What areSolarPILOTAgreements

APILOTisaPaymentInLieuOfTaxes madetocompensatetheCityfor
tax revenuethatitlosesorcannotobtainbecauseofthenatureofthe
ownershiporuseofaparticularpieceofrealproperty.
Inthecaseofsolarfarms,aPILOTallowstheCitytoreceiveadditional
income onlandwhichotherwisewouldprovidelesstaxes.

VerylowTaxIncomeReceived

SomePILOTIncomeReceived

Where areSolarPILOTsoptimal?
Wherethereisasignificantchancethatthelandfortheproposedprojectisunlikelytodrawnew
developmentintheyearsaheadduetomarketconditions,landform,contamination,
undesirabilityofnewdevelopmentorotherfactors.
PILOTsinthesecasespresentthebestchancetoincreaseincome onlandthatotherwisewould
remainunproductivefortaxationpurposes.

vs

LowDevelopmentPotential
(oddshape,neighborhood)

HighDevelopmentPotential
(Industrialcorridor,goodshapeandaccess)

Realpropertyv.PersonalProperty
Realpropertytax(landandanyimprovements)ispaidbythe
PropertyOwnerperParagraph2ofthePILOTAgreement.
PersonalpropertytaxorthePILOTispaidbythesystemowner.
Useofthelandforasolarprojectisclassifiedascommercialbythe
Assessorsforrealestatetaxpurposes.
AsaresultoftheCityssplittaxrate,theremaybeanincreaseinreal
estatetaxesreceivedbytheCityifthepropertywasformerly
classifiedasresidentialorexempt.Thiswouldnotbethecaseina
communitythathasasingletaxrate.

Why dosolarfarmsrequireaPILOT?
Onlyprojectsthatsell
electricityto3rd parties
(i.e.,HG&E)aresubjectto
tax.
Asolarprojectfacinga
largepersonalpropertytax
costisnotlikelyto
proceed.
ThePILOTallowsforthe
projecttobecome
financiallyviable.
ThePILOTalsoallowsthe
Citytogetahigherincome
streamthanwhatit
receivesonthelandnow
intheabsenceofthesolar
farm,andinthefuturehad
itoptedfortheproperty
taxoption.

How doestheSolarPILOTwork?
Byinstalledcapacity
NOTreflectiveofactualproduction,hencestaysfixedoverthe20yrterm

Providespredictabilitytotheprocess
Developerstakeaccelerateddepreciationofentirefacility,underFederal
rules,overaroughly5to6.5yrterm,hencethePILOTallowsspreadingouta
fixedrevenuestreamoveralongertimeperiod(priorgraphhighlightsthis)

LowerinHolyokeduetoPPA(PowerPurchaseAgreement)compensation,lowprices
Allowsforwholesaleenergypricingatorbelowalternativeenergy(i.e.,fossilfuels)
AvoidsanycostpremiumforHG&Es ratepayerswhichhigherretailtypePPArates
wouldrequireifahigherPILOTwasutilized

Who isinvolvedinthePILOT?
Company,HG&E,Assessors,LawDepartment,Planning,Mayor,City
Council
HolyokeCityCouncilMeeting4/15/14ReportsofCommittees:
15D. TheCommitteeonFinancetowhomwasreferredanorderOrderedthattheAssessorsand
representativesoftheHolyokeGasandElectricmeetwiththeCityCounciltodiscusstheG&E
proposedPILOTagreementforsolarprojectsintheCitytoensurethattheseagreementsare
structuredinamannerthatisprudentandinthefinancialbest interestofthetaxpayersofthe
City. Recommendthattheorderhasbeencompliedwith

What SolarPILOTSexistinHolyoketoday?
ConstellationEnergy MuellerRdCOD11/27/11(HG&Egasproductionfacilitysite)
3496kWDCsize $17,480/yrfromPILOT(InterdepartmentalAgreement9/17/12)

ConstellationEnergy MeadowStCOD1/3/12(HG&Eproperty,SpringdaleIndustrialPark)
1028kWDCsize $5,140/yrfromPILOT(InterdepartmentalAgreement9/17/12)

CitizensEnergy CountyRdCOD2/5/13(ClearChannelproperty)
799.5kWDCsize $3,997.50/yrPILOT(CityCouncilapproval11/15/11)

CTEC/HPP GarfieldStCOD10/8/15(RICARproperty,SpringdaleIndustrialPark)
997kWDCsize $4,985/yrPILOT(CityCouncilapproval4/21/15)
AllHolyokesolarPILOTs arebasedon$5,000perMWDCfixedfor20yrs(equivalentto$5perkW
DC)

Why is$5,000/MWdcfair&reasonable?
Reflectsmarketvalueoverterm
PILOTrepresentsaround0.5centsperkWhproducedfromsystem
Wholesaleenergyratesarecurrentlyaround4centsperkWh,while5yearsagotheywere
around6centsperkWh
Totalsystemcostshavedeclinedbyafactorof2overthepast5yrs
SRECincentivesdesignedbytheState,however,havedeclinedovertimetomaintainan
equilibriumontheoveralleconomicsofsolarfacilities
FewdevelopersareableorinterestedinsellingoutputfromsolarfacilitiesinHolyokesinceHG&E
paysonly4to6centsperkWh(wholesale);whilemostotherlocationsareoffsettingvianet
meteringatfullretailratesinthe12to18centsperkWh(retail)range(latternotsustainablewithoutever
increasingcostsubsidies/surcharges)

Hence,ifHolyokecanreceive$5,000/MWdcunderPILOT,itallowsi)3rd partiestoobtainvaluefortheirreal
estate,roofs,parkinglots,etc.,ii)HG&Earateatorbelowwholesalemarketpricing,andiii)solardevelopers
sufficientminimumfundstobuild&operateproject.
WithanymovementnorthonPILOT,thereisinsufficientrevenues fromtheprojecttomaintaintheother3
components.

Where isanumberdifferentthanHolyokesfairandreasonable?
$0/MWdc incommunitiesthathaveNetMeteringCreditPurchaseAgreementsin
placewhereallbenefitsgotowardsdiscounttoretail rateforCity/Town
$2,0005,000/MWdc wherewholesale ratesarerequiredbutthesolaroverallcosts
arehigherduetolandtopography,roofcondition,etc.
$5,00010,000/MWdc wherewholesale ratesarerequiredbutthesolaroverallcosts
arelowerduetypicallytopropertybeingleaseddirectlyfromCity/Townorplacedon
otherwisetaxexemptproperties
$7,00023,000/MWdc whereretail ratesarerequiredwithpurchaserbeingeithera
privateand/ormunicipalenduser
$100,000+/MWdc Fullpersonalpropertytaxassessmentstartingpointthatthen
declinesovertimebasedoncurrentvaluations donewhenthePrivateUtilities
constructprojects(Eversource,Ngrid,Unitil)astheyjustcreateaNetMetering
SurchargeandchargetheircustomersperDPUrulesfortheexcess