By Chas Sisk, The Tennessean
A company set up by former Gov. Phil Bredesen and two senior
members of his administration has asked for tax breaks for several
projects, tapping a law they helped push through just weeks before the
company was founded.
The Tennessee Department of Environment and Conservation has certified eight projects from Silicon Ranch Corp.
- a startup founded in 2010 by Bredesen, former tax chief Reagan Farr
and former economic development chief Matt Kisber - for incentives that
could slash their local and state tax bills.
The incentives were proposed by the Bredesen administration itself two years ago as a way to promote Tennessee's solar industry.
and other Silicon Ranch officials could not be reached for comment by
The Tennessean on Friday. But Farr, now the company's chief operating
officer, told the Nashville Business Journal that they believe enough
time has lapsed that company officials now feel comfortable applying for
tax breaks they helped create.
"It was vetted and looked at and became something we were comfortable taking advantage of," he said.
incorporating Silicon Ranch were filed in Delaware in August, with
Bredesen listed as its chairman, Kisber as its president and chief executive officer
and Farr as its vice chairman. Bredesen, whose role has been described
as a passive investor, told The Tennessean in 2010 that he asked Farr to
resign from state government to avoid any conflicts of interest.
How much Silicon Ranch will receive in tax breaks for the projects
will probably remain confidential. A spokesman for the Department of
Revenue said it could not disclose whether Silicon Ranch has asked for
tax breaks or how much it is in line to receive.
and a third member of the former governor's Cabinet have been
enthusiastic supporters of the solar industry. Promoting the industry in
Tennessee was a linchpin of the governor's economic development
strategy, with Farr and Kisber playing key roles in drawing companies
such as Wacker Chemie and Hemlock Semiconductor to the state.
Both companies make polysilicon, a raw ingredient in solar panels.
began laying the groundwork for Silicon Ranch before leaving office in
2010. Since then, they have announced several major projects, but
company officials did not apply for tax breaks until this year.
Now Silicon Ranch is poised to receive breaks that could underwrite several of its projects in Tennessee.
company could receive credits for three related projects near Pulaski,
Tenn., that it says will generate 1.4 megawatts of electricity, enough
for about 140 homes.
Tax incentives could also go toward solar
arrays at two HCA's facilities in Midtown Nashville that will generate
193 kilowatts each, an array at the Second Harvest Food Bank in
MetroCenter that will produce 260,000 kilowatt hours a year, a
1-megawatt solar farm at the Agricenter International building in
Memphis and a 750-kilowatt array at the Memphis Bioworks Foundation.
The company is also building a 9.5-megawatt array for Volkswagen in Chattanooga and a 30-megawatt solar farm in Georgia that do not qualify for tax breaks.
Silicon Ranch projects were approved for tax breaks in July, but they
were not disclosed in September, when The Tennessean requested a list of
for recognition as a "certified green energy production facility." A
spokeswoman for the department said a backlog in updating files meant
the information had not been included on spreadsheets released to the
Under the law, the projects qualify for three tax breaks:
• The company could get a full refund of any sales taxes it pays or owes on machinery or equipment.
• It would receive an exemption from the state's franchise tax on equipment.
The company's local property taxes would be calculated based on the
salvage value of the solar equipment, essentially nothing.
Bredesen greatly expanded the use of tax breaks, making it a
centerpiece of his economic development strategy. Farr and Kisber played
key roles in formulating that policy, often testifying before the
legislature on behalf of credits and exemptions that they said would
encourage companies to open businesses or relocate to Tennessee.
a Democrat, argued tax incentives were a better deal for Tennessee than
cash payments because companies could claim them only if they had
fulfilled their obligations. But many Republicans have since complained
that tax incentives are harder to track because tax returns are
confidential in Tennessee.
Gov. Bill Haslam, Bredesen's Republican successor, has proposed giving companies lump sums for investments in Tennessee.
Bredesen administration proposed the three tax incentives for solar
energy in its 2010 tax bill, the last the governor proposed before
leaving office. State lawmakers approved the measure in early June,
shortly before adjourning for the year.
Tennessee now ranks 17th
in the nation in solar-power capability. A recent report from the Pew
Charitable Trust said the state has the third-fastest growing clean
energy sector in the nation.
Farr resigned from the Department of
Revenue nearly a month after Silicon Ranch was formed, and Kisber
remained in office until late in the year. During that time, Kisber met
with officials from at least one major Tennessee company, Corrections
Corporation of America, to discuss a potential partnership with Silicon
Lawmakers last year discussed rolling back one of the three tax
incentives - the provision that slashed solar companies' property tax
bills. State Comptroller Justin Wilson argued that taxing solar panels
at a different rate would violate the state constitution.
The bill was withdrawn after solar companies complained that eliminating the tax break would crush the nascent industry.
The two other tax breaks for solar companies have not been reassessed.
told the Nashville Business Journal that the legislature's failure to
repeal the property tax break amounted to a "reaffirmation" of the
But Jason Mumpower, the comptroller's chief of staff,
disputed Farr's interpretation of the legislature's inaction. He said
lawmakers deferred a decision to give the attorney general time to
review that matter.
"We were concerned with this one provision
slipped into the end of the (2010) bill that created an exception for a
certain type of solar equipment," he said. "We thought, surely to
goodness, this had to be in error. ... This all has nothing to do with any
individual or individual company."
Lawmakers could revisit the issue when they reconvene in January.