Logan County Board settles on solar farm decommissioning terms

 

[April 28, 2021] 

At the Logan County Board meeting Tuesday, April 20, the one focus of discussion was the escrow amount for the Mulligan Solar Farm Decommissioning Plan.

Board members present were Board Chairman Emily Davenport, Vice chairman Scott Schaffenacker, David Blankenship, Janet Estill, Cameron Halpin, David Hepler, Steve Jenness, Keenan Leesman, Bob Sanders, Annette Welch and Jim Wessbecher. Bob Farmer was absent.

The Planning and Zoning Committee had a long discussion about administrative fees to put in escrow at their April 6 meeting. Discussion continued at the Board Workshop on April 15.

At the workshop, Logan County Board Planning and Zoning Committee Chair David Hepler said he would motion on Tuesday for approval of the Decommissioning Plan Mulligan Solar Farm with an escrow of $180,000.

In regard to the escrow amount, Hepler said he planned to amend the amount to $100,000. These would be administrative costs included in the plan for just the first five years.

Mulligan Solar is the county’s first solar farm and one of the first in the state. Hepler said the risks of a $100 million solar farm being turned back to farm ground or abandoned in the next five years is negligible. He said $100,000 would more than cover the county’s interest if that were to happen.

When Hepler spoke with Apex/Mulligan Solar representative Erin Baker, Baker said there is yet to be a solar farm abandoned.

Every five years the plan will be reviewed. Hepler said he does not want administrative fees to be burdensome and deter other projects from coming here.

Though Sanders wants to protect the county’s interest, he said $100,000 seems low for administrative fees.

Since an engineering firm was hired to do a decommissioning study, Schaffenacker asked the firm’s proposed escrow amount.

The original proposed amount for escrow was $6.2 million at the end of the thirty-five-year project. However, Hepler said the county would be reviewing the decommissioning plan every five years. In the reviews, Hepler said escrow amounts may be revised.

Schaffenacker said going from $6.2 M to $100,000 is a steep decrease.

Though Hepler agreed that is a steep decrease, he compared it to buying a brand-new car. When you buy a car, the first few years, it still has value. After thirty years, the value would be very different.

If the decommissioning plan is reassessed every five years, Blankenship said he is fine with $100,000 for escrow. The biggest risk would be a major shift in technology in those five years.

There would have to be a major catastrophic shift for the company to walk away from the project. Otherwise, Blankenship feels the risk [of them walking away from the project] is extremely low in the first five years.

Because of possible changes in technology and how quickly it evolves, Blankenship would rather have the plan reviewed every three years.

Additionally, reclamation prices are constantly changing. For example, Blankenship said not so long ago, televisions could be disposed of for free. Now people are often charged for disposing of old televisions.

Not having a bond option to use is something Welch said she struggles with. For Welch, it was a struggle to come up with a number for the escrow. Like others, she wants to make sure the county is protected.

With both solar and wind, Welch also wants to know what the county can put in place that prompts the board to make sure a review is done in five years. She does not recall any wind farm decommissioning plan being reviewed yet.

Mulligan Solar recommended an administrative fee of two-and-a-half percent. Leesman said that would add up to $150,000. He is not sure why the county should go lower than that.

The county has had permit fees coming in from solar and wind farms for a few years, which have been added into the budgets. Hepler said there is concern they will dry up, but they do not have to dry up.

On Tuesday at the Regular Board meeting, Hepler brought forward the motion to approve the Decommissioning Plan for Mulligan Solar Farm with an escrow of $180,000. He then amended the escrow amount to be $100,000.

Kyle Barry, the attorney representing the project said his client supports the amendment to the motion. Both Barry and his client believe $100,000 would be sufficient to cover risks associated with decommissioning for the county for the first five years of the project.

The solar ordinance says the cost estimates for decommissioning will be reviewed every five years. The review would be done by the county’s chosen engineer and revised if necessary at the developer’s expense.

The third party reviewing the decommissioning plan had provided a much higher amount than what was brought forward. However, Barry said that was based on the 35-year life of the project and not on a five-year review. He feels that is a key distinction.

The risk of a full decommissioning of the project in the first five years is low. The company will have just invested around $100 M in equipment. Even if decommissioning were to occur early on, Barry said equipment like the solar panels are worth something on the secondary market. There is also significant value in terms of salvage.

The Illinois Power Agency requires a fifteen-year agreement for solar farms to generate electricity. Therefore, Barry said a project is not likely to decommission during that time.

In the past decade, Barry said Logan County has done a good job promoting the growth of diversified sources of energy. These sources include the coal mining, wind farms and now solar.

Counties up north market energy resources to companies like Facebook, Amazon and Google. For some companies, the diversified generation of electricity is part of the appeal.

By approving the solar project, Barry said that sends a message that county will promote diversified energy sector.

Liberty Power representative Stan Komperda is working on the initial stages of development for the Sugar Creek solar project. He said the escrow amounts they are talking about for decommissioning would help his company as they work on moving the Sugar Creek solar project forward.

Some board members thought a different amount for escrow would be better.

