After a brief explanation on Monday, the Fisher County Commissioners County voted to find Mesquite Star LLC to be in default of its 2023 payment in lieu of taxes according to its 2018 Tax Abatement Agreement. This comes on the heels of the Fisher County Hospital District finding the company in default of its agreement last week.
Fisher County Attorney Michael Hall presented an updated version of the letter to be sent to Mesquite Star LLC, notifying the company it was delinquent on its payment in lieu of taxes (PILOT) for tax year 2023. Hall explained the amendment was nothing more than boiler-plate language he felt should be included along with what was March 7 letter originally entered into the court’s record.
Mesquite Star Special, LLC was established through the combined efforts of Hill Country Wind Power and NRG Energy Inc. Clearway Energy Group purchased NRG Energy Inc.’s renewables platform and officially changed its name to Clearway Energy Inc. in late 2018.
After months of negotiations with company representatives and legal counsel, the Fisher County Commissioners unanimously approved the agreement, with the county anticipating more than $3.2 million in PILOT payments over the 10-year term, nearly half of which was expected in the first five years alone.
The agreement essentially blends a guaranteed fixed fee with a fluctuating contribution based on price-permegawatt, each of which increases annually. The more megawatts produced, the more the county will profit is how Hall explained it to commissioners in 2018. Mesquite Star’s 419-megawatt wind farm came online in the summer of 2020.
Clearway has tax abatement agreements with Fisher County and the Fisher County Hospital District, as well as Chapter 313 agreements with multiple school districts. Both Roby CISD and Roscoe ISD confirmed having received their annual Chapter 313 payment, each of which is roughly $60,000.
The up-front, lost revenue payments the district received through the 313, offset budget shortfalls district-wide, and the 313’s effect on the I&S tax rate was a driving force behind Roby CISD’s $10.8 million bond proposal earning voter approval.
The Fisher County Hospital District funneled over $1 million from Mesquite Star’s 2021 and 2022 PILOTs into a separate tax account, later using the funds as security to borrow against when funding the district's new clinic construction. FCHD reported in late February that the account balance would be more than $1.6 million if not for the late payment.
The more than $530,000 owed to FCHD remains outstanding, and district CFO Caleb White informed hospital directors last week that the representative he spoke with said the company was experiencing cash flow issues.
Hall said it also came to his attention last week that Mesquite Star Special LLC had not made its payment to the county either, which prompted the letter. “We’re required to give them written notice to either get paid or pursue other remedies,” said Hall.
A 60-day cure period is written into the agreement to address default situations and remedies, which is initiated by issuing the notification letter. While the court agreed to send the letter, Commissioner Preston Martin raised objections to the letter’s wording that instructed the company to contact Hall’s office to discuss the matter.
“I’m against having Michael Hall negotiate or deal with any energy contracts,” said Martin. “He sat here and misled this court before on other agreements, and I’m against having him do anything with any kind of energy contract.”
Hall said if it would be easier to earn a unanimous vote, he would be willing to include the county judge as a point of contact. “I’ll do my job however you guys want me to,” said Hall.
If the company fails to settle the issue during the curation period, there are several avenues the county could pursue after the curation period. “None of that will happen if we send this letter and they pay,” said Hall. “Obviously we want to be paid.”
This is especially true this year, as commissioners took a less conservative approach when incorporating Mesquite Star’s roughly $590,000 PILOT into the county’s almost $6 million annual budget.
While nonpayment is unlikely, officials agree if the company were to fail to meet that financial obligation, the county would be looking at a nearly $600,000 budget shortfall and forcing cuts, likely to big-ticket items such as law enforcement budgets, community services like the senior citizens center, or heavy equipment purchases.
Hall later declined to comment, adding he did not want to go on the record with any statements. He then refused to hear questions from the Chronicle, claiming this article’s author violated their agreement to keep conversations “off the record” but provided no reference for how that agreement was violated.
Fisher County Judge Ken Holt confirmed that other than what was shared in court on Monday, to his knowledge, the county has had “zero” communication with the company regarding the delinquent payment. Other than what is outlined in the agreement and its default remedies, Holt said he does not know when to expect the funds.
Clearway Energy Group Director of Communications Zadie Oleksiw confirmed with the Chronicle last week the company was working with the FCHD administration, assuring the public that payment would be made by March 31. Oleksiw also responded to our queries earlier this week but was unable to provide answers to those questions before our press deadline. More information will be shared as the situation continues to unfold.