ELLICOTTVILLE — The Cattaraugus County Industrial Development Agency on Thursday backed away from an initial tax break for solar farms proposed in December.
Members of the IDA board of directors had discussed a payment in lieu of taxes (P.I.L.O.T.) of $15,000 per megawatt on Dec. 10.
The IDA’s current P.I.L.O.T. for solar facilities is $5,000 per megawatt. Last June the IDA enacted a six-month moratorium on accepting new applications for solar farms.
Corey Wiktor, IDA executive director, told board members his research showed area counties with lower P.I.L.O.T.s for solar farms, developers were balking at the higher agreements, and towns expecting solar projects are afraid higher IDA rates will kill their projects.
The three BQ Energy solar projects in the city of Olean received $5,000 P.I.L.O.T.s. For each megawatt the solar facility is capable of producing, the city, Olean school district and Cattaraugus County would split $5,000.
Wiktor told the board solar firms are pitching a half-dozen or more solar farms with 45 megawatts in Portville, Allegany, Franklinville, Machias and Dayton. There are other projects — including in the town of Great Valley — which have not yet approached the IDA.
The county IDA isn’t looking for any of the massive solar farms being proposed in other areas of the region.
“Our sweet spot is from 2 to 20 megawatts,” Wiktor explained.
At 20 megawatts, West Valley Solar LLC, formed by BQ Energy, is the largest one approved by the IDA. The IDA also approved a project in Portville and additional projects have been proposed on Haskell Road there.
County Legislator Joseph Snyder, who sits on the IDA board, wondered if the IDA should be enabling productive farmland to be used for solar farms.
Many of the solar farms are located on brownfields that have been cleaned up, others are on farmland and the West Valley solar project is on land controlled by the New York State Energy Research and Development Authority (NYSERDA).
In most cases, the land the solar farm sits on remains taxable even while the company pays a P.I.L.O.T. on the equipment that generates electricity, IDA attorney George Cregg Jr. said.
Pressing to revise downward the proposed $15,000 P.I.L.O.T., Wiktor said some town officials contacted him to express concern that solar projects in the hopper and ready to submit applications to the IDA “may not occur.”
Wiktor added: “I would ask the board for discussion to back away from $15,000. We’re seeing it in the marketplace” and in research by the IDA.
Wiktor said NYSERDA recommends a P.I.L.O.T of less than half what the IDA currently charges. “And they are trying to encourage alternative energy.”
Developers who spoke recently with Wikor about the proposed $15,000 per megawatt P.I.L.O.T. pointed out it is among the highest in the state. “They said the market is much lower,” he said.
IDA Chairman Thomas Buffamante said the board initially agreed to “see what the market would bear.”
According to Wiktor, the $15,000 per megawatt P.I.L.O.T. looks like more than developers will bear — especially when surrounding counties already have lower rates.
Snyder said “outside investors using our infrastructure” will be making profits from these developments, while providing no permanent jobs or otherwise contributing to the community.
Buffamante said the solar farms give municipalities an opportunity to increase revenues through the P.I.L.O.T.s. “It’s more than they are contributing now which is zero,” he said of some of the solar sites. There are also provisions for community host agreements.
In December, the IDA board had considered two P.I.L.O.T. rates: The $15,000 level per megawatt and a $10,000 level for developers who sweetened the local community host plan.
BQ Energy, for example, will make electricity discounts available for St. Bonaventure University, Olean City government and Olean General Hospital as part of the host agreement for Solean 1 and 2 and Homeridae.
Wiktor said that at the $15,000 per megawatt P.I.L.O.T. level “some of these projects are just not going to happen.” Other IDAs P.I.L.O.T.s are generally in the $3,000 to $7,000 range. “A few (solar developers) will submit applications soon.”
Board member Michael Wilmer argued for a better P.I.L.O.T. based on the IDA agreeing to increase the P.I.L.O.T. period from 15 years to 25 years. “It adds value to the developer,” he explained.
Snyder said he would prefer the $15,000 per megawatt P.I.L.O.T. and did not think it was unreasonable given all the subsidies the solar industry receives and how aggressively Gov. Cuomo is pushing alternate energy projects.
“We know we’re a little high,” said Brent Driscoll of the IDA board. “They (developers) must be making money somehow.”
Wiktor said the IDA wouldn’t grant tax breaks to a project that did not enjoy community support. A letter from a town board is required before a project is granted tax breaks.
After wrangling back and forth a little, the IDA settled on a tiered P.I.L.O.T. proposal based on megawatts:
0-4.9 megawatts — $6,000 per megawatt.
5-9.9 megawatts — $7,500 per megawatt.
10-24.9 megawatts — $9,000 per megawatt.
Attorney Cregg will prepare the amendments to the solar energy facilities P.I.L.O.T. resolution and circulate them to IDA board members prior to scheduling public hearings in Olean and Ellicottville at a date to be determined.
In addition to the proposed P.I.L.O.T. amounts, the IDA agreed to include in the resolution:
nA 2% annual escalation in the P.I.L.O.T. payments
nApproval by the host community.
nA 25-year P.I.L.O.T. term.
Underlying land would remain subject to assessment and taxation.
Municipalities and solar developers will also be notified of the changes in the proposed solar P.I.L.O.T. and invited to comment, Wiktor said.
(Contact reporter Rick Miller at rmiller@oleantimesherald.com. Follow him on Twitter, @RMillerOTH)
