Logan County continues to support decision to extend enterprise zone to Mulligan Solar

 

[March 24, 2021] 

At the voting session of the Logan County Board on Tuesday, March 16, the board took considerable time to continue discussion that began at the Board Workshop on whether to reconsider the decision that adds the Mulligan Solar Project to the Lincoln/Logan County Enterprise Zone.

Board members present either in person or remotely 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 request was first made Erin Baker of Apex Clean Energy in March 2020. Incorporating Mulligan Solar into the enterprise zone would allow Mulligan Solar to take advantage of sales and use tax exemptions.

Ninety percent of the use tax would be exempted in the enterprise zone and would go only to the state of Illinois. Baker said there is really no loss to the county or other jurisdictions here if Mulligan Solar gets the use tax exemptions.

In January the board approved adding solar farms to the list of projects eligible for the Enterprise Zone voting 8 - 3 with Halpin, Sanders and Schaffenacker voting no.

The board then approved adding 1.4 miles for the Mulligan Solar Project with a 10-1 vote, Halpin voting no. Bob Farmer was absent.

Enterprise Zone decisions are voted by both the city of Lincoln and the Logan County. The city council discussed the matter late February, but has yet to make a decision.

The county decided to re-addressing the issue based on questions the city raised.

At the March Workshop Halpin said a couple board members had second guessed their January decision. Halpin said there is concern about the lack of land remaining in the enterprise zone.

On Tuesday, Mar 16, Halpin brought forward a motion to rescind the ordinance that extends the Enterprise Zone to Mulligan Solar Farm Project.

Newest board member Keenan Leesman opened discussion saying he sees no clear right or wrong answer. He is not in direct opposition to the solar farms, but asked if solar farms meet the purpose of the enterprise zone.

In reading the enterprise zone act, Leesman said it discusses how people depend on “a healthy economy and vibrant communities.” The act says, “the continual encouragement, development, growth and expansion of the private sector within the State requires a cooperative and continuous partnership between government and the private sector.”

To attract “private sector investment” into depressed areas, the act also “explore[s] ways and means of stimulating business and industrial growth.” One of the ways the act stimulates business and revitalizes neighborhoods is through “relaxed government controls and tax incentives in those areas.”

To be approved by the state for an enterprise zone, Leesman said an applicant must meet at least three out of eleven criteria. One is whether the business is an economic driver. A big consideration for Leesman is whether it would create long term jobs that would attract people to Logan County.

As Leesman gathered feedback, he said the question was how the solar farm would help the county as it applies to the enterprise zone. He had a few thoughts on the question:

First, there is about $200,000 in permit fees that are once and done.

Second, the project creates temporary work for contractors who most likely are not going to be from the county.

Third, though there may be a couple long term jobs, they may not be in the county.
As far as property taxes, Leesman said the project may decrease property taxes initially but not long term. He does not feel the solar farm meets the intent of the enterprise zone.

Leesman asked board members to ask themselves whether the solar farm is uplifting the community. He wanted them to reconsider their position of whether a solar farm meets the spirit of the enterprise zone law. Leesman said he feels it only uplifts two parties: Mulligan Solar and the property owners.

Leesman said he would feel better if solar farms were considered high impact or could be part of opportunity zones more suited to this project. He wanted board members to rescind the January decision awarding enterprise zone status to the solar farm.

While he appreciated Leesman’s perspective, Blankenship said sustained funding and revenue coming into government is important. The local government is a sizable employer and bringing in revenue to sustain services and avoid furloughs and layoffs contributes to and helps drive local economic development.

Because we are sustaining jobs, Blankenship said income and revenue coming in from the solar farm is beneficial to economic development. It is critical to sustainment and expansion of our local economy and public services without increasing taxes. He supports giving Mulligan Solar the enterprise zone because of the economic benefit. With what the current economy has done to the county budget, Blankenship said we do not need any more damage to the budget.

As for Leesman’s opinion that solar farms potentially do not meet the spirit of the enterprise zone law, Blankenship said he respectfully disagreed.

If the county were to rescind the motion, Blankenship said it would look bad in the industry because it would look as though the county does not keep its word. It could also make the county look as if it is not good to do business with, which Blankenship said would be detrimental.

Wessbecher said he was originally against allowing the solar farm into the enterprise zone, but factories are not dropping out of the sky. In addition, in years past the board approved grain elevators that do not bring in many jobs. A solar farm can have a positive impact on property taxes. Wessbecher agreed with Blankenship that [the board] going back on their word could come back on the county.

