Testimony of Dayna Baird Payne On Behalf of the American Wind Energy Association and Iberdrola Renewables Senate Ways & Means Committee May 20, 2015

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1 Testimony of Dayna Baird Payne On Behalf of the American Wind Energy Association and Iberdrola Renewables Senate Ways & Means Committee May 20, 2015 Chairman Peterson, Vice Chairman Beagle, Ranking Member Tavares, and Members of the Senate Ways & Means Committee, thank you for the opportunity to testify today. My name is Dayna Baird Payne, President of Government Edge, and I am here on behalf of the American Wind Energy Association (AWEA) and Iberdrola Renewables. I am here today to respectfully ask for the extension of the sunset on the payment in lieu of tax for renewable and alternative energy projects. The payment in lieu of tax, or PILOT, was established in Senate Bill 232, sponsored by Senator Chris Widener, in the 128 th General Assembly. As project developers looked to build non-traditional energy sources like wind, solar, clean coal, and on-site combined heat and power, they realized that Ohio law considered the project owners to be a "public utility," capturing all renewable and advanced energy projects in the definition. As "public utilities," those projects would pay the tangible personal property tax. In the instance of a wind farm, that would have amounted to more than $40,000 per megawatt, where the range in our surrounding states was $ ,000 per megawatt. It effectively made wind farms impossible to build in Ohio. The impact on other forms of on-site generation was just as dramatic, with the tax rates significantly driving up energy costs and making projects infeasible. Thus, SB 232 created the PILOT, which sets a per megawatt amount of $9,000. In order for a qualified energy project to qualify for the PILOT, several requirements must be met: 1. County commissioners must approve the PILOT or must pass a resolution deeming the county an Alternative Energy Zone (AEZ) such that all qualified energy projects in the county would automatically be approved (9 counties have passed AEZ resolutions and have set the PILOT at $9,000 per MW) 2. Project owner must employ at least fifty percent Ohio-domiciled employees during construction of the project 3. Project owner must train and equip fire and emergency responders in the project area 4. Project owner must repair roads and bridges to restore them to preconstruction conditions as determined by the county engineer must post a bond with the county for those repairs

2 2 5. Project owner must establish a relationship with a university to educate and train individuals for careers in wind and solar industries (endowments, co-op programs, internships, research and development projects, etc.) When created in SB 232, the PILOT had a two-year sunset date, which has subsequently been extended twice for two additional years in the previous two biennial budgets. The current sunset requires a renewable energy project to be under construction by the end of 2015 and to be placed in service by the end of 2016, with slightly longer timeframes for advanced energy projects such as clean coal, nuclear and cogeneration. I am here today to request a five year extension of the PILOT for all such projects. This request is not a cost to the state or the General Revenue Fund in any way. Only when a project is built is the PILOT assessed and paid, and as with the tangible personal property tax, is it paid to local school districts and county government. Ohio's two operational wind farms pay $3.6 million annually in PILOT payments, and county officials and school district superintendents in both counties have repeatedly praised the PILOT. Just this year, Lincolnview school district in Van Wert County was able to equip all students K-12 with tablets, ipads, or laptops in large part due to Blue Creek Wind Farm's PILOT payments. A new and exciting development in Ohio further necessitates the PILOT extension. In a previous budget bill, changes were made to the tax treatment of large data centers in order to attract those data centers to locate in Ohio. The changes are working. I suspect most of you have heard about blue chip, west coast technology companies possibly coming to Ohio. Please see the attached news articles highlighting Amazon s data center plans in Ohio. We are also aware of others actively seeking sites in the central Ohio area. Data centers for companies such as Amazon, Facebook, Google, and Microsoft are all large energy users and all have sustainability policies. They express a commitment to purchasing renewable energy in the states in which they locate. Without the extension, we do not believe energy developers can build wind, solar, biomass, CHP, or other such projects in Ohio, likely making Ohio less attractive to these data centers, as well as other Fortune 500 companies with renewable energy and sustainability goals. If Ohio wishes to attract these global companies, we should maintain the ability to construct these projects so that companies voluntarily seeking out renewable energy are not chased away by punitive tax rates. A five year extension of the PILOT would help us do that. Thank you for your time today and I am happy to answer any questions of the committee.

