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HomeMy WebLinkAbout10/05/2011 Public Hearing Transcript re: Bill #2415PUBLIC HEARING OCTOBER 5, 2011 A public hearing of the Council of the County of Kauai was called to order by Dickie Chang, Chair, Economic Development & Renewable Energy Strategies Committee, on Wednesday, October 5, 2011, at 1:36 p.m., at the Council Chambers, 4396 Rice Street, Suite 201, Lihu`e; Kauai, and the presence of the following was noted; Honorable Dickie Chang Honorable Tim Bynum Honorable KipuKai Kuali`i Honorable Nadine K. Nakamura Honorable Mel Rapozo Honorable JoAnn A. Yukimura Honorable Jay Furfaro, Council Chair The Clerk read the notice of the public hearing on the following: Bill No. 2415 - A BILL FOR AN ORDINANCE AMENDING CHAPTER 5A, KAUA`I COUNTY CODE .1987, AS AMENDED, RELATING TO EXEMPTIONS FOR COMMERCIAL ALTERNATIVE ENERGY FACILITIES, which was passed on first reading and ordered to print by the Council of the County of Kauai on September 7, 2011, and published in The Garden Island newspaper on September 21, 2011. The following communications were received for the record: 1. Jody Allione, Project Development Director, Po`ipu Solar LLC, dated October 4, 2011 2. Kurt Bosshard, President, Kapa`a Solar LLC, dated September 19, 2011 3. Carl Imparato, dated October 4, 2011 The hearing proceeded as follows: JODY ALLIONE: Jody Allione with Pb`ipu Solar LLC. Good afternoon Chairman, members of the Council. I appreciate the opportunity to speak to this issue. AES Solar is the developer of the Po`ipu Solar project, it has worldwide experience in developing solar in this highly competitive market. We came to Kauai over a year ago and we have achieved the goals of getting a power purchase agreement with KIUC which was approved in July this year by the PUC. The project is located near Koloa at Hapa Road and it is a twenty-eight (28) acre piece of a sixty-six (66) acre parcel, it is leased from Knudsen Trust. The land is in the open zoning area and is unusable Ag, class "D" and "E". We did receive a class four (4) zoning and use permit on May 11 of this year. This project will provide reliable solar energy to this utility for a term of twenty (20) years under a fixed price. contract for the entire term. We carefully considered all of the factors when we committed to this long term fixed price contract because we had some significant performance objectives to achieve and stringent operating requirements, we had a lease to pay and then we had to build this project on a very difficult soil which is pretty much solid rock. We're being pinched in every direction on the development 2 PUBLIC HEARING OCTOBER 5, 2011 BILL NO. 2415 of this project. We were recently advised that the property tax approach being taken by the County of Kauai was to designate the land under the solar projects as industrial and then to appraised the underlying land based on comps for industrial sites. This has the impact of increasing the property taxes that we are currently invoiced for by an order of magnitude of five (5} to ten (10) times more than we budgeted depending on which comps were being used. Furthermore, we were advised that the facilities will be annually assessed the market value of current sales of industrial land. We are, however, appreciative of the proposed fifty percent (50%) reduction but there's significant risk to the project in the uncertainty of annual assessments based on future industrial comps in the Po`ipu area. This uncertainty will make it very difficult to obtain long term financing since the revenue stream in fixed and in a solar project, the operating cost are pretty much fixed over the term of the project, which offers us no relief for the project in eventuality of a high assessment. I have attached my testimony which I have copies of a table which outlines the impact of various levels of assessment of the project compared to what the landowner is currently paying. Mr. Nakamura: Three (3) minutes Mr. Chair. Ms. Allione: Sa in the interest of trying to creatively approach this, my testimony will provide some potential alternatives to the amendment that's currently being considered. We're asking that these alternative options be reviewed because they may provide a fair property tax payment and alleviate, we want to make a fair payment, I'm not trying to avoid any taxes here but we do need to alleviate the undue risk of the current tax structure. Some of the alternatives to be considered would be to designate the land under a new category as Renewable Ag land with its own tax rate. Consider the Net Present Value of the lease rates over a twenty (20} to twenty-five (25) year period to arrive at an equivalent price for the land to come at an assessed value. And thirdly, cap