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HomeMy WebLinkAboutAgenda - 06-15-2010-13 (1)Information Item Memorandum To: Orange County Board of County Commissioners Orange County Manager Frank Clifton From: Orange County Economic Development Department Date: May 28, 2010 Subject: Status update on solar array project on Orange County landfill Background In Fall of 2009, the Orange County Board of County Commissioners (BOCC) approved continued efforts in pursuit of installing a solar array on Orange County's closed Construction & Demolition (C &D) landfill located on Eubanks Road. Since that decision, there has been much movement, and much change, with this project. The purpose of this memorandum is to provide the BOCC with a status update for this project and present a proposed timeline for upcoming tasks. In general, the proposed project will include the installation of a solar array on the closed C &D landfill that will be directly tied into the local utility provider. A primary component of the feasibility of this project is the generous tax credits currently available for solar installations; North Carolina offers a 35% tax credit and the federal government offers a 30% tax credit. Although government entities such as Orange County are ineligible for tax credits, the project can be constructed using a third party finance model, where an outside entity that can utilize the tax credits, will fund the project. The entity that funds the project, or its representative, will direct construction of the solar array, own, operate and maintain the project, and lease this portion of the landfill from the County under a long -term lease agreement. A Request for Proposals (RFP) will be issued to those firms interested in implementing this project requesting a submittal that will include a design of the system and proposed terms for a lease agreement with Orange County. The RFP will stipulate that the project maximize the economic, environmental, and community benefits to taxpayers. An important component of this project will be community education, in both the installation and the operation of the solar system. Numerous conversations have been conducted with various stakeholders to validate the feasibility of the project, and have involved those responsible for permitting, the local utility company, communities in other states that have considered or implemented similar projects, local solar professionals, and local government departments that would be affected. The'Orange County Solid Waste Department has been, and will continue to be, an important partner as this project develops, as this project has the greatest long -term impact on them. Orange County Economic Development — Solar Landfill Project Status Page 1 Information Item Additionally, we are fortunate to have several well- regarded technical resources in the region, and have discussed many aspects of the project with representatives of the NC Solar Center at NCSU and the AppState Energy Center at Appalachian State University. All information collected during these discussions will be consolidated into the RFP that will be issued to potential firms for installation of the solar array. Items of Note Section 1603 -grant in -lieu of credit expires 12/31/2010. In response to the recent recession, the American Reinvestment and Recovery Act (ARRA) made the 30% federal tax credit more attractive by allowing this credit to be exchanged for cash. The modification was made due to the economic conditions which resulted in fewer companies having the income necessary to fully utilize the credits. This program (commonly known as the Section 1603 program) is scheduled to expire December 31, 2010. It would be prudent to initiate the solar project at the landfill prior to this program expiring, as this option allows more financial flexibility. Legislation currently under consideration in Congress would extend the 1603 grant program until 2012. NC legislature agenda items. An unanticipated glitch in the Federal 1603 grant in -lieu of tax credits program resulted in confusion on how they are taxed at the state level. Currently in North Carolina, many projects have been notified that the grant in- lieu of credit is considered the receipt of public funds, and is therefore taxable by the state, although this was not the intention of legislators. A simple modification has been proposed in the current session of the General Assembly to clarify this misunderstanding which will remove an unintended hurdle for solar projects. Another related item on the Legislative Agenda is a request to clarify that tax credits can be allocated to the tax liability of different investors for the state tax credit vs. the federal tax credit. This clarification would also allow more flexible financing options and open these larger projects to a wider pool of potential investors. A ruling is expected during the summer legislative section; it would benefit the project to have resolution on these items. Upcoming Activities • Solid Waste consulting engineering firm review. The Solid Waste department is in the process of finalizing a contract with a consulting engineering firm. To ensure that the County -owned landfill is properly protected, the consulting engineering firm will review and revise the RFP as necessary. This work will commence once the firm is under contract. This contract is currently on the June 1, 2010 BOCC agenda, • Assemble RFP submittal selection group. A group to review the RFP submittals will be organized so that once the RFP is released, the selection process will be as efficient as possible. This group will include representatives from departments that have been involved in the project to date, including Economic Development, Solid Waste, the Attorney's office, Asset Management and Purchasing, as well as technical advisors from the NC Solar Center. Additional members will be included as necessary. This task will be completed during Summer 2010. Orange County Economic Development — Solar Landfill Project Status Page 2 Information Item Submit Final RFP to BOCC. Once all comments from the Solid Waste's consulting engineering firm are incorporated, the final RFP will be submitted to the BOCC for its review and approval for issuance. It is anticipated that the Final RFP will be provided to the BOCC at its August 17, 2010 meeting. Issue RFP to bidders. Once the BOCC approves the RFP, it will be issued to potential bidders. Summary While many factors related directly and indirectly to this project are continuously changing, it is a viable and very exciting project for the County. When combined with the methane gas that is currently extracted from the landfill for use by UNC, the solar installation could make the Orange County landfill one of the first in the country to utilize two renewable energy sources from a single landfill. Additionally, this project will advance the progress and visibility for the County's solar cluster, educate the community about the possibilities and benefits of solar energy, and provide the county with a revenue stream (although likely a small one) from land that cannot be used for other purposes. cc: Blair Pollock, Orange County Solid Waste Department Gayle Wilson, Orange County Solid Waste Department Willie Best, Assistant County Manager Orange County Economic Development - Solar Landfill Project Status Page 3