MOUNT VERNON — In 2017, Ohio’s solar map was blank. As of June 15, the map has 47 dots showing the location of solar projects in various stages.
The proposed 1,533-acre Frasier Solar project in Knox County does not yet have a dot. Most of the parcels are in Miller Township; several are in Clinton Township, and numerous easements involve Clinton and Pleasant townships in addition to Miller.
A public hearing in May 2022 showed Knox Countians divided over the solar issue. One topic both sides mention is how solar projects affect local revenue streams.
In 2010, the Ohio Legislature approved a tax abatement for real taxes and personal property taxes for qualified energy projects.
Real taxes involve real estate and are often referred to as property taxes. Personal property tax covers equipment, tools, etc.; it is often called personal taxes.
In exchange for having taxes abated, solar developers must pay a PILOT (Payment In Lieu Of Taxes).
Under a PILOT, developers must pay a minimum of $7,000 per megawatt (MW) to the county and local taxing districts. The money is divided on a millage basis.
“The county does not have discretion over those funds. It goes to the local taxing entities,” Craig Adair, vice president of development for Open Road Renewables, Frasier Solar’s parent company, told the commissioners on Thursday.
The county can choose to add another $2,000 per MW. That money goes into the county general fund.
Frasier Solar formally applied for a PILOT on June 14. The county commissioners have 30 days to accept or deny the application.
Revenue comparison
If the commissioners deny Frasier Solar’s PILOT application and the project proceeds, Frasier’s real property and personal property will be taxed at regular rates (statutory assessment). If they accept a PILOT, Frasier has agreed to pay up to $9,000 per MW over the 40-year life of the project, plus additional one-time payments to several entities.
Frasier Solar is a 120 MW project. Phase 1 is 80 MW; Phase 2 is 40 MW.
A study by Novogradac & Company on behalf of Open Road Renewables showed that, in aggregate, county entities would receive $38.163 million under a regular assessment and $42.84 million under a PILOT.
Looking at individual line items, the county’s general fund would increase from $2.09 million to $11.35 million. All of the other line items would see a reduction in revenue under a PILOT.
“Keep in mind that these are based on today’s millage rates … These breakdowns could fluctuate,” Adair said.
The Mount Vernon City School District would receive $22.18 million under regular tax assessment and $19.368 million ($488,289 annually) under a PILOT. The career center would receive $3.94 million and $3.44 million ($86,904 annually).
Adair said the regular assessment numbers do not factor in any potential decrease in need-based school funding as property values rise. PILOT revenue is in addition to state funding and does not affect the state’s funding formula.
Adair acknowledged that some entities fare better under the traditional tax structure and that the county and schools are the primary beneficiaries of a PILOT.
“We’ve agreed to provide additional support in conjunction with the PILOT to help the townships pay for road upgrades and to cover some of the personnel costs for the fire district,” he said.
Miller Township will receive an additional one-time payment of $500,000, Clinton Township will receive $300,000, and the Homer Fire Department will receive $300,000.
Adair said the benefits of a PILOT to Open Road Renewables are the lower taxes in the initial years and the predictability of costs.
“Having the predictability of knowing what those payments are is a big benefit for modeling. We know what our liability will be, and you know what your revenue will be,” he told the commissioners.
Additional requirements
A PILOT has other requirements in addition to the payment per megawatt:
•Road Use and Maintenance Agreement (RUMA). The RUMA requires the solar developer to repair any road damage caused by project activity during construction and operations. In addition to the RUMA, Open Road will pay Miller Township $500,000 and Clinton Township $300,000.
•Emergency services. Developers must provide equipment and training to local first responders. Open Road will also make an additional one-time payment of $300,000 to the Hartford Fire Department to help cover personnel costs.
•In-state labor. Ohio-based workers must fill at least 80% of the construction jobs.
•Education support. The developer must work with a local university or vocational school on programming, funding, or similar endeavors related to careers in renewable energy.
Some landowners enroll their parcels in the CAUV (Current Agricultural Use Value) program. CAUV parcels are taxed at a lower rate than regular real estate taxes.
When land comes out of CAUV, property owners owe back taxes for up to three years. Open Road Renewables has agreed to pay the taxes for that three-year look-back on land it leases that comes out of CAUV.
