Groveland Mine Solar would repurpose a former mining area 12 miles northeast of Iron Mountain for renewable energy. (Circle Power Renewables photo)

IRON MOUNTAIN — Three townships in Dickinson County are considering property tax contracts that would guarantee $12 million in new revenues over 30 years for Groveland Mine Solar.

The $12.4 million estimate includes revenues to Norway, Felch and Sagola townships as well as Norway-Vulcan Area Schools, North Dickinson County Schools, the Dickinson-Iron Intermediate School District and county-wide entities.

The guarantee from Circle Power Renewables of Royal Oak commits the project to a minimum payment stream, based on the entire 120-megawatt solar farm being built, said Jordan Roberts, Circle Power CEO.

“It provides a minimum floor to protect local entities,” Roberts said in a recent interview.

The agreements will prevent revenues from dropping, even if state tax policies should change. If there are adjustments favoring the taxing units, then the project would fall under the new rate.

“If there are any changes in state tax policy that benefit local governments, the project would be required to meet its full property tax obligation,” said Elise Matz, Circle Power vice president of public affairs.

Circle Power envisions 185,000 solar panels over a footprint of 500 to 550 acres, much of it at the former Groveland Mine that operated from the early 1950s until 1981. It will cost more than $100 million if fully built, which includes an estimated $12 million in labor costs.

As currently planned, the project would provide enough electricity to power 17,600 homes annually.

According to developers, the size will be determined by a number of factors, including whether the cost of the electricity is competitive. If less than the entire project is built, the guarantee would be adjusted proportionately. If tax rates increase in the future or if project costs rise, local governments could receive more than the amounts guaranteed in the contracts.

The proposed project includes 57 MWs in Norway Township, 32 MWs in Sagola Township and 31 MWs in Felch Township. The tax revenue estimates and each township’s share are based on that arrangement.

The 30-year total includes $6.48 million to Dickinson County taxing entities, which includes county operations, the library, Bay College, senior centers, health department, veterans services and the road commission.

Norway Township would receive $1.24 million; Sagola Township, $673,000; Felch Township, $617,000; and the Dickinson-Iron Intermediate School District, $1.71 million.

Based on current millage rates, another $1.08 million would go to the Norway-Vulcan Schools’ debt levy and $642,000 to the North Dickinson County Schools’ sinking fund and bond.

The industrial personal property taxes are frontloaded due to depreciation, so about 50% of the estimated 30-year totals would be paid in the first five years, according to Circle Power. Assuming a $12.4 million total, the average annual total tax payment over the 30 years would be $413,000.

Legislation introduced in the Michigan Senate this summer would allow governments to opt into payments in lieu of taxes for commercial solar developments. Although there may be other variables, the proposed rate for brownfield sites in Senate Bill 1106 is $2,000 per MW for 20 years, which would be $240,000 annually for a 120-megawatt site. In most other cases, the proposed rate is $7,000 per MW for 20 years.

In comparison with real property taxes, Circle Power’s promise is roughly equivalent to the revenues that would go to county-wide entities from the construction of 145 new $300,000 homes.

Although Dickinson County government would be a major beneficiary, no direct tax contract is proposed for the county. That’s because the individual townships are the assessing units that set the property values on which the tax payments are based.

Jim Anderson can be reached at 906-774-3500, ext. 226, or janderson@ironmountaindailynews.com.