“Chapter 313” is an economic development program within the tax code, trading taxable property value for promised job creation. It’s a decade-long tool provided to school districts intended to attract jobs to their districts.
The project’s parent companies — Austin-based High Road Clean Energy and Virginia-based Apex Clean Energy — and Troy ISD applied for the Chapter 313 process last year with the Texas Comptroller of Public Accounts.
A 3,000-acre plot of land, Big Elm Solar plans to install 18-foot-tall solar panels on 1,400 acres and leave the rest undeveloped. The project is estimated to have a generation capacity of 200 megawatts (MW) per year — 1 MW can power between 200 and 500 homes depending on the time of day. Per the contract, it must be operational by March 2022.
Those 3,000 acres were appraised at $155 million by the comptroller’s office.
The company is seeking a $135 million reduction in its appraised value for the school district’s Maintenance & Operations rate in exchange for promising the creation of a singular job.
The program requires a job creation minimum of 25 jobs in non-rural ISDs and 10 jobs in rural districts. To circumvent that requirement, the Big Elm Solar developers requested that the job creation standard be waived.
The company further estimates the project will support a few hundred construction jobs during development and intends to hire two or three full-time positions once it is operational.
In a heated public meeting before the Bell County Commissioners Court, the project’s developers suggested it would generate $195 million of various investments in the community. According to the proposal, without the abatement, the ISD would bring in $11.8 million in property tax collections and $3.6 million with it. The commissioners court awarded an abatement to the project under the Chapter 312 program allotted to cities and counties.
Proponents argue that without the abatement the project would move elsewhere while opponents are mixed in their opposition between landowners whose property would be directly or indirectly affected by the project or those concerned with doling out incentives on the taxpayer’s dime.
A 2017 study by the University of Texas found that between 85 percent and 95 percent of the program’s beneficiaries would have relocated to Texas with or without the abatement. According to numbers from the comptroller, beneficiaries have generally created more jobs than they promised originally.
Strict advocates of renewable energy more broadly tout the switch from thermal generation to “cleaner” forms of generation like wind and solar. However, mining the rare earth material needed to construct wind and solar generators is a highly intensive process and, thanks to strict domestic regulations, is concentrated in far less prosperous parts of the world.
Not all renewable advocates are of the same mind on fossil fuel replacement. The more dogmatic proponents wish to throw off entirely the use of thermal generation while others want to see more diversification. But governments — federal, state, and local — have all prioritized renewable generation through a mix of those motivations.
Over $15 billion in existing 313 abatements have been divvied out to companies of all qualifying kinds across Texas. Just over half belong to renewable energy companies while “manufacturing” companies, within which thermal energy companies fall, receive 47 percent of the total.
Renewable energy companies not only benefit from state incentives but are also rewarded handsomely by the federal government through the Production Tax Credit (PTC). The PTC provides financial grants to renewable generators per kilowatt-hour they produce. That program was extended for a year by Congress in December of last year at 60 percent its previous amount.
Last decade, total federal subsidies for renewable companies were 33 percent more than federal subsidies given to oil and gas, nuclear, and coal companies combined.
The combination of subsidies, both federal and state, often allows renewable generators to break even on their investments by selling their commodity, electricity, at negative prices.
After a lengthy and nail-biting fight, the legislature neither passed a proposed massive expansion of the project, nor a more limited two-year renewal. Some lawmakers have called for its renewal to be added to a special session agenda, but Governor Greg Abbott has yet to abide that request.
Despite the program’s looming sunset, local officials in Bell County will consider the Big Elm Solar proposal in a meeting Monday night.
Update: The Troy ISD board of trustees voted down the solar project abatement proposal Monday night. It failed by a vote of six to one. Parent company of the Big Elm Solar project, Apex Clean Energy, sent The Texan the following statement on the vote’s result: “We share our local landowners’ disappointment in this decision, which has significant economic implications for the project. We are currently evaluating our options for proceeding with the project. Big Elm Solar has been approved to receive a 312 abatement from Bell County. This decision by Troy ISD could eliminate opportunities for local private landowners and the county at-large, including over $36 million in tax payments to Bell County and Troy ISD.”
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Brad Johnson is an Ohio native who graduated from the University of Cincinnati in 2017. He is an avid sports fan who most enjoys watching his favorite teams continue their title drought throughout his cognizant lifetime. In his free time, you may find Brad quoting Monty Python productions and trying to calculate the airspeed velocity of an unladen swallow.