Belchertown driving range turned solar farm to be moneymaker for all involved



Last modified: Monday, June 09, 2014

BELCHERTOWN — When Barbara and Richard Greene decided to turn the driving range next to their mini-golf course on Route 9 into a 1.5-megawatt solar farm, they not only created an income stream for their retirement but they added significantly to the town’s tax base.

Belchertown was collecting about $400 a year in taxes on the driving range but will be getting about $25,000 on the solar facility, according to town assessor, John Whelihan. The figure is based on a tax agreement negotiated with Nexamp, a solar power developer with offices in Boston and North Andover and the property’s increased assessed value.

Under the 20-year agreement, Nexamp will pay the town $20,500 in the current fiscal year with an annual 2 percent increase. Over the life of the agreement, which can be extended, the total tax benefit to the town will be $528,557, according to Whelihan.

That does not include the higher real estate taxes the town will collect on the property. As a driving range, the 11.3-acre parcel was classified as recreational and was valued at $22,100, said Whelihan. Now the land is assessed at $281,500. At a tax rate of $17.72 per thousand dollars of valuation, that translates into an annual tax bill just shy of $5,000.

Greene declined to disclose how much Nexamp is paying the couple to lease their land, saying it was a private business transaction. The amount of electricity Nexamp expects to generate can power 120 homes, she said.

She and her husband made their decision not by comparing how much they could earn from the driving range this year compared to what Nexamp will pay them, but based on the security of having a steady income as they get older, said Greene,

“It’s not so much what’s more profitable right now, it’s the longevity of our lease,” said Greene. She is 62 and her husband is 66 and they are looking toward their retirement. “We put it on the scale and said, ‘Let’s see, mow the lawn once a week and pick up golf balls every day or let it sit there as a leased piece of land?’ Hello?”

The fact that the town will also derive what Greene called “some serious tax dollars” on the project made it even sweeter. “It’s a win-win for everybody,” said Greene.

She and her husband will continue to operate the Evergreene Mini-Golf facility at the same location on 80 Ware Road.

Pioneer efforts

The solar farm, which has been in planning and construction for three years, will be the second solar power plant with a larger than 1-megawatt capacity in Hampshire County when it goes on line in mid-June. A 2.3-megawatt facility operates at the Easthampton landfill.

Whelihan said the state allows municipalities and solar power developers to negotiate tax agreements that build in predictability as part of a pilot program to encourage new sources of green energy. The Belchertown Select Board appointed him and town administrator Gary Brougham to hammer out the deal.

The agreement in place between Belchertown and Nexamp is based on payments of $13,400 per megawatt that the plant is expected to generate. The actual output might vary depending on the amount of sunshine in a year. If Nexamp upgrades its panels, the tax payments will go up at the same rate based on the higher capacity, according to the agreement. But in no event, other than those resulting from what the contract calls “acts of God,” such as a storm that destroys the hardware, will the payments to the town decrease or stop.

Nexamp CEO Zaid Ashai said his company is able to enter into these agreements because the technology is mature and anticipated revenue is fairly predictable. He would not say how much Nexamp sells the electricity for, saying the price is derived through a private negotiation with its customers.

Owners of installations like these have two revenue sources. One is the money they can charge so-called “off-takers,” or entities that purchase electricity from the grid. The other is from selling Solar Renewable Energy Certificates to utility companies, the price of which fluctuate based on supply and demand. Utilities are required by the state to either produce more renewable energy each year or to purchase certificates to show they are meeting mandated levels.

Ashai said the solar panels his company is installing have a life span of at least 20 years and probably longer.

“It’s a very stable technology,” he said. “We have power plants that were built in the Carter administration that are working at high efficiency.”

Ashai expects new designs for solar panels to improve in the years ahead, but not necessarily by enough to warrant scuttling older equipment. He likened the panels to a laptop computer that will not be as fast as one you can buy five years from now, “but that doesn’t mean that the previous model is obsolete by any measure.”

Ashai also said the maintenance costs for the solar panels are “pretty minimal.” Long-term tax agreements with municipalities benefit both sides, he said. “It gives certainty to the town in terms of tax revenue and it gives us certainty when we build these projects.”

Finding a fair figure

Whelihan said revenue to communities in Hampden County that have negotiated deals with a developer have varied widely. Up until a few years ago agreements usually built in tax payments of between $4,000 and $8,000 per megawatt of capacity.

Whelihan faults the state for not giving local governments more information sooner. “Some of the earlier tax agreements weren’t done with any expertise on the appraisal end,” he said.

In February 2013 the state Department of Revenue held a workshop to help municipal governments better understand the value of solar installations. Since then, Whelihan said, tax agreements in western Massachusetts usually guarantee communities payments based on between $12,000 and $20,000 per megawatt capacity.

“These projects have been coming on line for a couple of years but the workshops just happened last year,” said Whelihan.

Talks between Nexamp and Belchertown “went very smoothly,” said Whelihan. “It was a quick negotiation within the range we thought was fair to the taxpayer of Belchertown and to the company” given the risks it is taking.

“That’s why these tax agreements are allowable. No one knows what the solar industry is going to be five years or 20 years down the road,” said Whelihan. “There are so many uncertainties.”

A benefit to the town is that solar plants place a minimal burden on town services, said Whelihan.

Carrie Cullen Hitt, a senior vice president with the Solar Energy Industry Association, said her group is concerned that local taxes on solar installations in Massachusetts may be getting too high. “There may have been a few that were low, but unfortunately from our view the pendulum has swung too far the other way,” she said.

Some of the price guidelines the Massachusetts Department of Revenue gave municipalities “were somewhat misinformed,” said Cullen Hitt. As a result, she said, solar energy in Massachusetts is being taxed at a higher rate than hydroelectric power. “Why solar is getting taxed more than other energy sources is a little strange to people.”

Another in the pipeline

At the annual Town Meeting last month, voters approved a tax agreement for what may become the second solar generating plant in Belchertown. If the deal goes through, Kirt Mayland, owner of Housatonic Solar, a company in Avon, Connecticut, would build a 1.2 megawatt facility on industrial land off Old Springfield Road. He has a purchase-and-sale agreement in place for the land, which he plans to act on pending approval from the Planning Board and the Conservation Commission.

The agreement he reached with the town is similar to the one for the plant on the Greenes’ property.

“I think it’s fair. That’s what you are seeing around the state,” said Mayland, even though he expects his site to be less profitable then the one Nexamp constructed.

Mayland hopes to start building his solar array in August and to have it operating in October.

Town planner Douglas Albertson sees the arrival of solar generating plants in Belchertown as beneficial as long as they are put in appropriate locations.

“We are trying to encourage them, but we’d like to see them integrated more with buildings and parking lots,” he said. “I think we’ll probably see some more as long as the energy credits and the state tax and federal incentives are available,” said Albertson. “We are more than happy to have these things, not just for the taxes but to generate some energy.”

Barbara Greene said several solar developers approached her and her husband before they decided to lease their land to Nexamp.

“We have the ideal situation for what they need for solar,” said Greene. “We have southern exposure and by being on Route 9 we are near to the grid, requiring minimal wiring costs. You are not going to put something like this in the middle of the boondocks.”

They built the driving range in 2003 as a business they could operate while in retirement. “Then the plan changed slightly and we came up with this solar farm as a way to satisfy a lot of needs for us and the town,” said Greene. “Solar energy is right now the way of the green-energy world.”




 


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