County Council declines to declare farmland an economic revitalization area for solar tax abatement

The Dubois County Council declined EDP Renewables’ tax abatement request for the planned Duff Solar Park.

The Duff Solar Park will be located on land adjacent to the Duff Vectren Substation on County Road South 650 West. To accommodate the park, EDP already has about 1,500 acres signed up to participate. However, the solar panels will only take up about 725 acres.

Before reviewing the tax abatement request, Michelle Carlton, project manager, and Tom LoTurco, EDP Renewables North America Executive Vice President, Eastern Region and Canada and Government Affairs, gave the council an update on the project and the company.

Carlton reported that through the company’s North American portfolio of Solar farms and parks, it produced enough energy to provide the average amount of electricity used by 2.6 million homes.

In Indiana, the company has invested about $9 billion in renewable energy projects and in turn that has produced about $35 million in funding for local governments, paid $9 million to landowners and created 90 permanent jobs.

The 100-megawatt Duff Solar project will produce enough energy to power about 19,200 homes. Construction is expected to begin by December or January and the project should be operational by December 2025.

“We did get a power purchase agreement executed with Google,” Carlton reported.

When questioned by Councilman Alex Hohl about how the power purchase agreement works, LoCurco explained that the purchase agreement is designed to offset the company’s usage through the Midcontinent Independent System Operator (MISO). Through a complicated process involving multiple regions, Google is essentially saying the load the company uses in the Indianapolis region of the MISO is offset by the amount of energy produced and supplied through the Duff Solar Park.

“Those electrons (from Duff) go to where needed, first they would go locally and then they would go further out,” he explained. “But, because we’re on what we call a liquid system, or regional transmission system organization, which allows the power to go to where it’s needed, Google can basically say ‘we are buying this amount, these units virtually to offset whatever we’re using in a certain area.'”

In asking for the tax abatement, EDP Renewables felt with the capitol investment of $143 million in the project as well as the creation of two fulltime jobs and the use of local contractors to build the project, the project qualified for a four-year property tax abatement. This would begin at 100 percent tax abatement stepped down to 25 percent by year four before rolling off.

Carlton reported that with the approval of the abatement, the company would enter into an economic development agreement to pay the county directly–rather than being ran through as property taxes and split up to the different taxing units.

“And that economic development payment is discretionary, and can be used for any project,” she explained. “So over the course of a four year abatement term in this example, the county will end up receiving more money.”

She told the council that the Duff project would likely pay out about $2.1 million to the county in discretionary funds over the first ten years of the project.

LoTurco told the council that it was important for the company to receive the tax abatement because of the high capitol investment in the project the company is making.

“In the first few years, our economic model is sensitive to higher payments because, essentially, we have a cost of capitol to build our projects,” LoTurco said.

Before the tax abatement committee reported their score, Councilman Hohl stated that local taxpayers may see this as a subsidy.

LoTurco pointed out that EDP Renewables is funding the entire project independently. “All this is doing is using a rule that’s allowed by the Indiana Tax Code that allows property tax payments to be phased in,” he explained.

He reiterated the project would still be paying these economic development agreement funds directly to the county over that time. A move that he attempted to demonstrate was a better outcome for the county since those funds are paid directly to the county and can be used for anything.

LoTurco said in other projects those funds have been used for playgrounds, splash pads, procuring right-of-ways for high speed internet, roads, sewers and infrastructure improvements.

The county tax abatement committee scored EDP Renewables’ application at only 30 points out of a possible 100, which would qualify the project for a two-year abatement. Those 30 points were attributed to the company’s investment into the project. The number of jobs produced did not meet the county’s ordinance requirement for consideration which is at least three permanent jobs, and there was no commitment on the company’s part to ensure they used local contractors for the construction.

However, the committee did not recommend the area be designated an economic revitalization area, a necessary step for a project to receive an abatement. An economic revitalization area is a distressed area that would benefit from a tax abatement to induce commercial investment.

“Based on that definition, the area is not an undesirable area for normal development, as the land is currently profitable farming operations. Dubois County ranks very high in agricultural production in Indiana,” said Lynn Gosman, who sits on the abatement committee. “This would be a loss of productive farm ground and associated agricultural jobs, local farm equipment suppliers, seed and fertilizer sales and grain elevators.”

Based on this recommendation, the council voted unanimously against designating the project site as an economic revitalization area, a necessary step for granting the tax abatement.

Loturco thanked the council for the consideration and reported EDP Renewables still anticipates construction to begin in December or January.

During the meeting, Council President Mike Kluesner (likely speaking with the White Stallion bankruptcy in mind) told the EDP Renewable representatives that it was important for them to guarantee the project would not impact the ground and they would treat the landowners well. He also mentioned top soil being removed from the leased land as a concern. LoTurco stated they require all contractors to keep any topsoil on the property, even if grading is required for the installation of the solar panels. “We would never, ever take topsoil away from a landowner, and we have no right in our lease to take topsoil and sell it,” he said, adding that it would be detrimental to the project’s longevity. “We’d never be able to work with any of those landowners again.”

Here is a previous story on this project.