INNISFAIL -- The town has signed off on an amended lease agreement with the owner and developer of the planned solar farm -- a new deal extending the length of the term by nine years and reducing the annual lease revenue originally earmarked for the town.
The new amended agreement is important to the town as an unanticipated doubling in the original estimate of municipal property tax costs for Innisfail Solar Corp., a company now owned and operated by Vancouver-based Elemental Energy, threatened to scuttle the highly anticipated 100-acre solar farm development north of the Innisfail Golf Club.
"They came back and said the project could be in jeopardy if the total costs paid to the town were not amended," said Todd Becker, the town's chief administrative officer following town council's April 23 regular meeting when the new amended agreement was approved. "The unanticipated costs of the taxes made them relook on the operational side, and would have created a challenge to roll out the project."
Becker said original calculations by the developer estimated an annual municipal property tax bill of about $80,000 but it was later discovered through a provincial assessor the correct amount was almost double at $155,000. He said the town and project owner then met to work out an amended deal, one that took about four months to finalize. The amended agreement included adjustments to all three revenue streams for the town, including municipal taxes, lease revenues and the Community Benefit Fund.
"With real information comes real conversations, and now with the anticipated $155,000 (municipal tax) that created an opportunity for discussion, 'hey, we got some reality starting to come to play,'" said Becker. "Nobody has developed one of these in Alberta, especially in an urban environment, so this is all pretty new; new technology and new industry.
"Innisfail is kind of leading the charge here. That real information has created an opportunity to discuss the realities of the project," added Becker.
The agreement before the approved amended version had the length of the lease term at 26 years with a five-year option. It now has a 35-year term with a two-year option. The previous agreement had the solar farm owner paying the town a lease rate of $500 per acre. That now changes to $100 an acre from year one to 10, $200 an acre from year 11 until year 20, and $400 an acre from year 21 until year 35.
The Community Benefit Fund will be a fixed rate of $20,000 a year once the facility is operational. The former agreement tied the amount to the final installed capacity.
"It comes close to the original revenue opportunities for the town. The land lease has dropped a bit but the property tax revenue has gone higher," said Becker of the amended agreement.
Dan Eaton, director of project development for Elemental Energy, said his company, which also owns and operates the recently built solar farm facility in Brooks, is pleased with the new agreement, noting his company typically looks to take on projects on a 30- to 35-year basis.
"At the Brooks site we own and can see the long-term path there, and for here we felt it was important to be able to extend that term, thought it would be a win-win for us and the town to extend it to a longer term," said Eaton, noting financing for the project, which is expected to cost more than $20 million, is secured.
"I can't get into details about that but we are certainly in the position that we have the financing to bring in the project, just can't get into the details," he said, adding it's still hoped construction on the project will start some time this year. "I want to manage expectations. Our goal and our plan is to start construction this year but there are still a few details to get sorted out prior to committing absolutely."