the annual increase in assessed values at a fixed percentage, so that we know what to expect in the future and we can budget accordingly. We are available to discuss these options with Committee members and we really hope that you will give it some consideration so that we can proceed with the financing of this project and break ground later this year. Thank -you very much far your time. Committee Chair Chang: Thank you Ms. Allione. Did you say that you had copies for the members? Ms. Allione: I do, I have ten (10) copies here. Committee Chair Chang: Okay, we'll have the staff pick that up and distribute that. Thank you so much for your testimony. I believe Mr. Imparato; I believe that... is he? Oh I beg your pardon, Mr. Blake, I'm sorry. Mr. Nakamura: Committee Chair, next speaker is Ted Blake followed by Kurt Bosshard. PUBLIC HEARING BILL NO. 2415 OCTOBER 5, 2011 TED BLAKE: Aloha, Chair and members of the Council, I'm Ted Blake from Koloa. I speak in support of the position taken by AES Solar. About a year ago, we were contacted, Hui Malama O Koloa, and the Koloa Community Association was contacted by a wahine who was identifying herself as doing native advocacy and she mentioned this plan of solar farm in Po`ipu and that she was here to help bridge the community, those interested in working and preserving Hapa Trail with the developer. We have had a history last seven (7) years that was pretty rocky with developers, so the flags went up, and caution and suspicion and hesitancy was abounded. This project shares eighteen hundred (1,800) linear feet of Hapa's western border; it's almost twenty-eight percent (28%) of the length of Hapa Trail. It's in an area on the Northern part of Hapa Trail that's been completely rearranged by recent construction; there's no wall .anymore. Even Hapa Trail, the road itself has been moved at the convenience of the contactors; they were doing work in the Kiahuna mauka partner area. The group sent us their draft of their permit to the Planning Department asking us for comments, additions or deletions. We made note of the fact that the report says that this was Ag "D" and "E" land, totally unsuitable for agriculture and we beg to differ with them saying that this was part of the Koloa field system which was productive agricultural enterprise for five .hundred (500) years and it still had two (2) of the most important features that the Hawaiians used for farming -sun and water. They also mentioned that they wanted to do a landscape buffer along Hapa Trail and we're... you know when you see landscape buffers, you think of long lines of naupaka or red hibiscus which may be appropriate in some areas, but not in Hapa Trail. We ask that they look into doing native and indigenous plants (drought. resistant/wind resistant). They liked the idea. We talked with NTBG, Dr. Dave Burney, Mike DeMotta and came up with a list that were not only native and indigenous but they were DNA to be found from Koloa which made it a little bit more special. So we'll be doing the... they offered the Hui Malama O Koloa to spearhead that project and there is also a large burial cave there that has probably sixteen hundred (1,600} linear feet around. Normally developers, they do the minimum they got with the burial, this burial; site was carved out of their parcel by the landowner. Committee Chair Chang: Mr. Blake that was your first three (3) minutes, but please go ahead and continue. Mr. Blake: Thank you. And it was carved out and eventually it would be left alone and nothing would happen. The developer said listen that's not the right thing to do, we want to do the right thing so they've asked... they were going to fence it with chainlink and barbed wire on the top, that's the only graveyard I've ever seen with chainlink fence and barbed wire if they did that. We said you've got a lot of rocks there; you're going to have a security fence around there, why don't we just build a dry stack wall around the fourteen hundred (1,400) linear feet of perimeter, which they went for. These projects are over and above what the general contractors are going to do when he installs the panels and the batteries, etc.; the developer's paying for this. We're looking at this from a purely... we have ulterior motives to back them up because if they had to take money away, the money would come from the budgets that will have to do this work. Hapa Trail is the focal point of the Koloa area circulation plan; it's also going 4 PUBLIC HEARING OCTOBER 5, 2011 BILL NO. 2415 to be a focal point of the recently approved Hawaii Scenic Byways Designations we just received for Koloa. These are... once we put this in motion and our corridor management, manager and plan is accepted, this area will provide an economic stimulant for