Despite Incentives, Solar Energy Company Defaults on City Lease

SAN ANGELO, TX -- A planned solar energy producing facility on land owned by the City of San Angelo will not be built. 

According to the agenda for Tuesday's city council meeting, OE Renewables Texas, LLC has defaulted on its lease.  

The City and OE Renewables entered into a Commercial Lease and Option Agreement for a solar electric generating facility effective Aug. 6, 2014, for the lease of approximately 80 acres of land situated east of N US Highway 67.

The solar energy farm was highly touted at San Angelo City Council meetings starting in July 2015. “Plans Emerge For The First West Texas Solar Electric Generating Facility,” read our headline back then.

The solar energy farm’s spokeswoman, Jen Bradford, said in 2015, “Most likely it would power the local area, the local grid, and we’re also working with AEP on the inter connection requirements.” She continued, “Most likely it would power the immediate area. One megawatt generally powers (it changes in different regions) but can power between 300 and 400 homes depending on the temperature and geography and energy use of that region.”

In 2015, the board at COSA-DC recommended a $580,000 incentive package from the ½-cent sales tax economic development dollars. Since most incentive packages are provided “in-kind” or as the project progresses, is not known how much tax dollars were spent on the incentivization of the failed project, if any at all.

On Jan. 1, 2016, the lease expanded the area to 143 acres.  The agreement provided that OE Renewables shall possess and use the land only to inspect, examine and test for purposes of due diligence and planning relating to potential for construction of solar electric generating facilities.

OE Renewables notified the city of a change in development plans that will reduce the leased premises from 143 acres to 10 acres. The Report to council shows OE Renewables has failed to use the land as required under the lease. OE Renewables was provided Notice of Default in Tenant performance on June 15, 2018.

The report says OE Renewables did not respond to the Notice of Default; therefore, staff recommends termination of the commercial lease and option agreement for a solar electric generating facility.

Also at Tuesday's council meeting, there will be an update on sales tax revenue and the first public hearing on the proposed tax rate for FY 2019.  

The overall tax rate is proposed to remain the same as the prior year’s tax rate of 0.776 per $100 valuation. This budget will raise more total property taxes than last year’s budget by $626,546 (1.67%), and of that amount, $383,414 is tax revenue to be raised from new property added to the tax roll.

The San Angelo City Council meets at 8:30 Tuesday morning in council chambers at the McNease Convention Center.  The meeting is open to the public.