Knox seeking host community agreement from RIC to balance tax loss

Enterprise file photo — Melissa Hale-Spencer
"Solar Westerlo": Many residents were surprised when solar panels first went up in Westerlo. "The most scenic parts of town have been turned into an industrial complex," said Supervisor Matthew Krysak this week.

KNOX — RIC Energy, which has conditional approval for a 5-megawatt solar farm in Knox, has offered the town extra financial incentive to go forward with the project, which is awaiting the conclusion of payment-in-lieu-of-taxes negotiations. 

Rather than wait for the town to negotiate with the Berne-Knox-Westerlo school district and Albany County — which are each entitled as taxing entities to RIC’s PILOT installments, and would together take the vast majority of the $25,000 the company would pay per year, to the town’s chagrin — RIC has offered an additional payment of several thousand dollars per year on top of the $1,400 the town would get through the PILOT, Supervisor Russ Pokorny told The Enterprise this week. 

Pokorny said that Knox successfully requested an escalator clause, so the first payment would be $14,352.10, and then increase by the 15th and final year of the agreement to almost $19,000. However, the Knox Town Board still feels that the PILOT and host community agreement don’t add up to enough money to offset the potential impacts of the project on the community’s character, and has agreed on a yearly sum of $30,000 for RIC to meet through both payment types combined, Pokorny said. 

If the company were to have to pay taxes at the regular rate, the town would earn somewhere in the realm of $200,000 annually, said Pokorny, who was once the town’s assessor. His estimate assumes that the property would be valued at $2 per watt, which would equal a $2 million total.

Should the company agree to a host community agreement that nets the town $30,000 a year to start, its initial payment to the town, school, and county would be a little over $50,000, Pokorny said, “so that would still be a quarter of their normal tax rate.”

“But the thing is,” Pokorny added, “RIC can’t afford to pay in excess of some amount. We don’t know exactly how much it is because National Grid is going to pay them so much per kilowatt hour and if it isn’t affordable, they can’t do it.”

The town had planned to be aggressive in negotiating a PILOT with RIC when Vasilios Lefkaditis was supervisor before Pokorny took office. Lefkaditis, who led a board of members who had all been elected alongside him, argued that it was unfair that the county and school district would receive more money than the town since they bear none of the risk of hosting a solar farm.

The state-set PILOT structure reflects the amount that each entity gets in taxes; school taxes are by far the highest.

Pokorny, who took office at the beginning of this year and was the only new board member to come out of last November’s election (Lefkaditis didn’t run), has carried forward that thinking. 

“This is right in the middle of the town of Knox. It’s entirely our thing, and we shouldn’t be getting such a measly portion of [the payments],” Pokorny said of the prevailing attitude. 

The Knox Town Board has already considered what it would do with the money, he said; the transfer station is “in very rough shape” and will probably need at least $100,000 in repairs in the next year or two.

Plus, he said, “We always have road improvements, we always have trucks to buy, we always have maintenance, so we could use the money. That’s for sure.”


Cautionary tale

For a lesson in the risks — or at least the lack of any meaningful reward — from tax-exempt solar fields, Knox has only to look to its rural neighbor Westerlo, where five solar projects were built in the span of a few years.

Advocates in Westerlo, such as then-planning board chairwoman Dorothy Verch, framed PILOTs as a windfall for the community, enough to make up for the fact that they weren’t paying a full tax amount. 

Proposals from solar companies came to Westerlo and were accepted at such a breakneck pace that the town ultimately put a moratorium on renewable energy development until it could put together a comprehensive plan, on which it would base new zoning laws, which were finally passed last year. 

When reached to discuss solar’s legacy in Westerlo, Supervisor Matthew Kryzak took a cautionary tone.  Kryzak was first elected supervisor last year, having been acting supervisor for a few months prior; he had joined the town board in 2020, when work on the comprehensive plan was just getting started. 