the residents of Kauai and Koloa. So on one (1) hand, you're taking something away and on the other hand you're giving. I mean it's going to be time, it's an investment in time, and an investment that's something that will go on forever. Just from a street level perspective, I'm not nearly as educated as you are in taxes but the State of Hawaii allows solar farming on agricultural land and the County of Kauai wants to give them a use permit and change the assessment to industrial. I can understand that that we shouldn't have to be paying for services that somebody may use when they develop their land. Solar takes... there's no trash, there's no water, there's no services that the County provides. After it's built one (1) guy takes care of it. So my question and what I'm puzzled about is why you'd be raising the taxes on someone that's not even, that hasn't any reason to use County services, but more importantly this is a company, that has totally gone against everything that we've experienced in the last seven (7) years. You know they've come to the community, they reached out, they've listened to what we said, not only listen but when we wrote back our comments, they took it almost verbatim from what we wrote and put it into their final application for permits. I wish we had started these eight (8) years ago... Committee Chair Chang: Mr. Blake, excuse me, your six (6) minutes are up so would you like to finish up? Mr. Blake: That's it. Dickie, thank you very much. Committee Chair Chang: If I could just make a request? Mr. Blake: Sure. Committee Chair Chang: I know you speak from the manao, can you put some bullet points down of the things that you are expressing for the benefit of our members so we can absorb that, when you get a chance. Mr. Blake: I'll email ,that back tonight, would that be fine? Committee Chair Chang: Whenever you're available. Mr. Blake: Thank you for your time, I appreciate your listening. Committee Chair Chang: Mr. Blake, thank you very much. Mr. Blake: Aloha. Committee Chair Chang: I believe the next speaker is Kurt Bosshard? KURT BOSSHARD: Thank you for having me, I appreciate it. My name is Kurt Bosshard, I am the president of Kapa`a Solar and I'm here to reinforce some of the comments that were made by Ms. Allione and Mr. Blake. What I am attempting to do through my written testimony, my correspondence to 5 PUBLIC HEARING OCTOBER 5, 2011 BILL NO. 2415 you that was presented previously, is convince you that treating the taxation assessment issue, the site as an industrial area, is not a good idea and I can demonstrate that by the experience that I had through my own 2011 assessment. I want to encourage you to consider that some leniency on the tax issue as regards to the alternative energy sites is warranted because I think it's encouraging the sites here on Kauai is an opportunity we have to have more of these sites. Kapa`a Solar site is still the biggest photovoltaic site in the State even though you read in the newspaper every day there's stuff that's planned; it hasn't happened, there's probably a reason that hasn't happen and it's probably economical. I'm not saying that this particular tax issue is going to be a make or break issue for every project but it appears to be a significant issue for other's that would follow and I want there to be other projects that follow me. The industrial classification is problematic because comparables for this type of property are not available. I believe there was one (1) sale of an industrial lot in 2010 and I don't know if there's been any in 2011. Alexander and Baldwin is going to build photovoltaic on their industrial land and I assume it's because there really- isn't much of a market for industrial land and because it's particularly situated and suited because it's right next door to the KIUC power plant. That will probably be the only solar site that is built on industrially zoned land, and fashioning this Bill around the A&B example is not the way to go. The tax office assessed my property initially at one point seven (1.7) million dollars, that's over three hundred thousand dollars ($300,000.00) an acre, actually over four hundred thousand dollars ($400,000.00) an acre, for land that they were previously receiving a evaluation assessment of sixteen thousand dollars ($16,000.00) an acre and would have been tax assessed at less when I got around to fencing that particular area and dedicating it to agriculture because we are farming that area. We have pasturage, cattle, sheep and goats there on approximately thirty-five (35) acres that are adjacent to the solar farm... Mr. Nakamura: Three (3) minutes Committee Chair. Committee Chair Chang: Mr. Bosshard that was your first three (3) minutes, but go ahead and continue please. Mr. Bosshard: