Stoddard County explores new tax strategies for solar projects after court ruling

BLOOMFIELD — Stoddard County commissioners face new challenges in regulating and taxing utility scale solar projects. Commissioners discussed payments in lieu of taxes for utility size solar developers on Monday.

Since 2013, “solar energy systems not held for resale” received a 100% exemption from state, local and county property taxes (RSMo. 137.100).

In August 2022, the Missouri Supreme Court found the property tax exemption unconstitutional. In the wake of this decision, solar developers are searching for new incentives to offset costs. During Monday’s discussion, it was learned RSMo. Chapter 100 may be one such avenue.

Chapter 100 authorizes cities, counties, incorporated towns and villages to issue revenue bonds for utility size solar projects. Unlike general revenue bonds, these bonds are not fully backed by the local government. The new incentive offered under Chapter 100 is awarded through a leaseback structure coupled with revenue bonds.

The solar developer will convey title of ownership for all solar panels and (improvements) to the municipality. The municipality then leases the project site back to the solar developer with bond purchasing contingencies. If agreed upon, then the solar developer no longer pays property taxes because ownership was transferred to the municipality.

To obtain Chapter 100 incentives, a utility-size solar developer must submit an application to the municipality where the investment will be made (Pike township). The county commission will review the application and decide if tax abatement is granted. If granted, the municipality will issue bonds for the solar project.

The solar company will purchase the bonds annually over the course of the lease period. These payments are referred to as payments in lieu of taxes (PILOT).

Associate Commissioner for District II C.D. Stewart said, “The PILOT payments are for the life of the contract.”

It was learned the PILOTs will be made annually.

Stewart asked, “How do they divide the PILOT payments among the schools and ambulance districts?”

After verifying with Jefferson City, Stoddard County Deputy Clerk, Brittney Teeters said, “The commission will need to determine how the revenue is split in that district.”