The proposed solar deal between Frasier Solar and Knox County is facing scrutiny as The Buckeye Institute raises concerns about its economic viability.
The Buckeye Institute’s analysis challenges the proposed "payment-in-lieu-of-taxes" (PILOT) payment of up to $9,000 per megawatt, suggesting it may not adequately compensate the county.
The potential undervaluation of future property tax revenues in PILOT agreements is the basis of concern for The Buckeye Institute whose analysis suggests the maximum $9,000 per megawatt PILOT payments may fall short, projecting a potential deficit of $3.2 million for Knox County when Frasier's 40-year solar project concludes in 2064.
The organization is urging Knox County officials to thoroughly assess potential risks associated with the current PILOT program and consider rejecting the agreement if it does not offer a fair return to taxpayers.
The research by The Buckeye Institute questions the adequacy of Ohio's statutory maximum rates for PILOT deals, expressing concerns about potential disadvantages for Knox County taxpayers.
The organization argues that state subsidy programs for green energy, including PILOT, may inadvertently support inefficient energy sources, negatively impacting electricity prices and the competitiveness of Ohio manufacturers.
To optimize returns, The Buckeye Institute recommends a minimum PILOT payment of $10,150 per megawatt, which would generate an additional $138,000 per year for county schools and services.
Frasier Solar has committed to contributing over $1 million annually to local schools and townships, contingent on the county waiving property taxes for its solar farms.
Despite Frasier Solar's optimistic projections of a $5 million surplus to Knox County by 2064, compared to traditional property taxes, The Buckeye Institute calls for independent verification through a net-present value (NPV) cash flow analysis.
The NPV estimate becomes crucial in assessing whether the proposed PILOT payments adequately compensate for the forfeited tax revenue.
