The state Department of Economic and Community Development has denied California-based solar company XsunX’s application for Business Energy Tax Credits, prompting company officials to submit a new application for a scaled-down Wood Village production facility.
The company awaited approval for months before launching production in a building it leases from the Merix Corp., which moved out of Wood Village last year.
The state was reviewing the company’s financial viability and other criteria as part of a required pre-certification process before it could issue tax credits. Oregon offers a tax credit of up to 50 percent or $20 million, whichever is less, through a five-year period for qualified solar and other renewable energy projects.
Lou Torres, state Department of Energy spokesman, said a review process on behalf of the Economic and Community Development Department found the company, which up to now has been in the research and development phase, did not meet standards for credits established by a legislative bill passed in 2008.
“The department conducted due diligence and found the company failed to show it met the requirements of House Bill 3619,” he said. “It recommended we not approve” the credits, “and we concurred with the findings” based on financial viability and prospects for long-term success.
Because of confidentiality agreements, Torres said he was unable to specify why XsunX failed to qualify for the credits, noting that the company is the first to be turned down since the stricter guidelines were established. He emphasized, however, that the company is free to move forward without the tax credits.
“This has nothing to do with (the company) wants to open for business.”
Tom Djokovich, XsunX chief executive officer, said he’s not thrilled about the decision, but plans on resubmitting plans for a smaller, 1,300-megawatt factory for the Wood Village plant. The original plant was based on 2,500 megawatts.
“It’s unfortunate we had to wait a year and a half to receive a response from the Oregon Department of Energy,” he said. “We have advised the department of our plan to resubmit” for a facility that “requires significantly less capital.”
A startup, green technology company based in Orange County, Calif., XsunX signed a sublease agreement in April 2008 with Forest Grove-based Merix for the 90,000-square-foot building on Northeast Halsey Street. The Wood Village City Council subsequently established an enterprise zone with the state to provide the company a three-year property-tax abatement.
Djokovich said then the company planned to start up in January 2009 with approximately 22 employees, with the potential to grow to as many as 160. The global economic crisis, however, and a longer-than-expected wait on the business tax credit process put the brakes on that projection, said Djokovich and Chief Operating Officer Joe Grimes.
The Wood Village plant, which employs approximately 10 at the moment, has vendors waiting and plans to get production moving as soon as finances are in order, Grimes said earlier this week. He expressed optimism that the credits would be approved.
The economy and the tax credit process prompted company officials to develop a contingency plan early this year, Djokovich noted.
“We’re electing to move to the contingency plan,” he said. “The purpose for refiling is taking a different approach. We have to find the right mix to take advantage of the benefits.”
Torres stressed that the tax credits are intended to encourage alternative energy businesses while protecting taxpayers’ money.
“The governor and Legislature are trying to promote renewable energy,” Torres said, noting that expanded 50 percent credits for solar and other renewable companies are attractive to many investors. “If you’re going to give these large tax credits, what we need to have is more commitment from the businesses. If they said they’re going to hire 200 people, we want to make sure they do what they say, make sure they can meet payroll. We have to make sure the taxpayers’ end is held up.”
By Shannon Wells, The Gresham Outlook – http://www.theoutlookonline.com/news/story.php?story_id=123579099116836900