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City manager outlines options to preserve federal tax credit for 5-MW municipal solar project
Summary
Keene's city manager told the council that a June federal court order could restore eligibility for a 5% "safe harbor" and potentially about $2.9 million in federal tax credits for the city's 5-megawatt solar project; the manager said staff may execute a change order for up to $200,000 to buy American steel if suppliers can meet delivery timelines, with a decision expected next week.
The city manager briefed the Keene City Council on the status of the city's 5-megawatt municipal solar project and two possible routes to retain federal tax credits for the project.
The manager said the city had completed procurement steps and purchased panels in 2025 but faced a change in IRS guidance that, for a time, restricted use of a 5% "safe harbor" for projects above 1.5 megawatts. On June 6, a federal court vacated the IRS notice, potentially reopening eligibility for the 5% safe-harbor approach that the city had been pursuing. "Now this is potentially $2,900,000," the manager said when summarizing the possible tax-credit value.
Because the court order may be appealed, the manager described a second avenue to preserve credits: certifying a Buy America percentage by procuring domestically produced components (notably racking steel). That option would likely require a purchase-order change with the project's vendor for up to about $200,000 to buy American steel. The manager said staff asked the vendor Revision to verify whether suppliers can reliably deliver the American steel without delaying the project in ways that would jeopardize the airport project in-service deadline (December 2027).
The manager emphasized the timing risk: uncertainty over the court order's finality and the availability of American steel complicates the decision. If the city can secure timely American steel and an independent verification that the already-purchased modules qualify for an exemption or are otherwise addressed, staff would execute a purchase-order change within the manager's authority and then return to council to amend the bond resolution if needed.
The manager also stressed that the project remains financially sound even without an additional federal tax credit: project analysis without the contested credits still shows net savings over the next 25 years. The manager said staff hoped to have a procurement decision next week and would report back to council on any executed change order and required bond amendment.
Councilors thanked the manager for pursuing all available avenues and noted the tradeoffs between risking a small additional cost now and securing a larger credit later. The council did not take a binding vote tonight; the manager will decide whether to issue a change order after receiving supplier assurances and independent verification.
