MOUNT VERNON — The Knox County commissioners on Tuesday requested a 30-day extension on the time frame allotted to make a decision on the PILOT proposal for Frasier Solar.
Frasier Solar filed the PILOT (payment in lieu of taxes) application on June 14. The commissioners had until July 14 to accept or deny the PILOT.
“We don’t have all of our information at this point,” Commissioner Teresa Bemiller said. “We also would like input from the schools: how it will impact the schools, how it will impact the state funding. We don’t have that information yet.”
Under a PILOT, Frasier Solar pays $7,000 per megawatt to be divided between the taxing jurisdictions in the project area and $2,000 per MW to the county general fund.
If the commissioners deny the application, Frasier’s real estate and personal property would be taxed at regular rates (statutory assessment).
Numbers previously provided by Craig Adair, vice president of development for Open Road Renewables, Frasier’s parent company, show that the county general fund would increase significantly under a PILOT over the 40-year life of the project. However, the taxing jurisdictions would fare better under statutory assessment.
The calculations are based on 2022 property tax values.
“I think the concern is there is reason to believe there will be change in those property tax values,” Bemiller told Adair during a ZOOM meeting on Tuesday. “That is the issue for me that’s not clear. Because that is going to change.”
“A change in property tax values won’t have a significant change on these numbers,” Adair responded. “Ninety-seven percent of the revenue is from the personal property side, not the land side. The land will be taken out of CAUV, but that is a tiny value.”
He noted that the personal property will depreciate over time.
Commissioner Bill Pursel questioned whether the equipment is good for 40 years or whether there is a chance it could be replaced and then taxed at a higher value.
“The life of a solar panel is 35 years, and the manufacturer warrants it for 30 years. We don’t anticipate any change,” Adair said.
When Frasier filed the PILOT last month, it was not known how the PILOT would affect the state’s need-based funding formula to school districts. In this case, Mount Vernon City Schools and the Knox County Career Center.
Under the funding formula, if property values increase in a district, the state reduces funding. A study by Fleeter & Associates shows that state funding for MVCS would decrease by $8.138 million over 40 years.
KCCC funding would decrease by $437,030.
The net result is that MVCS would receive $5.324 million less through statutory assessment vs a PILOT. The career center would receive $63,480 more.
Under a PILOT, real estate and personal property are exempt from traditional taxing structures and therefore are not reported by the county auditor to the Ohio Department of Taxation and then to the Ohio Department of Education.
The PILOT payments have no effect on the state funding formula and are in addition to state funding.
The commissioners questioned their ability to distribute the $2,000/MW that goes into the general fund.
“You have complete discretion. If you wanted to take that and direct that to any of these county departments, I think you have full discretion to do that,” Adair told them.
“That is still a concern for us, that they are going to lose funds,” Bemiller said.
In addition to the portion of the $7,000/MW that Miller and Clinton townships will receive, Frasier Solar has agreed to make additional voluntary payments of $500,000 and $300,000, respectively.
Frasier Solar will also make a payment to the Hartford Fire Department of $300,000.
Adair said he will check with his finance team and see if there is anything else Frasier Solar can do in the way of voluntary payments. One suggestion was to help Knox Soil & Water Conservation District with countywide mapping of field tiles. Preliminary tile maps of the 1,500 acres in the solar project are already completed.
The commissioners now have until Aug. 14 to accept or deny the PILOT. Meanwhile, they will check with the county prosecutor as to the level of discretion they have regarding the $2,000/MW.