There are taxes to be received from these operations through income that they receive and other benefits to KIUC and to the community which I've outlined in my correspondence, and I think that the community considers these sites to be an agricultural type of use. They want to encourage these sites. I've had overwhelming positive comments to what has been done there. Many people didn't even realize that or to think that the site had been built on, that there was this project there .that was generating electricity, and are happy to have it there and they want more. Now the State and the Federal government makes contributions towards the project through cash grants or tax credits, and is the County really foregoing anything by considering this an agricultural operation? No, because you're receiving tax revenues based on a valuation at sixteen thousand dollars an acre and it would be much less if it was Ag dedicated. The more of these projects you encourage and I believe probably the same would be for Po`ipu Solar, that the tax revenue there are minor. You're not even giving anything up by being kind to the solar industry, and I'm supportive of the concept that Ms. Allione presented or an assessment that's based on the agricultural value which is still quite expensive and perhaps a percentage discount off of the industrial zoning, excuse me, the agricultural zoning as was suggested 6 PUBLIC HEARING OCTOBER 5, 2011 BILL NO. 2415 with the industrial zoning that there be a fifty percent (50%) reduction in the valuation. I also want to point out that the area that is assessed and if it's going to be assessed differently than the other land around it, the designated is only the field where the solar panels are located. I also want to point out that Kapa`a Solar would appreciate if you eliminated my tax appeal because right now I'm facing a seven hundred and ninety-one thousand dollar ($791,000.00) assessment for land that is worth probably less than four hundred thousand dollars ($400,000.00) and less than that probably because it is a leased portion of a larger parcel which couldn't be sold separately and which I am presently leasing with an option to buy at an agricultural rate. So if the Bill were to commence as if to producers who were producing on January 1 or thereafter of 2011 then it would apply to me as well. Can I just make one (1) other comment? Committee Chair Chang: Sure. Mr. Bosshard: I do have a question in my correspondence there and it merely asks how the biomass people are being treated and whether they're only going to be taxed as industrial on the portion where their building is and then all the rest is going to be Ag dedicated, because at that point my solar panels are being taxed and the land underneath them is being taxed at the same rate as the factory that is going to be needing County services and create a much greater impact and obviously the solar panels that don't have any impact on County services and where the lot is totally unimproved. Appreciate it, thank you. Committee Chair Chang: Thank you Mr. Bosshard for your testimony. I'm going to have the staff, you got a lot of papers here and some of the pages are not numbered, so I'm going to have the staff... if you can point out to the staff that question that you have within your testimony then we can make that available and easy for us to look into that. Thank you Mr. Bosshard. Mr. Bosshard: Thank you. Committee Chair Chang: Next speaker Mr. Clerk? Mr. Nakamura: We have no further registered speakers. Committee Chair Chang: I believe I see a testimony from Mr. Imparato, did you want to speak? Thank you very much. CARL IMPARATO: Aloha Councilmembers, my name is Carl Imparato. I just want to raise two (2) issues in regard to this Bill; one (1) is with respect to the findings and the other with respect to the substance. As to the findings, I noted in my June 2010 comments to the Council when the Kauai Energy Sustainability Plan was going forward that I didn't believe that there is any legitimacy in the finding in that plan that the community has indicated that it wants to achieve one hundred percent (100%) local energy sustainability by 2030. That's an assertion and I think it certainly reflected the feeling of participants in the initial survey for the plan which asked for input before the ramifications of that PUBLIC HEARING OCTOBER 5, 2011 BILL NO. 2415 statement were studied but those lofty goals wasn't discussed after the plan's cost impacts were studied. I don't believe it indicates the sentiment of the general Kauai community. Propagating that statement now into findings in other BiIIs I think is a disservice to sound future policy making. As to the substance and first of all I don't see any major harm in exempting