OLEAN — The Cattaraugus County Industrial Development Agency board voted Tuesday to notify city, school and county officials of a roughly $40,000-a-year payment in lieu of taxes (P.I.L.O.T.) agreement for three Olean solar farms.

The IDA board voted June 15 at the Olean Business Development Corp. building to use the value of $5,000 per megawatt as proposed deviation in its standard wind P.I.L.O.T. Initially, B.Q. Energy LLC of Poughkeepsie had sought a P.I.L.O.T. based on $2,500 per megawatt.

The IDA is expected to settle agreement terms by September between the energy company and municipal groups.

Under the P.I.L.O.T. deviation the IDA is considering, the 8.8-megawatts of solar generating power the city, school district and county would share just over $40,000 a year over 15 years. There is also an annual host fee to the city of $50,000 to $55,000 beside the energy savings. The city, school district and county would still receive about $500,000 in property taxes in 2018. The school should receive its first installment in September, and the county and city in January.

“They are going to have to pay the taxes for a year,” said IDA attorney George Gregg.

Steel Winds LLC has built two of the solar farms using thousands of solar panels on brownfield areas off Buffalo Street in Olean — Solean and Solean West

The two projects are designed to save St. Bonaventure University $283,000 in energy costs a year, or $7.3 million over 25 years and Olean General Hospital $40,000 a year, or $1 million over 20 years.

A third project, Homeridae, located on Homer Street, has not been constructed yet. It is designed to save the City of Olean $125,000 a year, or $3.2 million over 25 years.

Acting Chairman Joseph Higgins said the resolution was just informing the taxing entities of the deviation in the IDA’s standard P.I.L.O.T., and not one based on the wind P.I.L.O.T., developed several years ago when a wind farm was being proposed in the town of Allegany.

An unexpectedly high assessment by the Olean Assessor’s Office on May 1 — $10 million for the two existing solar installations — caught BQ Energy officials by surprise. The company thought the county, city and school district had opted out of Section 487 of the Real Property Law. But that was not the case.

BQ Energy has filed an Article 7 action against the city of Olean after having lost an appeal of the $10 million assessment of the first two sites. The company contends that since the solar panels are sitting on top of the ground because of their position atop a brownfield, they are not taxable.

If a taxing authority has not opted out of Section 487, the solar or wind project would be tax exempt. By seeking a P.I.L.O.T., even though two of the solar farms are installed but not yet operational, BQ Energy’s will become tax exempt at the next taxable status day in March 2018.

BQ Energy will continue paying property taxes on the property the solar panels sit on, which is assessed at $400,000.

Company officials said that taxing the solar farms at the rate set by the Olean Assessor’s Office is not sustainable. They have hinted that the thousands of solar panels already installed could be relocated from the sites. This would leave St. Bonaventure, Olean General and the city without millions of savings in electrical costs over the next 25 years.

IN OTHER NEWS:

  • Corey Wiktor, the IDA executive director, said work at the Olean Gateway retail project off Buffalo Street could begin soon after utilities are connected beneath the intersection.
  • After several delays, construction of the retail component of the project could get underway by this fall. The 100-room hotel on the site could get under construction next year.
  • Wiktor said the senior assisted living facility, Field of Dreams on Seventh Street in Allegany, is expected to undergo a redesign after the first architectural drawings exceeded the $17 million set aside for the project.
  • Wiktor also reported an undisclosed business has Cattaraugus County on “a short list” of candidate sites for a 200,000 square-foot building to include warehousing and distribution and some light manufacturing.

(Contact reporter Rick Miller at rmiller@oleantimesherald.com. Follow him on Twitter, @RMillerOTH)

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