Developers outline $36M-plus economic package, pledge to protect county tax receipts amid new state law

Representatives for the proposed Pavia (Covia) solar development told the Decatur County Board of Commissioners on July 21 that the project will offer an economic development package worth more than $36 million across two phases and will contractually make up a portion of revenue lost after this year’s state tax changes. The presentation centered on the effect of Senate Enrollment Act 1 (referred to in the meeting as SEA 1), a recent Indiana law that allows accelerated depreciation of equipment and, the presenters said, can reduce the property taxes a county would otherwise collect on large energy projects. Don DeCastro, introduced in the meeting as a project representative, said the developer will “maintain that 30% depreciation” in order to preserve the county’s prior tax expectation even if state law permits lower assessed values. The developer’s financial summary, presented by Kyle Russetaritz of Dentons, estimated minimum investments of $336 million for phase 1 and $350 million for phase 2 and said the project would offer $8 million in economic development agreement (EDA) payments for phase 1 and $8.5 million for phase 2, paid in five equal installments beginning after commercial operation. Russetaritz also described “SEA 1 shortfall” payments — additional, contractually obligated payments intended to cover the difference between the assessment allowed under state law and the developer’s pledged assessment — estimated at roughly $18 million for phase 1 and $19 million for phase 2 over the assumed 30-year project life. Russetaritz said the package anticipates a 10-year, 100% property tax abatement on the solar improvements from the county council; the EDA payments are structured to share a portion of the developer’s abatement savings with the county. He told commissioners the sum of shortfall payments plus personal-property tax payments would be intended to equal what the county would have received under the 30% depreciation floor that applied before SEA 1. Commissioners asked about panel salvage value, decommissioning bonds, and how future reinvestment (repowering) would affect assessed value and taxes. Kyle Russetaritz said reinvestment would be treated as new investment and would be assessed in the year it occurs; that would increase the tax base at that time. Commissioners also asked about effects on neighboring properties and whether the agreement’s obligations transfer to future owners; Russetaritz said the payments and obligations would transfer to successors and would be payable to the county. Presenters said they are negotiating related documents — a road-use agreement, decommissioning agreement and master site/architectural agreement — and that the economic development agreement form and supporting analyses (including Baker Tilly and other advisors’ reviews) will return to the commissioners and to the county council for later approvals. The developer asked to be placed back on the agenda and presenters said they expected to provide final drafts and a utility/economic analysis for the commissioners’ August 4 meeting. The presentation was informational; the board took no formal vote on the economic development agreement at the July 21 meeting.