Construction of a Sandoval County solar power generation plant from which PNM will buy power to provide to the Meta data center in Los Lunas received unanimous approval from the Sandoval County Commission on Wednesday (Oct. 25). The commission authorized the issuance of $275 million in Industrial Revenue Bonds to build the NMRD IV Project on 1,100 acres of land west of Rio Rancho.
According to Rob Burpo, the county’s financial adviser, PNM could begin construction of the plant during the first quarter of next year. The 140 megawatt solar array could start providing the power to the Meta data center by June 2025.
While the bonds totalling $275 million were issued, Burpo said that the project really is expected to cost closer to $172 million, adding that extra is built in in case of cost overruns.
The cost for the solar panels, which are to be manufactured in Vietnam, totals $63 million; the batteries will be manufactured in the U.S. by Tesla and account for $95 million of the cost; and $8 million is allocated for purchase of the land, he said.
The new plant will be located about 10 miles south of two similar but much smaller projects the county has already developed, Encino and Encino North. The location of the site also proves to be a bit of a windfall for Rio Rancho Public Schools, the biggest beneficiary of revenues allocated for area public school districts.
Construction of the plant will generate considerably more money for the county and five area school districts than in the past, Burpo said, under the new legislation passed that changed how Payment in Lieu of Taxes (PILOT) receipts are distributed to school districts.
Still, he criticized the new law, calling it “terrible legislation,” for what he said was a flaw in the new formula that divvies up PILOT distributions.
SB 474, sponsored by state Sen. Benny Shendo, D-Jemez, and signed into law by the governor, amended the Industrial Revenue Bond Act to change how payments were made to school districts.
As a result of the new formula, Albuquerque Public Schools, which only has 382 students attending Corrales Elementary School in Sandoval County, will receive about $108,000 more in PILOT payments than Bernalillo Public Schools, the district that serves the county seat.
“To say it’s convoluted would be an understatement,” Burpo said of the formula. “It is very difficult to even factor. It takes quite a while to actually figure it out.”
The new formula calls for Sandoval County to receive 62% of the total PILOT distribution, which translates to $11.3 million, or an average of $377,000 in recurring revenue, over the 30 years of the bond. Previously, Sandoval County was getting $100,000 in distributions annually.
“So, things worked out pretty well for us,” said Burpo.
It’s how the other 38% is distributed to school districts that gets “convoluted.”
Prior to the legislation being signing into law, the distribution to the schools was shared equally among the five districts. Now, Burpo explained, 50% of the schools’ share goes to the school district in which the project is located, which in this case is Rio Rancho. Forty percent is based on the land mass occupied by each school district within Sandoval County. And the remaining 10% is distributed based on the population within each school district, regardless of whether that population resides in the county or not.
Consequently, Rio Rancho Public Schools is set to receive $3.7 million over the life of the bond, an average of $123,000 annually over 30 years on an escalating scale. RRPS would receive about $107,000 each of the first five years of the distribution, roughly $113,000 the next five years and so on, ultimately receiving payments of $137,000 annually the final five years of the bond.
Cuba Independent Schools gets $1.3 million over the life of the bond while Jemez Valley schools get $812,000.
Bernalillo schools receive just short of $500,000, while APS will collect just over $600,000, because Corrales Elementary, with fewer than 400 students, is in the Albuquerque school district.
Commissioner Jay Block was confounded by how that was possible.
“You’re telling me that for 382 students, they get $600,000?” he asked.
Burpo reiterated that’s the number determined by the new state statute.
Block also questioned Burpo about the rate Meta was paying PNM, noting that the corporation formerly known simply by one of its platforms, Facebook, would be paying a much lower rate for power than the average consumer.
“The big corporation of Meta is getting a sweet deal here on the power, and the normal everyday New Mexicans who are getting burdened by inflation and higher energy costs are going to be paying four or five times more. Is that correct? Does that sum it up?” he asked Burpo, who paused and said, “I’m not here to dispute your description.”
After all the discussion over the intricacies of the formula and PILOT payouts, Commissioner Michael Meek made the decision to approve sound like a simple one.
“But the basic fact is that we’re going to be exchanging $3,000 a year for taxes times 30 years in exchange for a total of $11,259,000 to the county?” he asked.
That, Burpo confirmed.
After the commission approved both the bond issuance and accompanying resolution, Block made one last statement.
“I just want to reiterate I really am totally against Meta getting that sweet deal, but this is money for the schools and God knows our schools need help in New Mexico being dead last,” he said.