Lincoln Mayor Tracy Welch was then asked to weigh in on the discussion. Welch said the city has not taken a vote on whether to allow Mulligan Solar into the enterprise zone yet. The city council discussed it, but Welch said it got tabled because they are waiting to see what the county does.

In talking to some of the aldermen, Mayor Welch said there are some sticking points. One sticking point for the city is that the space in the enterprise zone is finite.

Looking to future economic opportunities, the Fifth Street Road project plan has been evolving for decades. The county is set to six miles this spring. The city is optimistic that parcel acquisition will happen soon. The roadway creates a corridor where enterprise could actually set up.

In talking to Baker, Mayor Welch said Mulligan Solar has a five-year (EZ) decertification plan. Decertifying that area would free up land in the enterprise zone.
Welch said that after giving back its enterprise zone designation, Mulligan Solar would still be able to do what they need to do to operate their business; the county would still see its tax revenue and the land would then be opened for other opportunities.

County Finance Chairman Steve Jenness said he does not feel it is a long-term solution, but it (the permit and tax revenues) from the solar farm could be a Band-Aid, especially with all that has gone on this past year. It could loosely benefit the local economy because the revenue helps the county keep local services going.

Hepler said experts in Springfield will be vetting the enterprise zone application even if the city and county approve it. If the experts feel the application falls within the spirit and law of the enterprise zone, Hepler said it would be approved. If it doesn’t Hepler said it won’t [be approved by the experts]. Hepler said the county could lose some credibility by rescinding the motion.

The property taxes brought in by the solar farm start out around $400,000 a year, which is split up between various taxing bodies. Among the taxing bodies receiving property taxes is Lincoln Community High school, which gets around $70,000 a year. Hepler said the $70,000 a year coming in for thirty years could mean the difference between hiring and losing a teacher.

Mulligan Solar is up against some hard deadlines and Hepler said there is a point at which this project may not be able to continue. Baker told Hepler if they do not have permits taken out by the end of May, the project will probably not happen.

Hepler motioned to make an amendment that if permits are not taken out by the last day of May the county treasurer is authorized to take the $208,000 in revenue out of this year’s budget.

Schaffenacker said since that would be a budget amendment, it would require a written resolution. The resolution would need to specify the funds affected and the reason for the transfers. The resolution would need a two-third vote by the board.

Withdrawing his original amendment, Hepler said if Mulligan Solar does not take out a permit by May 30, the matter would be referred to the finance committee for a budget amendment. That way, the county will not keep revenue they will not be getting in the budget. If the $208,000 in permit fees is removed, Hepler said it could mean making budget cuts and layoffs.

At the city council meeting in February, Halpin said Apex told the city it was their intent to move forward regardless of whether they got the enterprise zone or not. Apex was asked if the project would be threatened if they didn’t (get the EZ), and Halpin said Apex told the city no.

Now Apex is saying if they do not pull (take out) permits by the end of May the project would essentially be done for this year. Halpin said he does not see a timeline in which Mulligan Solar could get all they need done. They would have to get everything resolved at the county, get the city’s approval, go to all the other municipalities for their signature, submit the application to the state for review and approval, then get permits by the end of May.

Halpin just wanted to know, which is the truth. He asked whether Mulligan Solar is moving forward regardless or not. Halpin asked how they anticipated getting everything wrapped up and getting permits by the end of May.

Though Baker said things are looking positive with their financial partners, moving forward is not guaranteed. Decommissioning (removing units and restoring land to its original condition) security and acquiring the enterprise zone could have a major effect. Baker said they are doing everything possible to move forward and are hoping to close on financing by April 15.

The date the project is committed to the Illinois Power Agency is May 2022. If Apex/Mulligan Solar is not able to secure building permits until May, Baker said the project may be in jeopardy of not being able to meet the operational state requirement and renewable energy credit contract.

Davenport said she was still on the fence and had a question about how long the (EZ) decertification would take.

After looking on the Department of Commerce and Economic Opportunity (DCEO) website, Halpin said the process to decertify is the same as the process to certify. There would have to be a public hearing with the enterprise zone administrator. Then an ordinance and intergovernmental agreement would have to be amended. The company would have to go back to the city and all municipalities for decertification too. It would have to go to DCEO for review and approval.

The city of Lincoln and the county are the only two that must vote on letting Mulligan Solar into the enterprise zone. However, the other municipalities must still sign-off also.

