UPDATE: Board Of Supervisors Holds Off On 'Sun Tax'

6/28 UPDATE: For the time being, solar energy companies planning projects in Riverside County will not have to pay a development fee critics derided as a "sun tax,'' with the Board of Supervisors deciding in an hours-long meeting today that further study was needed to determine what a reasonable future fee should be.

"We need to pause and go back and work on this policy,'' said Supervisor Marion Ashley. "I think we're very close to arriving at a fair, competitive fee.''

At the board's direction, the county Executive Office had proposed a policy that would require solar power generators to pay the county 2 percent of their gross annual receipts as compensation for operations located within the county, the eastern half of which is federally recognized as the "largest solar energy zone in California,'' with 202,000 acres of productive space extending from Desert Center to the Arizona border.

According to Executive Office documents, 118,000 acres are already slated for development by 18 firms, covering a 185-square-mile area equal in size to Cathedral City, Indio, Palm Desert, Palm Springs and Rancho Mirage combined.

Two companies on the threshold of building solar farms near Blythe -- Oakland-based Solar Millenium Group and Tempe-based First Solar Corp. --
ardently opposed the fee proposal. Representatives from each firm argued that the cost burden would be too great.

Over a four-hour period, more than four dozen people addressed the board about the prospective fee. The vast majority of speakers were against it.

Larry McLaughlin, director of the College of the Desert's Advanced Transportation Technology & Energy Program,  emphasized that graduates were desperately seeking renewable energy jobs and the county's timing couldn't have been worse.

"We're anxious for these solar projects to get under way,'' McLaughlin told the board. "These projects are moving forward on paper-thin margins. How many jobs are going to be scared away by fees like this?''

Supervisor John Benoit, in whose district the solar arrays will be located, said the issue boiled down to whether "local governments should receive some long-term compensation for the unavoidable impacts of these projects?''

"We're talking about massive seas of (radiation-absorbing) mirrors, towers and troughs within view of the (10) freeway,'' Benoit said. "Shouldn't citizens be compensated for the long-term impacts?''

The Executive Office pointed out that county roads would endure more wear and tear as the solar power facilities are constructed and demands for medical, fire and police services would increase.

According to the county Transportation and Land Management Agency, the county's property tax gains from the projects would be modest, at best, because
the state allows for numerous tax exemptions on solar equipment.

The agency also questioned the long-term employment benefits, given that job gains are generally linked to construction, after which "few long-term jobs will remain'' because most plants are automated.

According to the Executive Office, the county has utilized franchise and development agreements as a condition to granting right-of-way and land-use permits to traditional energy providers for a century, citing its 1913 agreement with Southern California Edison as an example. SCE and other electricity franchisees in the county pay 2 percent of gross annual receipts, county officials said.

Union representatives slammed the tax proposal, arguing the solar projects were essential to boosting employment locally.

Lawyers for First Solar challenged the constitutionality of the proposed 2 percent fee, saying that passage of Proposition 26 in November prohibits any new assessments by local governing boards without a two-thirds approval from voters.

Lawyers further questioned the validity of a levy when the solar companies, unlike conventional energy firms, would not be providing power directly to residents, but rather selling the wattage to distributors such as SCE.

The supervisors repeatedly cited the impact of solar farms on the pristine -- and thinly populated -- desert area stretching between Desert Center and Blythe as a basis for imposing development fees.

However, Supervisor Jeff Stone said the impact needed to be weighed against the need to encourage business development in the eastern county region, where the unemployment rate averages over 20 percent.

"One thing is clear -- we need these jobs,'' Stone said. "We should be mitigating impacts, but I can't support a flat 2 percent fee. We need something equitable and reasonable that will encourage businesses to come to Riverside County.''

The Solar Millenium project is expected to create around 1,000 construction jobs.

With a majority of supervisors unwilling to support a 2 percent fee, Supervisor John Benoit proposed a detailed study by the Executive Office to ascertain what other counties and states are charging solar companies for mitigation. The board will consider a possible new rate at its Aug. 16 meeting.

Supervisors voted to exclude Solar Millenium from any fees because the company was in the "11th hour'' leading up to construction of its 7,000-acre project. However, the board voted to initiate negotiations with First Solar over an appropriate amount to be paid for mitigation. A vote on that is slated for July 12. --City News Service

ORIGINAL POST 6/28: Solar energy companies planning to build plants in Riverside County may have to pay more than they bargained for if the Board of Supervisors today approves the imposition of a development fee that critics derisively call a "sun tax.''

The board will consider requiring solar power developers to pay the county 2 percent of gross annual receipts generated from the operation of a power station.

According to Executive Office documents, Riverside County is federally recognized as the "largest solar energy zone in California,'' with 202,000 acres of productive space extending from Desert Center to the Arizona state line. The documents state that 118,000 acres are already slated for development, covering a 185-square-mile area nearly equal in size to Cathedral City, Indio, Palm Desert, Palm Springs and Rancho Mirage combined.

"Riverside County and its residents must be compensated for the unavoidable adverse impacts of these massive solar developments within our borders,'' a preface to the tax proposal reads. "Miles of (solar radiation absorbing) mirrors ... will alter the historic landscape for decades. Hundreds of thousands of acres ... will no longer be available for other uses important to our economy, such as recreation and agriculture.

"In addition, county roads, bridges and flood control facilities will endure additional wear and tear as a direct result of building and maintaining these plants. These projects also will permanently increase demand on county services, such as emergency services, medical services, property assessment and law enforcement.''

The Executive Office acknowledged the benefits of renewable power projects, particularly in boosting local employment. But according to county officials, the job gains are generally linked to construction, after which "few long-term jobs will remain'' because most plants are automated.

Officials also refuted claims that the county would realize higher property tax receipts stemming from photovoltaic plants, which are exempt under state law from paying taxes on energy generation facilities and equipment.

According to the Executive Office, the county has utilized franchise and development agreements as a condition to granting land-use permits to traditional energy providers for a century, citing its 1913 agreement with Southern California Edison as an example. SCE and other electricity franchisees in the county currently pay 2 percent of gross annual receipts arising from their local operations, county officials said.

Several groups blasted the county's proposed new tax policy, including the Blythe City Council, which, in a symbolic gesture, voted unanimously last Tuesday to oppose it. In a letter to county Executive Officer Bill Luna, Blythe City Manager David Lane expressed concerns about the impact the tax might have on a mammoth solar development planned on federal land just northwest of the airport. Oakland-based Solar Millenium Group is in the initial phase of constructing the 1,000-megawatt solar power facility, and last week, Gov. Jerry Brown and U.S. Interior Secretary Ken Salazar lauded the project at a groundbreaking ceremony.

"The council is concerned with the potential that the new (county) policy may result in Solar Millenium canceling the project and moving it elsewhere,'' Lane said.

Patrick Swarthout, president of the Imperial Valley-based Valley Action Group, called the county plan a "sun tax'' that would make the area "anti- competitive,'' threatening "tens of millions of dollars of direct tax revenue to the county and hundreds of millions of dollars of secondary economic benefit.''

"Other jurisdictions offer open space, abundant sunshine and no similar tax,'' Swarthout said. "Make no mistake about it -- Riverside County is competing with other counties and states.''

Coachella Valley Economic Partnership President Thomas Flavin said the potential consequences of establishing a tax need further review before the board votes.

"CVEP has emphasized the importance of improving our competitive profile if we expect to successfully compete for jobs and investment,'' Flavin said in a letter to Luna. "Since Riverside County has always had a good reputation among California government agencies as `business-friendly,' we want to ensure that we maintain and enhance that reputation.'' --City News Service