electric generation facility. The majority of the land is south of Route 47, between Yearsly and Storms roads and north of Route 347. Officials said they expect to begin construction in the first quarter of 2022, expect to be online, operational and generating power by the end of 2023.
Generally, a PILOT would exempt the property from paying local tangible personal property tax and real property tax in exchange for an annual payment of up to $9,000 per megawatt generated. Of that payment, $7,000 is divided among taxing entities with the other $2,000 per megawatt generation going into the county general fund.
“It allows for the project to be more economically viable for us, meaning the expense, in a non-PILOT scenario, would make this project more difficult to go forward in terms of the bottom line for our project,” said Ryan Van Portfliet, manager of renewable development for Invenergy.
He explained that with the PILOT, the project would pay about $80-$85 million over the 35-year life of the project. The facility could pay $90-$95-million in taxes over the same period.
Van Portfliet said that as the equipment value depreciates, the project will pay less in tax revenue, but the PILOT payment is predictable.
“The benefit of this dollar amount is being a guarantee — year one or year 35 down the road,” Van Portfliet said.
Commissioner Dave Burke said that while the equipment will depreciate, the value of the land should appreciate. He said that appreciation could mean the tax payments would be flat or even increase through the life of the project.
“If we were a stagnant county, this decision would be easy,” Burke said, explaining that with the county growth, he believes property value will continue to increase.
Additionally, if the project pays property tax, the township and other entities could pass new taxes to get additional revenue from the project.
Union County Auditor Andrea Weaver said the value of utility projects can change from year to year.
“The caution has been, from a township trustee level, ‘’Is that going to stay? Is that value going to stay? Can we build our levies and our budgets on that value?’”
There are also benefits to the community.
To qualify for the PILOT, a certain percentage of the construction workforce must be from Ohio, the developer must enter a road use maintenance agreement with the county, there must be a first-responder training program and there must be an apprenticeship program for the utility.
“We believe it is beneficial for the project to go forward, not only for the economics of the project, but we believe… from the Ohio jobs, to the trainings, to the university partnership, all the items we think are also a great benefit to the community,” Van Portfliet said.
Officials also explained that while the company already has about 5,100 acres under lease in Union County, only about 1,800 will be part of the PILOT agreement, meaning the property owners will still pay taxes on the additional land.
The property owner will also be able to farm or do whatever they want with the additional land.
“A lot of that goes back to conversations with the land owners,” Van Portfliet said.
He also explained the company would be willing to negotiate with the county about payments to the county. He said that if the county would be willing to keep the payments at $7,000 per megawatt generation instead of increasing it to $9,000, the company would be willing to make an upfront payment to fund a local project.
Invenergy is asking the commissioners to have a decision by December, “so that we can move forward and have sort of a solid plan of how we are going to move into construction with the project, ideally next spring.”