“Westerlo is pretty much an experiment because we have five commercial solar farms in a town of 3,600 people,” he said. “I haven’t come across any other town that quite has that.”

He said that it’s up to each town to determine what value it expects out of such projects, which have unforeseen “headaches,” as he called them.

“For instance,” he said, “and I don’t want to name names, but one solar farm in particular has caught fire twice. We’ve had to send our fire department out, get the emergency people in contact with maintenance folk from the company.”

Solar farms can be sold to other companies before they’re fully built, he said, and it can be a hassle “chasing down new owners, trying to get insurance documentation, decommissioning bonds confirmed.”

And PILOT payments are often late. 

“I think a majority of the companies we deal with in the PILOT programs are late payers,” Kryzak said. “It creates a new set of issues that we didn’t have before. With the amount of time we have to spend dealing with the five commercial solar farms, I’m not sure where Westerlo sits right now that there’s much of a benefit.”

One of Westerlo’s arrays sits at the intersection of routes 405 and 32, which Kryzak described as an exceptionally scenic area, but said has led to residents’ nicknaming South Westerlo “Solar Westerlo.”

“Giving up beautiful, agricultural land and scenic lands hasn’t made us any friends within the town,” he said. 

The annual PILOT amounts that Westerlo receives for each facility vary, and they increase each year, but altogether, the town is expected to receive a total of just under $512,500 over a 15-year period, according to documents Kryzak shared with The Enterprise and the town’s comprehensive plan. The 2022 budget’s overall expense line, for reference, is just under $3.8 million, with a $1.5 million tax levy. 

Westerlo receives about a third of what the Greenville School District receives.

After the 15 years is up, the PILOT agreements are “renegotiated or terminated depending on the status of the lease agreement with the land-owner hosting the solar array,” Kryzak said, noting that he was going off his memory of the agreements.

The town had also entered into an host community agreement with each of the companies, netting a one-time payment of $15,000 per project, for a total of $75,000 that was earmarked for the town parks. 

Kryzak said that while the town is grateful for the extra funding, it doesn’t add up to a whole lot in the long term, especially compared to what the town would earn from a new residential district, for instance, made up of homeowners “paying their fair share.”

Residential developments require town services whereas agricultural areas typically cost towns less.

“Progress for the sake of progress doesn’t get you anywhere,” Kryzak said. “I think we found out firsthand that we thought we were doing all of these wonderful things, but when everything was said and done, the budget needle didn’t move that much.

“The townspeople aren’t very happy about it. The most scenic parts of town have been turned into an industrial complex. So there’s a balance, and each town needs to find out, depending on the residents’ opinions, what their financial needs are.”


Other towns

Both Guilderland and New Scotland, meanwhile, have opted out of PILOT programs for renewable energy systems entirely, choosing instead to submit renewable energy facilities to the standard tax process, according to officials in those towns. 

In Guilderland, then-Assessor Karen VanWagenen submitted a memo in 2016, arguing that it would be unfair for the town to tax one commercial entity and not another, according to meeting minutes. The motion to opt out was passed in 2017 by a vote of 4-to-1. 

Guilderland Supervisor Peter Barber noted for The Enterprise that the town has entered into only two PILOT agreements, neither to do with renewable energy. 

“Omni Development, a senior facility on Carman Road, had a PILOT nearly 20 years ago,” Barber said. “That PILOT, however, was based on special federal financing rules based on it providing affordable dwelling units. It was extended several years ago. The other PILOT was approved by the Guilderland [Industrial Development Agency] for the Promenade facility in McKownville.  That was several years ago and based on its status as a Medicaid-eligible facility.”

New Scotland passed its opt-out law, by a unanimous vote, in 2017, according to meeting minutes. 

The Enterprise reported in 2018 that New Scotland’s assessor was not factoring residential solar devices into property values, according to Supervisor Douglas LaGrange, but that “when we’re talking a solar farm … A commercial money-making situation, we feel that’s a different animal.”

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