How will newly enacted Senate Bill 232 impact renewable energy across Ohio?

[William A. Spratley]

News accounts of the Ohio General Assembly's week's bi-partisan enactment of SB 232, also incorporating SB 223 are appearing statewide.  Governor Ted Strickland called for legislative action on wind farm taxation in his State of the State in January and applauded enactment of SB 223.

 

You can read SB 223 and the legislative history with bill analysis and fiscal impacts at:
www.legislature.state.oh.us/bills.cfm?ID=128_SB_232

 

Green Energy Ohio News Magazine will provide an overview of this new legislation by Dale Arnold, GEO Board Member and Energy Manager for the Ohio Farm Bureau Federation.

 

In addition to continuing news stories, see the Bricker & Eckler summary of the SB 223 below.

 

 

June 4, 2010l Ohio General Assembly Passes Renewable and Advanced Energy Jobs Bill with Large Bipartisan Majorities Wind, Solar Industries Celebrate Legislative Victory in SB 232 Tax Reform   In the early morning hours of June 4, 2010, the Ohio General Assembly enacted Senate Bill 232 (SB 232) sponsored by Senator Chris Widener (R-Springfield) to reform the tax code for renewable and advanced energy generators utilizing technologies such as wind, solar, co-generation and clean coal. The bill now heads to Governor Strickland's desk for signature. As the Governor had enthusiastically called for these reforms in his State of the State address in January 2010, his signature is virtually certain.  Because the bill contains an "emergency clause," it will then become effective immediately. SB 232 is considered a major step forward for Ohio's advanced energy economy, according to Terrence O'Donnell of Bricker & Eckler, who advocated for the bill on behalf of the renewable energy industry. Supporters say SB 232 will help jumpstart the growth of Ohio's advanced energy economy. It exempts qualified projects--including all of the renewable technologies as defined in Ohio's renewable portfolio standard, plus clean coal, co-generation and advanced nuclear technology--from tangible personal property taxes and real property taxes if built between now and the end of 2011. (After such time, the tax treatment will sunset unless extended). Such projects would instead make a payment in lieu of taxes (PILOT) to local authorities in amounts specified below.  Under the bill, the effective tax rates for eligible projects will drop from approximately $100,000 to $7,000 (the PILOT) per megawatt of energy generation from a solar facility, and from approximately $40,000 to no more than $9,000 (the PILOT) per megawatt of generation from a wind facility. Importantly, projects of 5 MW and greater would need approval from the local county commissioners in order for the tax exemption to take effect. Projects also need to meet a number of additional criteria specified in the bill, including creation of a certain percentage of Ohio jobs. Projects with a nameplate capacity of less than 250 kilowatts are permanently exempt from personal property taxation.  PACE In addition, the bill also incorporates Senate Bill 223, sponsored by Senator Jimmy Stewart (R-Albany). The bill expands the availability of municipal special improvement district financing (SID), currently only available for solar projects, to include other renewable and advanced energy projects. Under SID financing, also known as Property Assessed Clean Energy (PACE) financing, a municipality or township may levy a special assessment on the real estate tax bill on any consenting, participating property owner that may last for up to 30 years. Assessment revenue may be used to cover the costs of renewable and advanced energy projects. This financing mechanism generally allows for borrowing at significantly reduced interest rates. SB 232 expands eligible technologies to now include solar photovoltaic, solar thermal energy, wind energy, geothermal energy, gasification, biomass, and energy efficiency technologies. SB 232 passed the Ohio House by a vote of 91 to 7, and was later endorsed by the Ohio Senate by a vote of 27 to 5. Key House of Representatives supporters included Representatives Tom Letson (D-Warren) and Roland Winburn (D-Dayton).

 

 

 

[William A. Spratley]

One impact of SB 232 (and HB 1 earlier) was discussed in the August 5, 2010, "Ohio Energy SIDS & PACE Financing" presentations at the GEO Central Ohio Clean Energy Network Meeting in Columbus, Ohio.
Attended by 70 people, this GEO meeting featured an in-depth look at the recently enacted Ohio Senate Bill 232 (SB 232) as a major expansion of Property Assessed Clean Energy (PACE) renewable and advanced energy financing authority in Ohio. A second presentation discussed the federal actions blocking state PACE programs and remedial legislation in Congress and pending lawsuits. Downloads of the speaker presentations are below and an audio podcast of the meeting is coming soon.

Caleb Bell, attorney in the Public Finance and Green Strategies groups at Bricker & Eckler LLP discussed how PACE programs permit owners (including residential, commercial, industrial, non-profit, and governmental owners) of real property to form Special Energy Improvement districts (Energy SIDs). Energy SIDs can assist in financing advanced and renewable energy projects using special assessment financing tools previously available to only governmentally-owned projects. Download Caleb Bell presention [CLICK HERE]. Learn more on Ohio SIDS & PACE issues at on B & E website [CLICK HERE] and Ohio Green Strategies Blog [CLICK HERE].

Mary Cunningham of Renewable Concepts & Design presented an overview of the naiontal adoption of PACE Districts and current federal bills and state litigation relating to the July 6, 2010 action of federal financing regulators (Fannie Mae, Freddie Mac, and OCC). Download Mary Cunningham presentation [CLICK HERE]. Learn about national and state PACE issues at: PACE NOW [CLICK HERE]; Vote Solar [CLICK HERE]; ICLEI-Local Governments for Sustainability USA [CLICK HERE].

[William A. Spratley]

August 5, 2010, "Ohio Energy SIDS & PACE Financing" - Hear GEO Audio Podcast (96 minutes).