RICHMOND — The Town Council has asked Town Solicitor Karen Ellsworth to draft an ordinance that would give the developer of the town’s first solar energy project a substantial tax reduction.
Richmond Solar LLC’s proposed project, approved by the Planning Board in May, would consist of 1,660 photovoltaic panels to be installed on 4.4 acres of a 6.8-acre parcel on Stilson Road near Interstate 95. The panels would generate about 600,000 kilowatt hours of electricity per year, enough to power 100 homes.
Richmond Solar already has a 15-year contract to sell the power to National Grid, and said it intends to begin construction in the fall.
The land is leased from John Aiello Jr. of North Providence, the managing partner of Richmond Realty Associates, which also owns the 550-acre Richmond Commons development.
At the July 15 council meeting, project developer Palmer Moore proposed a tax stabilization plan in which his company would pay the town a fixed $3,000 per year for 15 years on its $1.5 million in equipment or tangible assets. Taxes on those assets would normally be about $29,000 per year.
The deal would apply only to equipment. Richmond Solar would continue to pay property taxes at the town’s regular rate of $19.76 per $1,000 of assessed value, or $4,500 per year at the current rate.
Legislation passed in June expands Rhode Island’s “distributed generation” program to encourage the development of renewable energy, locking in long-term contracts for solar power with National Grid and enabling municipalities to offer tax breaks to solar energy developers.
Palmer’s attorney, Anthony Gallone, said, “The Rhode Island legislature deemed renewable energy so important that they passed a special statute just dealing with renewable energy projects, allowing municipalities to exempt them from taxation. For this specific reason, knowing that the upfront costs on these solar energy projects are so prohibitive, cities and towns need to do something as far as ordinances are concerned in order to attract renewable energy projects to their communities.”
Moore explained told the council that “it’s critical for us to be able to identify variables like taxes to get an investor to come on board with us and make this project real. That’s the only way these projects can happen, because they take an awful lot of money upfront and the rates of return are not very much.”
Council Vice President Henry Oppenheimer summed up Moore’s request.
“Fundamentally, in terms of the equipment, he’s asking for 90 percent off,” he said.
Council President B. Joseph Reddish pointed out that the project will not use municipal services or facilities and will be an asset to the town.
“We get a project in town that’s progressive, that generates renewable energy, and we get $3,000 more in taxes without a whole lot of effort,” he said.
Several residents said they supported the proposed tax break, but one, Dick Millar, said he wasn’t convinced.
“I have seriously mixed feelings on that. If I was going to go into a project like this, I think I would work out the figures. Why should we suffer because their costs are high?” he asked.
Oppenheimer said the town could choose to pass an ordinance granting the tax stabilization, or risk losing the project, and $3,000 a year. “If we just say no, they will not build it, because the economics of it, in the present market, they’re not going to break even on it,” he said.
Council members voted unanimously to draft an ordinance allowing the tax deal, and present it to residents for their approval at a public hearing.