The borough discusses tax exemption options following the request of a solar energy producer

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Can the Kenai Peninsula Borough grant property tax exemptions to private companies?

It can, according to the borough code, if these companies can demonstrate that they contribute to the economic development of the borough. The Kenai Peninsula Borough Finance Committee discussed its tax exemption options this week following a request from a company to build Alaska’s largest solar farm to date on the Kenai Peninsula.

The borough has not yet taken a decision on a possible exemption. But congressman Lane Chesley said he wanted to strike up a conversation so the borough assembly would know what options it has when a business makes demands.

“I think as a finance committee I’d like to see us continue to keep this on our agenda and continue to work on that and wrestle with some of these questions about what we might want to do or if we are happy with what we have, “he said.

The solar farm plan comes from Renewable Independent Power Producers, an Anchorage-based company that wants to build a 60,000 solar panel farm on the Kenai Peninsula.

The project would be nearly 20 times the size of the company’s current farm in Willow and cost around $ 30 million, Renewable IPP CEO Jen Miller said in a presentation last October. The Homer Electric Association said it would buy electricity from the company if it could provide the lowest rates.

But before opening the way, Renewable IPP is asking the borough for an exemption from property tax.

Utilities like the Homer Electric Association are already tax exempt. But Renewable IPP, a private company backed by private investors, is not.

Still, there are options. Businesses that contribute to the region’s economic development can benefit from exemptions of up to 50% for up to five years, said Adeena Wilcox, borough assessment director.

She said that economic development is defined in the district code.

“This means the expansion of the private sector which creates permanent jobs, adds to the long-term tax base of the borough and improves the economic activity and the quality of life of the residents of the borough,” he said. she declared.

Wilcox said the last time an entity requested the exemption was in 2009. Companies apply through the assessment service and are approved by the assembly.

Miller said the tax exemption is important to keep costs low for Homer Electric and its members.

But she said a 50 percent exemption might not be enough.

“It helps the economy, but we are asking for a higher percentage, just to give the project a greater chance of success,” she said.

Miller’s company requested an 80 percent exemption. And since state guidelines are already more flexible, she said the borough could technically adjust its own policy. The borough said it was limited since the property tax helps fund the school district.

There are other options available for projects under a separate set of guidelines, created by the borough in the late 1990s to encourage business development on the Kenai Peninsula. If a project qualifies under these guidelines, it could be eligible for tax credits or land.

But these criteria of what constitutes economic development are more stringent. For example, a project must add $ 10 million to the borough’s property tax base or at least 25 full-time jobs. It cannot either “take market share from existing companies within the district”.

The proposals of this program are studied by a preselection team, the borough mayor and the assembly.

It is not clear whether the renewable IPP would satisfy any of the conditions described. Miller said Renewable IPP continues to work with the borough on its options.

In addition, a committee responsible for examining the renewable IPP proposal recommended that the borough grant tax exemptions to any independent electricity producer who sells energy to public services.

The borough commissioned a study last fall from the Resilience and Securities Advisory Commission, the group that is considering ways to make the Kenai Peninsula borough more sustainable. The commission said in a memo that the borough should extend its property tax exemption for utilities like Homer Electric to independent power producers from whom they purchase electricity.

The commission said renewable energy projects can be competitive with natural gas from Hilcorp, now responsible for about 86% of Homer’s Electric power.

But these projects are usually limited by construction costs, he said, and high borough property taxes are a deterrent.

“If this exemption is passed, we anticipate that the independent power producer model could play an important role in the future of electricity on the Kenai Peninsula, by diversifying the grid and stabilizing prices through various technologies. energetic, ”wrote the commission.

The note also notes that oversight from the Alaska Regulatory Commission will ensure independent power producers don’t rip off taxpayers when they sign agreements with utilities.

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