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Council approves three-year tax abatement for planned $160 million energy storage project
Summary
San Angelo approved a three-year tax abatement for Zeppelin Energy Storage LLC, offering up to 85% abatement on new city taxes for estimated $160 million in investment; council said the deal still yields a net benefit to the city over 10 years.
San Angelo City Council on a 7-0 vote approved a three-year tax abatement and held a public hearing for Zeppelin Energy Storage LLC, a company proposing a battery energy storage facility on the city's north side.
Michael Dane, interim economic development director, said the company plans to build a battery energy storage facility that would buy electricity when prices are low and discharge it when prices rise. Dane said Zeppelin estimates roughly $160 million in plant and equipment investment and has requested an 85% abatement on the increase in city property taxes for the first three years of the project.
Council and staff negotiated an investment floor in the agreement to protect the city's interest: if actual qualifying investment falls below $135 million, the company would be in default of the abatement agreement. Dane said the floor provides flexibility but protects taxpayers from a much smaller project receiving the full abatement.
Dane showed the staff's fiscal analysis: if the company invests $160 million, projected city tax revenue without an abatement would be roughly $6.6 million to $7.0 million over the analysis window; with the proposed abatement the city still expects a net gain of about $4.46 million over 10 years. The gross value of the abatement across the three-year abatement period was estimated at about $2.2 million in staff materials.
There were no public commenters at the hearing. Councilmember Lucy moved approval; Councilmember Larry seconded. The motion passed 7-0.
Ending
Staff said the agreement gives the city protections (a minimum investment floor) while allowing the company flexibility to adjust actual project scope; the council approved moving forward and authorized the city manager to negotiate and execute related documents.
