San Benito County leaders threatened to stop work at Panoche Valley Solar Farm Tuesday as tensions flared over unpaid tax revenue and lack of local workers at the renewable energy site.
After heated exchanges between the supervisors and a ConEdison Development representative, supervisors set the wheels in motion to enact a cease and desist work order.
The county believes ConEdison Development is in breach of the development agreement because the company didn’t establish a business location in the unincorporated area of the county, which resulted in a loss of sales and property tax.
Also eating into the county’s profits is a court settlement agreement between the energy behemoth and environmental groups, which reduced the size of the Panoche Valley Solar Farm to around 1,300 acres. More than 26,000 acres is expected to be preserved for wildlife habitat.
After some debate, the supervisors were unclear whether the county could even receive property tax for the now, protected open space.
“That land is going to be turned over to a nonprofit who’s going to file for exemption and then we get nothing off that land. We’re getting less money off the project,” said Supervisor Jerry Muenzer.
The county supervisors were already seething when the Panoche Valley Solar Farm, once heralded as a boon for the area, was cut from its initial 247 megawatts to its current projected size of 127 megawatts.
The difference in estimated tax revenue fell from a high of $25.6 million to $8.9 million.
Eric Cherniss, a ConEdison development director, addressed concerns about the payment of sales tax relating to the construction contractor.
“My understanding is about 90 percent of the sales tax there has been appropriately allocated and is going through the process at the [California State Board of Equalization],” Cherniss said. “It should be showing up at the county whenever [the board of equalization] ends up releasing those funds.”
He admitted a second portion of sales tax funds relating to solar modules was mishandled.
“We have rectified that and hope to have those tax statements re-filed by the end of the quarter. Around September 30 I hope to have hard documentation so you can see those monies have been paid appropriately.”
Cherniss said there was an estimated total of $104,000 for unsecured property taxes owed to the county for materials delivered to the project site by the end of 2016.
Supervisor Anthony Botelho suggested the county is owed interest on the unpaid tax revenue.
“I think we’re probably entitled to a penalty clause or interest on the money because it should have been paid earlier in the year or last year,” Botelho said.
Supervisor Mark Medina had a more direct approach.
“When can you give us this money?” Medina asked. “I mean if we’re waiting on the [board of equalization] why can’t you just give us the money you owe us and then once the [board of equalization] pays we’ll pay you back that money? Right now everything is in fiction land.”
Medina shut Cherniss down when he started to talk about the California tax process.
“It’s not the California sales tax, it’s the process that you guys failed in the very beginning,” Medina said. “That’s all I’m after. Because if you would have actually had it earmarked for San Benito County from day one, we’d have that in our coffers. You made a mistake, so what I’m after is the monies you owe us. We want to see that in our account by Friday. It’s very simple.”
Cherniss stated the sales tax was ConEdison’s issue, not the county’s.
“We’ve been open to setting up an escrow account,” Cherniss said.
Medina asked if that was possible by Friday and Cherniss said he’d propose something that County Counsel could review in the next 24 hours.
Muenzer took issue with the talk of an escrow account and said he was told that ConEdison Development committed to putting $2 million into an escrow account. Cherniss said that was correct.
“I haven’t seen that happen,” Muenzer said, adding that he believed ConEdison was blowing them off.
The discussion shifted to talk of preferential hiring of San Benito County residents for employment opportunities at the project site.
Muenzer said he heard stories of locals applying for jobs at the Panoche Valley Solar Farm and not getting hired.
Cherniss said there’s between 100-200 workers on-site and that around eight to 16 were from the county.
“We had a preferential hiring scheme put that was put into the development agreement with the county and the unions,” Cherniss said. “The reporting says they’re following that. The onus is on us to make sure that that’s occurring to the best we can have happen. The only thing I can think of is there’s some sort of communication issue with the general population. If there are people seeking employment in appropriate channels and they’re being turned down, that’s stuff that we need to know and feed back into the system.”