The site of the Hays Energy, LP, where a solar farm is planned. Photo by Sean Batura.
By SEAN BATURA
San Marcos city councilmembers voted unanimously last week to hold off annexing about 137 acres in the city’s southern extra-territorial jurisdiction (ETJ). In exchange, Hays Energy, LP, has promised to begin constructing a $74 million solar power plant on the land.
According to the San Marcos city manager’s office, the solar farm project could generate $1.3 million in tax revenues for the city over 20 years. About $7 million of the solar plant would be located within the city limits. Due to the agreement to not annex the 137 acres, about $67 million of the solar plant would be located outside of the city limits and off the city tax rolls.
No new jobs would be created with the construction of the solar power plant because current staffing at HELP’s existing gas plant — the Hays Power Plant — could manage maintenance and operations of the proposed facility, according to the city manager’s office.
The annexation restriction could remain in effect as late as 2022, according to the terms of the Chapter 380 economic development agreement between the city and Hays Energy LP (HELP).
The solar plant is proposed to encompass two parcels of land located about three miles south of the Tanger and Prime outlet malls. About five percent of the solar array would be built on one parcel within the city limits. Most of the solar plant would be constructed on a 136.96-acre parcel within the city’s ETJ, but outside the city limits. Adjacent to the 136.96-acre parcel is a 100.885-acre tract (within the city limits), where HELP owns and operates a gas electric plant.
If the appraisal district asses all personal property on both parcels at $30 million or more in the last year of the agreement — 2019 — Hays Energy LP (HELP) can request a three-year extension of the annexation restriction.
The Hays Central Appraisal District values the gas plant at $227.6 million, which includes $6.7 million for personal property and $220.9 million for land and improvements.
According to the economic development agreement, construction of the solar plant constitutes “a significant investment in alternative energy production,” and “will create opportunities for economic development involving green industries and jobs while also advancing the City’s goal of supporting environmental protection.” According to the agreement, the annexation restriction and related provisions constitute “a public necessity.”
Said Amy Madison, President and CEO of the Greater San Marcos Economic Development Corporation, “If the company is able to move as they predict, the San Marcos-Hays Solar Project will be in operation by 2013, making it one of the largest solar plants in the state.”
HELP’s parent company is United Kingdom-based International Power. International Power operates in 21 countries and is one of the world’s leading power generation companies. For the year ending Dec. 31, 2009, International Power made £1.143 billion in profits after taxes, according to its online consolidated income statement.
“This agreement will assist International Power in its investment in a solar farm that will generate wholesale electricity using the latest technology,” said San Marcos Mayor Susan Narvaiz. “We are delighted to support advances that will contribute to the region’s clean power resources.”
The economic development agreement does not stipulate a project completion date for the solar farm. According to the city manager’s office, the solar farm project is “time sensitive” because the company must begin construction before Jan. 1, 2011 in order to receive a Renewable Energy Grant from the U.S. Department of Treasury. The grant is available through the federal American Recovery and Reinvestment Act.
The city manager may terminate the agreement immediately if HELP abandons the solar farm project.
“HELP shall begin construction of the project within 18 months after the effective date (Nov. 1) and thereafter pursue, with commercially reasonable diligence, completion of the project to be fully operational,” states the economic development agreement. “HELP shall provide notice to the city when it begins construction of the project.”
The term of the annexation restriction began Nov. 1 and will continue for a period of seven years from Jan. 1 of the first full calendar year following completion of the solar farm project.
The solar farm, a utility-scale “solar photovoltaic” project, would tie to existing Lower Colorado River Authority (LCRA) transmission lines and produce 20 megawatts of energy for resale, according to the city manager’s office. Twenty megawatts is roughly enough electricity to power 10,000 average homes under normal conditions in Texas, or about 4,000 homes during hot weather, when air conditioners are running for longer periods of time, according to the Electric Reliability Council of Texas, grid operator for most of the state. The City of San Marcos electric utility purchases its energy from LCRA at wholesale cost.
“The project is an all-win for the company, San Marcos and Hays County,” Narvaiz said. “It has no negative impact on the environment and it broadens our strong focus on green energy and sustainable development.”
According to city officials, the company considered building the solar farm in Victoria and Dallas before choosing San Marcos.
According to a city press release, HELP plans to begin construction “later this year.”