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County approves reduction of 'sun tax'

RIVERSIDE, Calif. - Riverside County supervisors signed off today on an agreement that will end further litigation stemming from a legal challenge to a county policy mandating that solar power developers pay fees of $450 per acre for projects on county land.

"This required many months of hard work and tough negotiations," said Board of Supervisors Chairman John Benoit. "`It's a step in a very positive direction. Not everybody may be happy, but at least everybody is in agreement."

The Independent Energy Producers Association and the Large-scale Solar Association worked out an agreement with county attorneys that was certified Wednesday by a Superior Court judge and was placed on the board agenda today for final approval.

The vote was 4-1 in favor. Third District Supervisor Jeff Stone casting the dissenting vote, saying the county would be setting itself up to be under-compensated for permanent changes to open space stretching 130 miles.

"From Cabazon to Blythe, you're going to see nothing but a sea of black solar panels," Stone said.  "This will be visually obtrusive, and I don't believe we're going to be receiving the appropriate revenue to ensure mitigation of these visual obstacles along what's supposed to be a scenic highway."

Under the negotiated deal, the county will slash the per-acre fees imposed on solar power developers from $450 to $150. However, the county will also scrap incentives that were enshrined in the original policy to reduce developers' expenses, and will also mandate a 2 percent annualized increase in fees for as long as county property is in use by a solar electricity generator.

In exchange for chopping the per-acre fees by nearly 70 percent, solar developers will take steps to ensure the county's full receipt of sales and use taxes associated with construction of a project, according to the agreement.

The Independent Energy Producers Association and the Large-scale Solar Association jointly filed suit in February 2012 in response to board policy B-29, which the supervisors enacted in November 2011 to ensure the county was compensated for utilization of land that might otherwise go toward farming,recreation and housing.

At the time, Benoit emphasized that solar farms would ever-after mar desert landscapes.

The plaintiffs equated the per-acre fees to an illegal "sun tax," arguing that the monetary charges violated Proposition 26, the "Stop Hidden Taxes" initiative approved by voters on Nov 2, 2010, as well as the state Mitigation Fee Act of 1987, which permits local agencies to charge developers for the use of public services -- but only to compensate for a specific project impact.

According to the IEPA and LSA, the county needed voter approval before implementing what amounted to a tax. The county argued the fees tied to the franchise and development agreements that solar power providers would be required to enter into as a condition of operating in the county were analogous to the payments required of traditional power plants when they used county resources and rights-of-way.

Stone argued today that county voters should be given the opportunity to decide whether the per-acre fees should be $450 or lower. He said a vote would also put to rest any further questions about whether the county was imposing an illegal tax, which County Counsel Pamela Walls insisted was not the case.

"There's going to be billions of dollars made by these (solar power) companies, many of which are foreign-based," Stone said. "They're getting the bargain of a lifetime. Let's let citizens have the final say what the fee should be."

Benoit replied that the issue needed to be resolved after 18 months of legal wrangling -- and for the sake of giving companies certainty of what to expect insofar as doing business in the county, instead of waiting another year for a "two-thirds plebiscite" to decide the matter.

"It's time to move forward, " the chairman said. "No one gets completely what they want in this type of situation. But it's a fair settlement."

At the time of B-29's implementation, more than 20 solar power projects were in the works in the desert spanning the Coachella Valley to Blythe. Since then, several have been delayed or dropped altogether.

According to county officials, Riverside County contains 200,000 of the roughly 300,000 acres in California eyed for solar development.

According to the county Transportation & Land Management Agency, a typical 50-megawatt photovoltaic plant requires 250-350 acres of land, while a gas-fired power plant needs about one-tenth that amount of turf to produce 16 times as much electricity.

A county-commissioned report by David Kolk of Complete Energy Consulting LLC estimated the county would rake in about $160,000 annually -- before rebates -- from a typical 50-megawatt solar provider operating on a 250-acre tract. That figure, however, was calculated using a per-acre fee of $640, which is what the county originally proposed before outcries during public hearings led the supervisors to agree on a lower amount prior to ratifying B-29.

"We appreciate the board's attention to this matter," said IEPA Executive Director Jan Smutny-Jones. "The settlement is fair to the county, fair to our members and will allow them to move forward."

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