If the project is in the enterprise zone, Blankenship said that would help offset a lot of costs that have been imposed on the industry by covid. He has seen costs go up exponentially and delays in products of 28 to 32 weeks. Being in the enterprise zone would also help offset lead times and costs associated with manufacturing delays and products.

Because Mulligan Solar is in a time crunch of needing to get permits, Halpin asked why they did not pursue the extension months ago. He said Mulligan Solar came to the county almost a year ago and informed them of the intent to request the enterprise zone.

Baker said Mulligan Solar had a public hearing in December 2020 and it came to the board for the vote in January.

For Blankenship, one question was whether any board member is aware of any potential businesses wanting to utilize the enterprise zone in this area. He asked board members to disclose any knowledge of groups wanting to come in and start manufacturing. No one spoke.

Mayor Welch’s understanding is that multiple solar companies are wanting to come into the county. The council would like to present an option that would help the Mulligan Solar project, the high school, West Lincoln, rural fire and the county to see tax revenue. If a group comes in down the road, Mayor Welch said he does not want to be landlocked for thirty years.

Lincoln Economic Advancement and Development, Inc., a new regional economic development organization was recently launched. Schaffenacker asked for some input from their new Chief Executive Officer Andrea Runge.

Runge said there is a lot to consider when it comes to economic development and asked the following questions:

Is there a percentage of local businesses the company is willing to utilize as part of their construction?

Is there energy they are willing to sell back to the grid to lower the city’s energy costs?

What kind of things might we have outside tax that we can negotiate with them considering the sizable contribution to the enterprise zone the project is hoping to do?

Runge said it had been a great discussion and she was interested in both sides and what will come of it.

There are many things that could happen down the road, so Runge said long term goals should also be considered. For instance, is there long-term job creation in this type of development for the city and county?
To get more background information, Schaffenacker asked Runge to explain what LEAD does and her experience.

LEAD was formed as a non-profit by a group of local entrepreneurs through private investment and donation. They have been working on setting up the organization for a few years.

As a professional with a Master’s degree in Community and Economic Development from Western, Runge has more than 20 years’ experience in operating a revolving loan fund. She recently served as Director of Community and Economic Development for the Illinois Association of Community Action Agencies/Illinois Community Action Development Corporation. Runge has extensive experience in community development and said time would tell the right decision. She said the county would need to think creatively in going back to the company if asking for revision.

Other questions Runge said it would be good to ask: What else is there besides property taxes? Can the company provide something to train people who live here? Can we figure out how to cooperatively work with the company to make it something that has a lasting impact on our residents and not just the enterprise zone?

While Leesman said the comments Runge made fit in with the intent of an enterprise zone to help uplift the community and even train people, he said that type of work would have to happen with solar farms. Otherwise, Leesman said he does not think they meet the intent of the enterprise zone.

Though grain elevators are automated and thus do not provide jobs, Blankenship said they were past recipients and benefited from enterprise zones. Since they were approved by the state, he is certain solar farms would be too.

Saying he was speaking with the utmost respect, Blankenship said to Runge the days of government going to a business and negotiating what they can get out of the business has to stop. He said that is not really a free market.

Although Blankenship agrees in working with businesses as far as training if they want to go that route, he does not feel it should be a precursor to granting them an enterprise zone. Blankenship said that would be going down the path of socialism.

As a representative of a non-government, non-profit organization, Runge said she is not trying to make it a quid pro quo issue. She said for future developments, the county should look at how the decision benefits everybody.

If a business is not a viable business, Blankenship said it should not get into business. He is not fond of direct cash payments and businesses utilizing people’s money to make themselves look viable. Blankenship said it is not the county’s job to bleed money out of businesses because businesses are not a cash cow. He feels businesses will benefit the county more if the county does not put the hand of oppression on them. Businesses also benefit us more when we don’t give them the people’s money to make them look successful when they are not.

Sanders wanted to bring forward a motion for decertification in five years, but Halpin said it was not appropriate for the main motion to rescind.

Though Hepler agreed with what Sanders said, Hepler said he did not know if they could commit a future board to that. He said the attorney for the solar farm had sent a template for decertification.

Baker said the agreement they had sent Tuesday stated they were agreeing to decertify at any time, not necessarily in a five-year window. As soon as the city or county comes to Mulligan Solar with a request, Baker said they would work towards decertification. This would not commit any future board to a certain action.

If the city passes their approval with a five-year decertification plan, Sanders asked if the county would need to come back and address that.

It is not necessarily an amendment to the ordinance or intergovernmental agreement regarding the extension of the enterprise zone. Halpin said it is just a side agreement to say all three parties commit to cooperate with a deletion process if the city and county were to request it.

