State issues order for PILOT payment, certificate of verification for New Market Solar I

The Ohio Department of Development has issued an “order establishing service payment for tax year 2024” for an area solar project, as the county should be collecting the initial PILOT payment for New Market Solar I in spring 2025, approximately two years after the county issued its first invoice.

The news was discussed at the Sept. 11 Highland County commission meeting.

As previously reported, Highland County commissioners David Daniels, Brad Roades and Terry Britton voted to issue a Payment in Lieu of Taxes, or PILOT, invoice for the New Market Solar (aka Hecate’s “Highland 2”) project March 22, 2023. The first half-year payment of $450,000 was due April 20, 2023, according to the invoice. The county was later informed that they would not be able to collect payment until “a certificate of verification” was issued by the state for the project.

According to an Aug. 29 email from Ted Geer, Deputy Chief, Policy & Special Projects, Ohio Department of Development Director Lydia Mihalik issued an order Aug. 23 for “New Market to remit to the Highland County Treasurer a sum of $315,000 on or before the final date for payments of public utility property taxes.” The necessary certificate of verification was also issued.

The order says that the facility “was placed into service on July 19, 2023” and that “the nameplate capacity of the facility as of Dec. 31, 2023 was 35 megawatts.”

“Ohio Administrative Code (OAC) 122:23-1-05(B) tells us that the personal property of the Qualified Energy Payment (QEP) is exempt in the year after it is placed in service,” Highland County Auditor Alex Butler told The Highland County Press. “According to the document from ODOD, the project was placed into service on July 19, 2023. In other words, I'll start the tax exemption in tax year 2024 pay 2025 based off the 2023 in-service date.”

Butler said at the Sept. 11 Highland County commissioners meeting that the payment will be due next spring, as the county “will sync it up with the real estate settlement timeline” for property taxes.

“I still have to reach out to a point of contact with the solar company, but our plan would be to sync that up with the real estate taxes collected at the same time, and then also distributed at the same time we make first-half real estate settlements,” Butler said.

As previously reported, the “amount of the annual PILOT shall be $7,000 per megawatt,” and “the amount of the additional annual service payment shall be $2,000 per megawatt,” for a combined $9,000 per megawatt — the maximum allowable under state law. As noted by Butler and in the order issued by Mihalik, of the $315,000 being invoiced, $245,000 is the “annual service payment” that will be distributed among various entities (schools, townships, etc.) and $70,000 is a “discretionary service payment” that goes to the county.

“It's difficult to say at this point exactly who's going to get how much of that PILOT payment, but it will be in proportion to how the real estate taxes are distributed,” Butler said. “For example, the school gets x amount of the real estate settlement; they will get x amount of the PILOT payment. If the county gets x amount of the real estate settlement, the county will get the X amount of the same proportion of the PILOT payment.”

Daniels pointed out that for Highland Solar 2 — which, according to Hecate, “occupies 222 acres” — involves parcels that may encompass multiple school districts. The New Market Solar project is split into two separate facilities, as Highland 4 is another 582 acres, according to the Hecate website.

“If a parcel is located, say, in Bright Local School District, then they would get a small percentage of that, and Lynchburg-Clay might get the other percentage of what goes to the school portion,” Daniels said. “It could be all in one school district, or it could be split.”

“Right,” Butler said. “We have the total amount. Now we have to do some math on the back end to calculate who's going to get what. I still have to confirm the parcel list from the state.”

Butler also told The Highland County Press that although “I think the order from the ODOD has sufficient information to warrant payment,” the county will be working to submit another formal, “detailed invoice with a due date” to Hecate.

As this is the first Highland County solar project to officially be listed as commercially operational, Daniels said that the PILOT payments are “not wholly new revenue.

“We are taking those properties out of the current tax base and just replacing this system of payment with that,” Daniels said. “The idea that we are [receiving] $300,000 more is not entirely accurate.

“It’s not just all new revenue. There’s an offset.”

“That’s why PILOT stands for Payment in Lieu of Taxes,” Butler said. “It’s because the land and the personal tangible property becomes exempted.

“[At least some of] the land being exempted for the projects was previously in CAUV, which is a pretty big tax savings, so I can say with confidence that the PILOT payments — when it's all said and done, the revenue generated from the PILOT payments will be greater than the revenue generated from the CAUV tax base.”

In addition to discussing this long-awaited resolution to the PILOT issue, commissioners noted that the Ohio Power Siting Board sent their August update on county solar projects, which they received in the past week.

As previously reported, commissioners held a virtual conference with OPSB representatives during their July 10 meeting, following the Power Siting Board’s June 20 ruling that New Market Solar violated minimum setback requirements. As of that meeting, OPSB executive director Michael Williams told commissioners that the answers to their questions about the impact on project timelines were mostly unknown, pending a call between New Market Solar and the OPSB as well as any potential filings by the solar developers.

According to the update from the OPSB in their August report, “New Market Solar has decided not to appeal the Board’s decision and is working to remediate setback issues and fully operate the facility in a timely manner. New Market is working to complete, and will submit for staff approval, a redesign plan that adheres to the approved setback requirements and installs the approved agricultural-style fencing. Further, New Market is replacing inverters over the next few weeks in response to some equipment failure concerns that have arisen over the past two months.”

It was also noted that developers are going to pay $515,000 “to the Highland County Engineer’s Office for completion of road repairs” in accordance with their Road Use and Maintenance Agreement (RUMA).

For the New Market project, the OPSB said they have recently “received complaints from four neighbors of the property” regarding setback and drainage concerns.

“Staff met with managers for New Market, and New Market is in the process of answering neighbors’ questions and answering their concerns and will report the results to [OPSB] staff,” the update says. “Compliance staff intends to inspect the site in the near future to assess the status of each area of concern as well as the status of the construction related to the redesign plan.”

In other local solar updates:

• For the 300 MW Highland Solar project, located in Clay and Whiteoak townships, the OPSB was “advised of a change in the tree screening mix from Eastern Red Cedar trees to Western Red Cedar trees upon the recommendation of the landscaping contractor,” and a “screening for a neighbor abutting the project … has been at her request.”

According to the OPSB, Highland Solar “is advancing positively and is expected to engage the DOD on PILOT implementation within the next three months.”

• Repairs are underway on a previously reported problem with the main transformer on the Willowbrook project in Highland and Brown counties and “are almost complete,” the update says. “After the repairs are complete, testing and commissioning can continue since the project has not yet achieved COD [Commercial Operation Date] status.”

• For the 200 MW Palomino solar project in Union and Dodson townships, the latest update is that “Innergex is working on the project design and landscaping plan, has completed the Highland County Road Use and Maintenance Agreement and solar panels have been ordered,” the OPSB wrote. “Innergex’s current target for construction kickoff is summer 2025.”

• The 117 MW Dodson Creek project in Hamer and Dodson townships is under construction, which “is on schedule and is expected to be completed in early 2025.”

In July, the OPSB said they were looking into a report of an alleged fish kill in a neighboring pond. According to their August update, “staff concurred with the project’s determination that the fish kill was unrelated to the project’s installation. Since the project’s investigation was completed, the lake is restocked and operational. As a gesture of good will, Dodson Creek Solar has been renting the lake on occasion to host recreational events for the construction workers.”

For more from Wednesday’s meeting, see the story at: https://highlandcountypress.com/news/property-taxes-transportation-prog….

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