Mulligan Solar mentioned two-and-a-half percent, or $150,000, for escrow at the Planning and Zoning meeting. Therefore, Leesman asked why the county would commit to a lower amount. Even with the five-year review, Leesman said the administration aspect and process would still be the same whether it is in five years or 35 years.

While saying Leesman made good points, Hepler said the engineers tried to put an amount in that represented what they typically do. The engineers also recognized a board can customize the plan. The lower amount is proportionate to the low risks of decommissioning in the first few years.

Because Hepler would like the county to be first on the list for companies wanting to do projects, he does not want the amount to be burdensome. The county competes with other counties for projects.

This project will be in a small portion of the enterprise zone. Leesman said he is concerned about the enterprise zone being used up by other solar farms. He wants to know what other incentives the county can offer when there is no room left in the enterprise zone.

Once Mulligan Solar is up and running, they have offered to withdraw from the enterprise zone. If solar farms are in the footprint of wind farms, Hepler said the solar farms could get the same tax benefits wind farms do.

Even though Mulligan Solar was allowed in the enterprise zone, Jenness said the board does not have to approve all solar farms being in the enterprise zone.
 

For Blankenship, putting so much emphasis on projects being in the enterprise zone is not right. He does not want it to become a popularity contest. Blankenship would rather set an environment inviting to businesses.

Incentives come and go, so Blankenship wants to find other ways than subsidizing projects to make it favorable for companies coming in.

Jenness, who is the finance chair, agreed with Blankenship.

Though Leesman agreed standing each one on their own would be good, he said Mulligan Solar told the county last month the project would be at risk if not approved for the enterprise zone.

When escrow amounts were discussed at the April Planning and Zoning Committee meeting, Welch said they were all over the map. They went from several hundred thousand dollars to almost nothing. Welch said the committee met in the middle to bring the $180,000 amount forward.

To Sanders, going from $180,000 down to $100,000 seemed like a big leap.

Halpin said he agreed with Sanders. He then further amended the escrow amount to $140,000.

Wanting to stick with something that pleases investors, Hepler said he was initially going to change the amount to $150,000. He picked a figure the industry would be comfortable with.

Whether the amount is $140,000 or $180,000 or even another amount, Hepler said people should feel the figure is not just picked out of thin air. He wants there to be an actual calculation for using certain figures for these fees.

If the industry is comfortable with $100,000, Hepler said it would probably generate more projects. If investors are pleased, hopefully more companies will do projects.

To Leesman, it seemed the industry was fine with $150,000. He did not understand why they could not go with that number.

For the record, Hepler said Mulligan Solar’s request was for $75,000.

After the discussions, the board then voted on the amendments from last made to first, and then the main motion as amended.

Halpin’s amendment for $140,000 failed 4-6 with Davenport, Blankenship, Hepler, Estill, Jenness and Welch voting no.

Halpin, Leesman, Sanders and Wessbecher voted yes.

Hepler’s amendment for the $100,000 escrow amount passed 6-4.

Davenport, Blankenship, Hepler, Estill, Jenness and Welch voted yes.

Halpin, Leesman, Sanders and Wessbecher voted no.

The main motion as amended with the $100,000 for the escrow amount in the decommissioning then failed 5-5 with Blankenship, Halpin, Leesman, Sanders and Wessbecher voting against it.

Though Blankenship said he was comfortable with the $100,000 escrow amount, he would like a review of the plan after three years instead of five years.

With that motion failing, Hepler asked where to go from there and how it would affect the project.

Because of the project timeline, Barry said the decommissioning plan needed to be approved this month.

If there was an agreement to review the decommissioning plan after three years, Blankenship said his vote would be yes. He is concerned by some of the decommissioning agreements for wind and feels that now is the time to address when reviews should be done. He stood firm on wanting a review after three years.

The ordinance states the review will be in five years. Hepler said the company is entitled to the ordinance under which they applied.

Five years is part of the ordinance as opposed to being a condition.

Barry said he would ask his client if they might consider a review of the decommissioning plan in three years.

Blankenship then made a motion to reconsider the vote on the Decommissioning Plan for Mulligan Solar Farm. It passed 7-3 with Blankenship, Davenport, Estill, Hepler, Halpin, Jenness and Welch voting yes.

Leesman, Sanders and Wessbecher voted no.

Hepler then motioned for a new vote on the main motion as amended for the decommissioning plan with an escrow of $100,000. This motion passed 6-4 with Blankenship, Davenport, Estill, Hepler, Jenness and Welch voting yes.

Halpin, Leesman, Sanders and Wessbecher voted no.

Schaffenacker was absent for these votes.

Other action items

The board approved Executive and Personnel Committee Chairman Scott Schaffenacker’s motion to schedule Electronics Recycling on July 10, 2021 from 10 a.m. to 1 p.m. The alternate date will be July 24, 2021.

The board unanimously approved the following Road and Bridge motions:

• To award contracts for Bituminous Materials from the Township Motor Fuel Tax Fund.

• An engineering agreement with Hampton, Lenzini & Renwick, Inc. for $35,000 to design a bridge replacement on 1039th Avenue in Elkhart Township.

The next Regular Board meeting will be Tuesday, May 18 at 6 p.m. on the second floor of the Orr Building.

[Angela Reiners]