A shining opportunity for Refugio County continued its progress this past week.
At a April 13 public hearing in the Refugio County Courthouse, the county’s commissioners court unanimously approved the creation of a reinvestment zone and adoption of tax abatement for AP Solar Holdings LLC. The company is intending to construct a 400-megawatt solar energy plant on the northeast sector of the county, within the boundaries of Austwell-Tivoli ISD.
Discussions for the plant began in 2019, with decisions on abatement needing to be finalized before construction begins in earnest. With the abatement agreement reached, the project can begin building in the second quarter of 2022, with commercial operations tentatively scheduled to begin in the final months of 2023.
Lisa Murphy, Development Director with AP Solar, appeared at the hearing to give more background information for newer commissioners and stakeholders, stating that Refugio County “is an excellent place for a solar project.”
Refugio is part of the statewide push for solar energy, as Texas currently employs over 10,000 solar workers and is ranked fifth in the United States in solar production. Murphy said that solar is a good option for providing power during “peak demand” times during the day, something that has put a strain on Texas power providers. When operational, the Refugio plant will provide more than 65,000 homes with electricity.
“That’s really important with our growing demand here in Texas,” Murphy said.
In her presentation, Murphy stated that the plant is on a 35-year lease with 4,500 acres on private property. The acreage is mostly on large ranches, with AP Solar offering the opportunity to landowners to hold onto the property and earn money from the endeavor.
“It’s been very smooth, and we appreciate the consideration (from the landowners) ... it’s really a win-win,” Murphy said. “It’s a win for us, a win for the county, and a win for the landowner.”
During the construction phase in 2022-23, between 300 and 400 construction workers will be employed within the county, and after completion there will be at least four permanent jobs opened up at the plant.
Per the abatement agreement, the first 10 years of the plant’s 35-year cycle will generate $2.65 million in revenue for the county, executed through a PILOT (payment in lieu of taxes) payment. The payment, explained by Austin-based attorney Robert Bass, is “essentially the equivalent amount the county would have received under a roughly 75 percent abatement over the 10 years of the abatement period.”
The PILOT payment is advantageous to the county due to it being an “average revenue stream,” something that does not factor in depreciation on the plant and its equipment. Without a PILOT payment, the first-year payment to the county would be $475,000, but the final year payment would be in the neighborhood of $102,000. With the payment, the county will have a fixed payment of $265,000 each of the 10 years.
After the 10-year abatement agreement, roughly 80 percent of the plant’s value will be depreciated, leaving the final 20 percent to stay fixed onto the county’s tax rolls for the next 25 years. At the county’s existing tax rates, the plant would provide roughly $400,000 in revenue for each year after abatement, totalling around $10 million in funds.
Austwell-Tivoli ISD will be given an even heftier sum, with estimated gains of $7.7 million through the 10-year period, then another $18.5 million through the next 25 years.
While the abatement is advantageous to the county, it is also a near-requirement for AP Solar, with the Austin-based company thanking the commissioners court for their unanimous approval.
“The first few years, when we’re paying for all the equipment and everything, if we have the abatement of taxes, it helps us to finance a project,” Murphy said. “It makes it more marketable, more attractive to finance ... it’s really difficult to finance without the tax incentives.”
Other standard provisions in the abatement contract include remedies in the case of default, with the county recouping abated taxes if the plant project does not come to completion. Another provision given is a one-time extension on the project, which would allow construction to go into 2024, something that is not anticipated.
For more information on AP Solar and its team, visit www.apsolarholdings.com.