Solar array, downtown midrise seek tax breaks with IDA – The Ithaca Voice

ITHACA, N.Y. — The Tompkins County Industrial Development Agency has a busy agenda planned for Wednesday afternoon’s meeting. The agency will be reviewing applications for a payment in lieu of taxes (PILOT) agreement for a solar array project in the town of Enfield, and begin discussions on sought-after tax breaks for a project on the east side of Downtown Ithaca.

Norbut Solar Farms Enfield Array

First in the discussion will be Norbut Solar Farms’ plan for 15 Megawatt solar array project in the town of Enfield. To put that in perspective, even in Ithaca’s notoriously cloudy climate, 15 MW of the latest and greatest in solar panel technology will be enough to meet the annual power consumption of an estimated 2,400 homes. The Rochester-based energy firm plans to build the $20.1 million array in three separate 5 MW arrays on 157 acres of a 252.54-acre parcel that’s been used for farmland along South Applegate Road south of Mecklenburg Road. Technical note, because each array is seperate, they each have their own IDA application and PILOT agreement.

The state doesn’t collect taxes on solar energy projects, but towns and counties can choose to collect property taxes if they wish. In an effort to encourage the development of renewable energy sources, Tompkins County and most of its towns will entertain PILOT agreement proposals so that sustainable energy developers don’t have to pay the full taxable amount on their site improvements, which would otherwise make the projects prohibitively expensive (Groton tends to be more difficult than the others).

Typically, the IDA’s standard PILOT for solar projects is range of $4,200-$4,800 per megawatt, with a 2% increase in the PILOT each year for 25 years. In this case, Norbut is seeking a financially similar deviation from this policy, where the PILOT payment would be $3,000 per megawatt plus $1,200 per megawatt ($18,000 total) paid directly to the Town of Enfield (so $4,200 total, but split differently). Both amounts would increase 2% per year for 30 years. The town board of Enfield has given their consent to the proposal.

As noted in the memo prepared by Ithaca Area Economic Development’s Heather McDaniel, there is a cost-benefit for existing NYSEG customers in Tompkins County: discounted solar electric rates. “(c)ommercial and residential customers who purchase electricity from NYSEG will be able to purchase “green” solar energy at a discount without investing in their own systems. The combined annual savings on electricity and delivery charges on an estimated mix of 40% residential and 60% commercial customer bills could amount to $80,000-$100,000 a year in savings, or over $2,000,000 over the life of the project.”

The estimated town, county and school district taxes paid on the entire 252-acre parcel last year was $19,682, and without a PILOT the taxes would be $400,000 per year. In this case, the project would pay $45,000 per year in the PILOT, as well as the $18,000 payment to Enfield directly (which is outside the IDA’s review). Since about one-third of the parcel will remain undeveloped, it will not be affected by the PILOT and still pay regular taxes, $7,479 worth. In sum, the new tax revenue generated over what the property pays now will be about $32,000 in year one, plus the $18,000 paid directly to the town.

Although a minor part of the calculation, the site would create 50-70 construction jobs during buildout, and support a handful of part-time jobs after completion – security, snow removal and mowing, and maintenance workers. The project is finishing up environmental review with Enfield’s Planning Board, so if the IDA approves the PILOT, construction on the arrays is planned to begin this fall with completion by the fall of 2022.

McKinley Ithaca LLC (401 East State/Martin Luther King Jr. Street)

Following the discussion on the Enfield solar array, the IDA will next turn its attention to a proposed apartment project currently under review in the city of Ithaca. The planned residential development by McKinley Development calls for a six-story, 301,900 square-foot apartment building with a 267‐space internal parking garage and 353 apartments mixed between studio, 1, 2 and 3‐bedroom units, to be built on what is mostly surface parking on the eastern end of downtown Ithaca. The project includes other site improvements including the extension of the Six Mile Creekwalk to the eastern end of the site, outdoor seating, landscaping, lighting and other site amenities. Potential discrepancy, but city planners told me prior to the last Planning Board meeting that it was 326 units, but there have been major internal revisions as noted in the planning board review last month. It’s always possible larger units have been split and reconfigured, like a three-bedroom into two one-bedroom units.

While parking is not required within the city’s CBD-60 zoning, the Project replaces the existing Gateway Center surface parking (152 spaces) that are being displaced by this Project. The Project also provides 115 parking spaces for residents of the Project, and 122 spaces of the total 267 spaces will be available to the public after business hours.

Atlanta-based McKinley is requesting the mouthful that is the “CIITAP Financial Need / Enhanced Energy Large Multi-Family Project Incentive”. In other words, the project is being designed to achieve the 12 points required under the ‘Easy Path’ compliance path of the 2025 requirements for the City of Ithaca Energy Code Supplement, also known as the “Green Building Policy”. For going above and beyond the current six points required, they can apply for a tax incentive. Points come from feature like air-source heat pumps, low-flow water fixtures, LED lighting, high-efficiency insulation and HVAC systems, and all electrical energy being sourced from an off-site solar array. (You can read in-depth about the plans here). As other developers have noted lately, the application talks about how the price of various construction materials are near or at all-time highs.

McKinley’s plan for complying with the Workforce Housing Policy does not include setting aside low-moderate income units in its building, but instead paying $1,765,000 to the Community Housing Development Fund once construction funding has been secured. The firm states in the application that its market-rate units will be competitive and “below the current high end of the market”.

With an estimated cost of $117,631,108 for the project, the sought tax incentives would save $15,743,029 in property taxes, $2,682,120 in sales tax exemptions on the purchase of construction materials, and $182,328 in exemptions from the mortgage recording tax. Over ten years, it would pay $7,862,152 in new property taxes on top of what the site currently pays. (On a side note, they would also pay Travis Hyde Companies $12,115,000 for acquisition of the project site, and one can’t help but wonder if that would indirectly help the Library Place project resume construction.)

The project would create 100 construction jobs at any one time with a commitment of 35% to local labor, and ten permanent jobs with an average pay of about $41,907 in maintenance and leasing (McKinley is committing to a living wage for all positions), and would open to tenants in August 2023. While the application goes out of its way to call the plans general market-rate housing with no preference in tenants, the rental cycle still revolves around the student population, and about 40% of Downtown Ithaca renters are either Cornell graduate and professional students or a smaller number of Ithaca College students.

Both the Norbut solar array and the McKinley apartments are set as discussion items for this month’s meeting, meaning no vote will be taken on either project until at least June’s IDA meeting. Comments can be submitted to IAED’s Ina Arthur prior to 9 AM Wednesday at inaa@ithacaareaed.org, and if you want to watch, the meeting is scheduled to livestream at 2:30 PM Wednesday.

Source: https://ithacavoice.com/2021/05/solar-array-downtown-midrise-seek-tax-breaks-with-ida/

May 10, 2021 susan ward