$200M solar project shops for tax breaks in Bastrop County
- Oct 1, 2020 12:07 pm GMTOct 1, 2020 3:10 pm GMT
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A $200 million solar project proposed in rural Bastrop County is shopping for tax breaks from local jurisdictions, according to public records.
The international renewable energy company RWE Renewables is looking to build a solar facility south of Rosanky along Jeddo Road that would send 200 megawatts to the state grid. But the project can only go forward if developers receive tax breaks from local taxing districts, according to company filings.
Earlier this year the company submitted a Chapter 313 application to the Smithville school board that asks the board to approve tax breaks if the project is realized.
That application must be reviewed by the Texas Comptroller's Office before it can be approved by the school board. The school board on Sept. 23 voted to move forward with the application process after company representatives presented the project during the school board meeting last week.
RWE Renewables has developed several wind and solar projects across the globe, with more than 30 in Texas. According to a spokesperson, RWE Renewables plans to invest $5.8 billion in renewable energy and to grow its renewables portfolio to 13 gigawatts of net capacity by the end of 2022.
Texas has become increasingly attractive to solar developers over the years due to the state's geographic position and large population centers. The state's only drawback, according to RWE Renewables, is its high tax burden.
"There are several factors that contribute to Texas's favorability for development, one however that does not is the state's notoriously high property tax burden - ranking in the top 10 across the United States," the company said in its Chapter 313 application to the school board.
RWE's 30 wind and solar projects in Texas were made feasible through tax breaks from local school districts and other taxing entities, the company said.
"The company has received tax incentives on several of these projects which significantly improve the financial viability of the investment," the company said. "RWE has not built a project in Texas that did not have a Chapter 313 agreement, as it is crucial to exceeding the company financial hurdle."
The Chapter 313 application asks the school board to cap the taxable value of the solar facility at $20 million for the first 10 years of the facility's expected 35-year lifespan. Under the district's proposed tax rate of $1.31 per $100 of property valuation for fiscal year 2020-21, the solar facility could generate about $262,000 annually between 2022 and 2031 if the tax rate remains relatively unchanged each year.
Without a tax break from the school district, the company would pay $2.6 million in 2022. But as the company notes in its application, "without a Chapter 313 agreement, this project would probably not be built."
The tax break agreement would expire after 10 years. By 2032, the company estimates that the facility's taxable value would drop to $41.8 million. That value would generate roughly $548,000 under the school district's proposed tax rate for fiscal year 2020-21.
The company also has plans to ask for a tax incentive agreement with Bastrop County. Company representatives presented the project to the Bastrop County Commissioners Court on Monday.