facilities that we're talking about here,. these kinds of improvements from real property taxes as those improvements would be creating taxes that are incremental to the existing tax base, so no harm in that part of the Bill. There's the idea then of exempting the Iands under those facilities from. some portion of their property taxes and there again to the extent that the exemption does not result in the net reduction from what you are already collecting property taxes on their land and so I don't see a problem with that. I do see a problem if there is a case and it doesn't seem to be the case here with the falks who spoke. I do see. a problem where if a certain amount of property taxes are being collected on a piece of land right now and if this Bill passes and that results in a lower collection of property taxes from that piece of land, then what's really happening is alI other Kauai tax payers are being asked to subsidize projects. I believe that all energy production facilities should stand or fall on their own economic merits. In conclusion, I ask that when you consider the Bill, you do two (2) things. One (1) is to delete the energy sustainability plan related finding and secondlyto amend those portions of the Bill related to that fifty percent (50%) exemption on land used for these facilities by including a no subsidies piece of language that ensures that in no event would you collect less in property taxes after the facility is built than before. With that, I don't see any problem with what's being asked here because it sounds like a number of the things that the previous folks have raised do have very legitimate concerns. Thank you. Committee Chair Chang: Thank you Mr. Imparato. Would any of the members of the community... Mr. Taylor, please. KEN TAYLOR: Chair, members of the Council, my name is Ken Taylor. I certainly agree with the comments that Carl made and I'd like to just point out that. in most cases we're only talking about thirty-five (35) to fifty (50) possible projects over the next ten (10), twelve (12) years, thirty-five (35) properties that would have two (2) megawatts or more and I'd be surprised with some of the larger projects that -are now coming in that would even get near thirty-five (35) parcels that we're actually talking about. I really think there should be no exemptions and that leave the property taxes as they are because they... if they weren't going to be used as agricultural parcels or used as agricultural parcels and we've agreed that we would allow these kinds of projects on Ag land, why are we even consideri,~g-~rn~king. changes and as they say, the numbers of parcels we're talking about are so small that there's no meaning, there's no sense of even wasting a lot of time on making any changes and I think that's where you should be taking a look and let it go at that. Thank you. Committee Chair Chang: Thank .you Mr. Taylor. Any other members in the community wishing to testify on this item 2415? Ms. Yukimura: Mr. Chair, I have a question for Mr. Taylor. 8 PUBLIC HEARING OCTOBER 5, 2011 BILL NO. 2415 Committee Chair Chang: This is actually a public hearing, so we're just taking their testimony right now. Ms. Yukimura: It's about his testimony. Mr. Furfaro: If the question is to clarify his testimony, it probably should be limited to only that. Committee Chair Chang: Go ahead Vice Chair. Ms. Yukimura: Thank you. Ken, you said that it should be assessed in the same as Ag land, isn't it possible that in doing so you would encourage that kind of use of Ag land in very larger scale when it's prime Ag land and it can be used elsewhere? Or are you just talking about "D" and "E" lands? Mr. Taylor: As I understand it, the rules and regulations today allow these kinds of projects on Ag land. I don't know if there's a difference. Ms. Yukimura: But do you see that it might encourage more of this type of use and shove good farming for production of food and replace that if you give incentives? Mr. Taylor: I'm only basing my comments on the fact that today we're only using about seventy (70) megawatts of electricity. If somebody decided they wanted to build a two hundred (200) unit megawatt facility, it would be totally ridiculous because they wouldn't be able to sell the electricity to anybody. The consumption of the island is going to dictate how many of these projects get built and what size. Committee Chair Chang: Thank you Vice Chair, thank you Mr. Taylor. Ms. Yukimura: Thank you. Committee Chair Chang: Any. other members wishing to testify? If not, the Economic Development and .Renewable Energy Strategies Committee is adjourning. There being no further testimony on this matter, the public hearing adjourned at 2:05 p.m. tfully submitted, PETER A. NAKAMURA County Clerk /ds