TRAVERSE CITY — Traverse City Light & Power and Cherry Capital Airport officials want to fast-track a potential 10-megawatt solar array before tax credits shrink.
Both boards will pursue two tasks at once — seeking proposals to build the array while studying how to build it. Utility board members on Tuesday agreed to the first task, and airport commissioners previously approved the second.
But TCL&P board members held off on applying for a $15 million loan from the U.S. Department of Agriculture to finance the project in light of questions over whether Traverse City would back the loan. Utility Executive Director Tim Arends said he'll meet with a USDA representative this week to get more information.
City manager Marty Colburn, a utility board nonvoting member, said he had no chance to discuss the loan with city commissioners prior to Tuesday.
"Candidly, that had not been part of the discussion with the part of the $15 million loan with backing from the city, so it really caught me off guard when I read this packet," he said.
Utility Controller Karla Myers-Beman said applying for the loan wouldn't commit the utility to taking the money — a potential interest-free source of funds, with 20-year payback terms, according to the USDA.
Arends added it would take "yes" votes from both the utility board and city commission to accept it. He defended the pace, noting project partners agreed to expedite the process so developers can use a federal tax credit before year's end.
Solar investment tax credits — currently at 30 percent — will fall by 20 percentage points in the next four years, the Solar Energies Industry Association reports. It allows businesses to recoup solar project materials and installation costs off of their income tax bill.
The utility can't take advantage of the tax credit, so partnering with a developer makes more sense than a TCL&P-owned array, Arends said.
Patrick McGuire, another board member, said he opposed seeking proposals for the array because economics for solar power in the region aren't good — his was the lone "no" in the 5-1 vote, which board member Amy Shamroe missed.
Federal requirements that the airport get a fair-market value for the land could make the financials even worse, and whichever third party agrees to develop the array will seek a profit, McGuire said.
"I see Traverse City Light & Power drawing the short straw so I don't think, therefore, that it's worth going through the exercise," he said.
Tim Werner, another board member, said he thought the responses to the request could provide crucial information for how much a project of this scale would cost.
The project's future hinges on the cost of its power output, Arends said — the lease cost, tax credits and the potential USDA loan all factor into the price of the array's output.
"Being larger, I would expect more favorable pricing than some of the smaller ones that you've been asked to approve in the past," Arends said to the board.
The array's output could help the utility meet a clean energy goal, and lease income from the array could boost airport finances. A smaller array— a six-megawatt — would cost an estimated $8.7 million, but the airport study didn't have 10-megawatt figures.
On the airport side, officials need to determine the land's fair-market value to set a lease price. Airport contractor C&S Engineers continues to study the potential installation further, including how to meet various Federal Aviation Administration rules, airport Director Kevin Klein said.
The land in question is the site of controversial tree cuttings. The airport commission approved them in light of a 2014 wildlife hazard assessment that recommended cutting or thinning the woodlot to head off aircraft-bird strikes and other animal conflicts.
Contractors cut the trees in early 2019 as city leaders mulled tighter rules for tree clearings, rules both airport and city commission attorneys contend wouldn't have stopped the cuttings anyway.
Airport Director Kevin Klein previously said a solar array or other development would put that land to good use while also heading off future wildlife conflict issues.
He said Wednesday the airport commission and some in the public are excited by the possibility.
"We think this is a great opportunity on doing solar energy ... for the community," he said.