Saturday, August 22, 2015

City of San Angelo's Solar Subsidy Heats Up

OE Renewables LLC, the developer of a 143 acre solar farm capable of generating 10MW of electrical power, is hitting up the City and Tom Green County for public subsidies.  The City already committed land for the solar project.  San Angelo's Development Corporation is proposing a $583,184 economic development incentive for OE Renewables Texas LLC

OE Renewables Texas, LLC, intends to create a Twenty to Twenty-five (20-25) construction jobs and One (1) new Full Time Equivalent (FTE) position
On August 11th OE Renewables and Partner Ryan LLC presented the project to Tom Green County Commissioners Court.  San Angelo Live reported:

As for funding, OE project manager Shane Sobotka and Ryan LLC construction representative Evan Horn told the commissioners they hope to negotiate local tax incentives provided by Tom Green County and the City of San Angelo. 

San Angelo Economic Development Director Roland Peña said the potential for tax incentives is feasible and would be a good idea.
The Development Corporation Board and City Council will entertain the prospect of subsidizing OE Renewables and Ryan LLC.  The definition of primary jobs according to the Texas Municipal League:

“Primary job” is defined to mean a job that is “available at a company for which a majority of the products or services of that company are ultimately exported to regional, statewide, national, or international markets infusing new dollars into the local economy” and that meets any one of a specific list of sector numbers of the North American Industry Classification System (NAICS).35. 
Utilities, like power generation, are enumerated under NAICS sector 221.  Will the majority of the generated solar power be sold to regional, statewide, national or international markets?  How many "new dollars" will be infused into the local economy if the company has but one full time employee, possibly located elsewhere?

The Standard Times reported:

The project would mostly be unmanned but would generate construction jobs, Sobotka said.
The twenty to twenty five construction jobs could infuse new money into the community. 

“Right now we’re looking at engaging local contractors. The vast majority of local contractors and management will be our existing partners, and they will oversee the project, but anyone can help us with any portion of this really,” Sobotka added. 
OE's Project Manager said the vast majority of new construction jobs will come from partner Ryan Construction, not One Energy Texas.  How long are those construction jobs expected to last?  Jen Bradford told City Council on July 7th:

"Construction should not take more than a few months for a project of this size."
OE Renewables Texas LLC, with its Austin address, intends to develop the project and sell it.  So whatever deal the city reaches may end up being fulfilled by another company. 

The City of San Angelo's website provided the following information on public assistance for private projects.

Tax Abatements
The City of San Angelo and Tom Green County may provide personal property and real estate tax abatements for periods of 5 to 7 years. Abatement levels range from 20% to 75% and are determined by the number of new jobs created and/or the amount of new investment in the community. All companies receiving the abatements must meet the minimum job creation level of 5 new jobs and no less than $250,000 in new valuation in either real estate and/or personal property. Please note that tax abatements and rebates may exceed the percentages shown but must be considered on a case by case basis.

Businesses eligible for the tax abatements are manufacturing, warehousing/distribution centers, home/regional administrative offices, data processing centers, and telecommunications services. Tax abatements are not automatic; applications must be made to both the City Council and County Commissioner’s Court.
Utilities, like power generation, are not on the list.  Also, OE Renewables is only creating one new full time position after construction is completed.  It's not clear how much of the recommended $580,000 subsidy is tax abatement or public sales tax funding.

Sales Tax for Economic Development
San Angelo voters have approved a 1/2 cent increase in the sales tax for community and economic development projects. The San Angelo Development Corporation has established priorities for manufacturing, warehousing/distribution, telecommunications services, data processing, and home/regional offices. Loans and grants are available for buildings, land, equipment, training, site infrastructure, moving expenses, lease subsidies, and other expansion costs. The minimum job and investment thresholds are 5 new jobs and $125,000 in new investment. Job retention may also be considered. The project must meet state mandated NAICS codes and “a definition of primary employees.”

Depending upon the wages and types of jobs created, the Development Corporation may provide assistance from $1,000 to $5,000/new job. High skill-high wage jobs may carry a higher incentive level. New and existing companies are eligible.
The City already executed leasing land to OE Renewables Texas LLC.  Might the lease subsidy be in the $583,184 total?  It will be interesting to hear the discussion, if any, on the 20-25 temporary construction jobs vs. the one full time position, as the Development Corporation Board and City Council consider their mandate to use public funds to provide primary jobs.  That discussion deserves to be in public, after the Board has done their work in Executive Session.  We'll see if we hear.

Update 8-25-15:  The information in the board packet on OE Renewables changed since its original posting, which only had a board resolution.  Staff added a memo from Economic Development Director and two maps showing the location of the solar power farm.

Update 6-11-16:  A COSADC update showed the project "in due diligence, in process of securing PPA."

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