Shank pressing to change lease process after last year's solar-farm agreement

February 24, 2012|By ANDREW SCHOTZ |
  • State-owned land near the Maryland Correctional Institution-Hagerstown and the Maryland Correctional Training Center will be home to a solar-powered electric generating facility capable of powering more than 2,000 homes at peak output.
By Colleen McGrath/Staff Photographer

Dissatisfied with last year’s solar-farm agreement for state prison land, state Sen. Christopher B. Shank is pressing to change the lease process.

In July 2011, the Maryland Board of Public Works voted to lease 250 acres at the prison complex south of Hagerstown to Maryland Solar LLC for about $32,000 a year to start.

The rent would rise 3 percent in year four of the 20-year lease, then every other year after that.

Shank maintains that the state could have done much better. He has filed a bill to shift final oversight of future renewable-energy leases from the Board of Public Works to either a legislative committee or the full legislature.

Shank presented his bill on Thursday to the Senate Education, Health and Environmental Affairs Committee.

The state Department of General Services, which negotiated the lease, objected to the bill in a letter to the committee.

General services alleged that the standard proposed in the bill — “an annual rental fee in an amount that maximizes the economic return to the state” — is vague.

“Without any definition, any amount would be open to criticism,” the DGS letter said.

General services also said the additional oversight Shank proposes would add more bureaucracy and “could, in effect, postpone a project for nearly a year.”

Similarly, the state Department of Natural Resources wrote in a letter of opposition that the new process “would add unnecessary administrative burden and delay on the existing open bidding process for leasing State property for renewable energy resources.”

Maryland Solar plans to build a solar farm that would generate, at peak, about 20 megawatts, doubling the state’s solar input.

Shank told the Senate committee that he supports the project and hopes there are more like it, but opposes the lease arrangement.

Last year, he provided the Board of Public Works with information on government bodies elsewhere that received higher lease payments for solar projects. Some agreements called for government to share in the profits derived by the production of solar energy. Under Shank’s bill, energy royalties would be required in future leases.

The land that Maryland Solar will use was farmed for years by Creek Bound Farm LLC, which paid the same level of rent.

Shank told the committee that the land’s value should be higher for a $70 million solar project than it was for agricultural use.

However, last year, Michael A. Gaines Sr., the assistant secretary of the Real Estate Division in DGS, said land values have dropped since the Creek Bound Farm LLC lease was negotiated in 2007. If the lease were renegotiated in 2011, the farmer probably would have sought a lower rent, Gaines said.

Shank’s only ally on the Board of Public Works was Comptroller Peter V.R. Franchot, who also insisted that the state could have done better on the lease and voted against it.

Franchot said the state should have tried to get a share of a federal tax incentive — more than $20 million — the project is expected to get.

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