Solar company would like Logan
County’s Enterprise Zone for construction phase
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[March 09, 2020]
At the Logan County Board’s Planning and Zoning Committee meeting
Wednesday, March 4, one focus of discussion was an enterprise zone
and lower permit fees for a solar farm project in development.
Erin Baker of Apex Clean Energy is working on a solar development
project in Logan County. Right now, the project is in the final
stages of polishing off site control. The company is moving on to
preparing a permit application to present to the county and go
through that process.
Baker is asking the county and other enterprise zone administrators
consider incorporating Mulligan Solar into the enterprise zone.
Doing that would require a redraw of the enterprise zone boundaries.
In Illinois, wind has previously been designated as a high impact
business, so it is automatically given a sales and use tax
exemption. As of yet, solar has not been designated as a high impact
business, so Baker said they are following the same sales and use
tax standards as every other business.
This solar development project has notable financial impacts with
around $7 million in sales tax.
Counties want to have the benefits that come with a business in
order to give that exchange. Baker said there are several reasons it
could be a win-win for the county.
Apex is not asking for property tax abatement, but just sales and
use tax abatement. Most of the equipment would be bought outside of
Illinois because modules and solar panels are not manufactured here.
Therefore, Baker said most sales tax would not come to the county
Ninety percent of the use tax would be exempted in the enterprise
zone and would be going only to the state of Illinois. Baker said
there is really no loss to the county or other jurisdictions here.
Committee member Chuck Ruben said the tax is paid to the state of
Illinois, but he thinks a percentage of the tax comes to the
There is a big benefit to the project being in the enterprise zone
to help it be cost competitive and not a significant loss of income
to the county. Baker said the enterprise zone designation could be
for just two years because their highest sales tax burden is during
construction. The labor would occur during that time. After that
project is complete, Baker said the boundary of the enterprise zone
could be moved back.
The project could create 100 to 125 jobs during construction and
Apex plans to source most of the labor from the local community.
When the solar project is in the operational phase, there will just
be a need for one or two full-time employees.
For financial modeling and planning, Baker asked for an indication
Ruben had questions whether the five percent state tax would be zero
if equipment was bought outside of Illinois. He also wanted to know
about the use tax, property tax abatements and what farm ground
would be assessed at.
Ruben said farm ground property taxes are currently between $30 to
$50 per acre. So he wanted to know what the amount would be when the
property is covered with solar panels.
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If buying equipment outside of Illinois, Baker said she did not think they would
pay any Illinois sales tax. There would still be a sales tax burden as they
would pay the sales tax of wherever they are buying equipment. The use tax is
the relevant exemption and Baker said she will check the breakdown of the taxes.
She is looking at various valuations. Ground would be assessed at five acres per
At five acres per Megawatt, Ruben said that would amount that would be around a
million dollars per acre of assessed valuation. He also wanted to know the
benefits to landowners who would be giving up several acres of farmland for the
solar project. Wind farms take a small footprint out of farming, but a solar
farm takes more acreage.
Though Baker would not discuss specifics, she said landowners are being
compensated several times more than they would get for cash rent. The solar farm
does put a pause on farming, but Baker said decommissioning is easier. The
ground could be renewed after lying fallow for many years.
Consideration of permit fees
Planning and Zoning Committee Chairman David Hepler said at the current
structure, permit fees would be close to $1 M. If it was comparable to the
formulation for the wind farms, the amount would be just under $200,000.
Because permit fees are more than those for a wind project, Baker would like
them lowered. Since solar projects are becoming more cost competitive, Baker
asked the committee to look over rates for these fees and consider modifying
Ruben asked how Logan County’s permit fees compare to other counties.
In the Midwest, Baker said the fees are highly variable, but she has found the
fees to be between $150,000 and $200,000 in places where solar farms have been
constructed. She plans to do more research on the amounts.
Highlander Renewables Vice President Stan Komperda said since wind farm capacity
factors and power generation are much different than solar farms, they should
not be taxed at the same rate.
If permits are taken out by 2021, Hepler said he would consider the same
valuation as wind farms.
Committee member Cameron Halpin wants to see how sales and use tax split up. The
Illinois website said a certain percentage goes to state and county where the
material is being used. For example, Halpin said if someone buys a vehicle
outside of Illinois, but it is titled and registered in Springfield, sixteen
percent would go to Springfield and four percent to Sangamon County. It is not
clear exactly how it is distributed.
Committee member Dave Blankenship said if the board is going to revisit the
permit fees, they should also consider that environmental impact,
decommissioning and repair are simpler on solar.
Logan County Zoning Officer Will D’Andrea will do a fee study and said he would
have that information in the next month or two.
Baker will likely come back in May with more research.
Ruben said Baker would have more answers about the use tax and fees then too.