3 Amazon remains hush-hush on data center plans in central Ohio INTERACTIVE: VADATA SITES View Larger See More Amazon told the Ohio Tax Credit Authority it would invest $1.1 billion in central Ohio and create 120 jobs. Take a look at the locations under discussion. By Steve WartenbergThe Columbus Dispatch Wednesday May 13, :52 AM One of the worst-kept secrets in central Ohio is that an Amazon subsidiary is building massive data centers in Hilliard and Dublin, and a third in either Orange Township or New Albany, that could help transform the region into a major technology and cloud-computing center. The Ohio Tax Credit Authority approved $81 million in tax incentives at a public meeting last August to lure Amazon, which has said it will invest $1.1 billion and create 120 jobs with an average salary of $80,000.

4 Two months later, Gov. John Kasich told a crowd in Powell that the project was a done deal and Amazon was making a billion-dollar investment in cloud computing. In the ensuing months, Amazon has received financial inducements from Hilliard and Dublin, and construction has begun at the Hilliard site on Hayden Run Road. New Albany City Council is expected to approve incentives at its meeting tonight, and Orange Township trustees are scheduled to vote on a zoning change on May 20 that could pave the way for Amazon. Despite all these public events, nobody is talking. We are not discussing anything on this topic, said Amazon spokeswoman Mary Camarata in an . We have nothing to say, said Kasich spokesman Rob Nichols in an . Local officials also say they can t talk specifics of the project. We signed a confidentiality agreement and can t say what the governor already said, said Tim Hansley, Delaware County administrator. However, he did say Amazon will select either Orange Township or a different third site, such as New Albany. They ve always said they want three sites for redundancy purposes, and if they don t go here (in Orange Township), they ll go somewhere else in the region, Hansley said. Why all the secrecy? The answer is simple: cybersecurity. Amazon is a very cybersecurity-oriented organization, and they don t like to talk about anything until after the fact and even after the fact they are extraordinarily security-conscious, which they should be, said John Sydnor, senior vice president of Rev1 Ventures, a Columbus technology business incubator. Bottom line: The company has billions of bits of data about its individual and corporate customers that cyberhackers around the world would love to steal. Our economy these days is all about data, said Phil Rist, one of the founders of Prosper Business Development Corp., a local data-analytics company. Our company uses Amazon Web Services for several of our applications, so we re very happy they take these extra precautions, he said. Amazon Web Services, an Amazon unit, provides cloud computing, applications and other services to corporate customers. A new Amazon venture will join a growing list of similar endeavors in central Ohio.

5 The Columbus Collaboratory was formed in February 2014 by Nationwide, Cardinal Health, L Brands, Huntington Bank, Battelle, American Electric Power and OhioHealth to help analyze data and combat cyberthreats. IBM opened a major big data operation in 2012 at Tuttle Crossing, and Cardinal Health opened a technology center this year in Dublin. Expedient Data Centers recently said it will build a $52 million data center in Dublin, and Compass Data Centers will build five data centers in New Albany. Amazon is a huge player in the growing field of cloud computing, which is the delivery of on-demand computing services such as servers, storage and applications on a pay-for-use basis to companies and individuals. It also constitutes a $5 billion business that is still growing fast, according to a recent statement by Amazon founder Jeffrey Bezos. Our lives are in the clouds now, Sydnor said. Amazon Web Services is a huge player, and them coming here will change the entrepreneurial landscape. Hilliard s incentive package to Amazon includes a 15-year, 100 percent real-estate tax abatement valued at $5.4 million, plus wage-tax rebates and the waiving of permit fees that total $200,000. Dublin has approved plans for Amazon to build on 68 acres at the southeast corner of Rt. 161 and Houchard Road but has yet to issue a building permit. The city has offered Amazon land valued at $6.8 million and performance incentives valued at $500,000 over 10 years. Orange Township officials have yet to approve the zoning necessary for five buildings at the southwest corner of Home Road and Rt. 23. Delaware County has offered Amazon a 15-year, 100 percent property-tax abatement, said Teri Morgan, spokeswoman for the county. New Albany is also offering a 15-year, 100 percent property tax abatement. The 68-acre site is located in the city s International Beauty Park. All of the activity points to something big afoot, even if very little is being said. swartenberg@dispatch.com