With other solar farm projects waiting in the wings and watching to see what happens with this one, Halpin had one concern. He said his only concern is saying we will do this provided at some future date we delete that territory and then do for other solar farm projects, the board would be approving and deleting. Halpin does not think a chain of such decisions would look good ten or eleven years from now when the county applies to the state for an extension of the enterprise zone.

Though Halpin wanted to rescind the ordinance, he said his desire to is not an attack on the Mulligan Solar Farm. He simply does not feel it fits the purpose of the enterprise zone. Halpin thinks solar should be considered a high impact business and is willing to reach out to state legislators and encourage them to support that.

Hepler said other solar farms have contacted the county about building here. He is concerned voting to rescind the motion would send a message that votes the board takes may not be reliable. Hepler said it could also send a message we are not business friendly, which could affect the county, city and even the LEAD organization. He wants to take a step forward and be even more business friendly to investors and developers wanting to spend money in the county.

If the board had had all the details they now have before the original vote, Halpin said he did not think they would be at this point. Some board members had expressed frustration because they did not know some of the details the city got at their first meeting with Apex/Mulligan Solar.

In response, Hepler asked what information Halpin was specifically referring to and who would have presented it.

Saying he could not speak to what other board members did not know or wanted to know, Halpin could not provide examples to support his claim.

One board member who had concerns was Annette Welch. Her concern was that if the board said yes to one solar farm being in the enterprise zone, they could end up using the rest of the enterprise zone with future solar farms. Welch now knows that one yes to solar does not mean yes to all solar. She now supported the original decision.

Halpin’s motion to rescind the ordinance to extend the Enterprise Zone to add the Mulligan Solar Farm Project was firmly rejected by an 8-3 vote.
Blankenship, Davenport, Estill, Hepler, Jenness, Sanders, Welch and Wessbecher voted no.

Halpin, Leesman and Schaffenacker voted yes.
The board’s January approval to add Mulligan Solar project to the enterprise zone stands.
Next, Halpin withdrew the motion to rescind adding “Solar Farm” to list of eligible projects for the Enterprise Zone.

Other Planning and Zoning motions:

The board approved the Mulligan Solar Drain Tile Mitigation Plan. Logan County Highway Engineer Bret Aukamp said he had reviewed it with Apex and they satisfied all his concerns. He recommended approval of the plan.

Hepler motioned for approval of the Mulligan Solar Farm Decommissioning Plan and then asked Logan County Zoning Officer Will D’Andrea for his input.

TMW, the third party who reviewed the decommissioning plan, told D’Andrea salvage value and assumptions based on construction plans should be included. Therefore, D’Andrea felt there were some questions that need to be resolved.

With the construction plans, Baker said her understanding is that the third party would do the decommissioning estimate based on the anticipated project design. The “as built” considerations for what decommissioning might cost in the future would be part of the five-year estimate updates.

Regarding security, Baker said the solar ordinance requires any security to be placed in escrow. Her understanding is that salvage value is included for consideration, but administrative fees are kept in security.

The company’s estimate for decommissioning is $6.2 million without salvage value factored in. If the project is required to hold that in escrow, Baker said that would be a significant cost to the project that may not be necessary.

Welch asked the difference if salvage value is included.

If salvage value is added in, Baker said that would bring the cost to decommission to zero. That is why her company would support the county requiring some sort of administrative fee to be held in escrow.

If the idea is to protect the county, D’Andrea said the county would need financial assurance of scrap value.

Photovoltaic units or solar panels are not easily disposed of so Blankenship strongly questioned their claim the salvage value could solely offset decommissioning costs.

Much of the scrap value comes from the glass in the panels used for a majority of the project, so Baker said it is more than resale value. TWM had no issue with the estimate calculated in the original report. The discussion was about whether to include salvage value.

While D’Andrea has not talked with TMW, his question is whether any kind of financial assurance is posted. He feels that question has not been answered.

Hepler’s motion for the approval of the decommissioning plan did not get a second, so it died. Therefore, the decommissioning plan will go back to the planning and zoning committee for more discussion in April.

Though Baker said that would make their schedule tight with the questions about security, the company would just have to discuss it further with the committee.

[Angela Reiners]

Logan County approves Enterprise Zone for Mulligan Solar Project

Lincoln City Council
Alderman hesitant to approve enterprise zone for Mulligan Solar

Mulligan Solar request for Lincoln/Logan County Enterprise Zone reconsidered and decided by county