AriSEIA Submits Letter on Community Benefits Agreements

City of Willcox
101 S. Railroad Avenue, Suite B
Willcox, Arizona 85643
 
Re: Community Benefit Agreements for Utility-Scale Solar and Energy Storage
 
Thank you for contacting the Arizona Solar Energy Industries Association (AriSEIA) for insight into how community benefit agreements are being structured for utility-scale solar and energy storage projects. AriSEIA appreciates the City's thoughtful approach, and in particular its goal of agreements that are competitive and reasonable for the industry while providing an equitable, long-term benefit to the community.
 
AriSEIA has some concerns about the utilization of community benefit agreements. We believe renewables projects should be treated on par with other electric generation projects and are concerned about only renewables projects being priced out of competitive solicitation processes. Additionally, every project and every community is different, so any agreement should be tailored to the specific project rather than set by a uniform formula. Where a community does pursue an agreement, AriSEIA hopes the information below helps it reach terms that serve the community without putting solar and storage at a competitive disadvantage.
 
Arizona Needs New Supply, And Every Resource Competes On Price
Arizona's electricity demand is growing rapidly. Arizona Public Service (APS) has said the state's energy needs are growing faster than at any time in its history, driven in part by unprecedented requests from extra-large users such as data centers.¹ Salt River Project (SRP) has likewise cited continued projected growth in its service territory as the reason it needs additional generation to keep service reliable and affordable.²
 
Meeting that demand requires new supply, and utilities choose among resources through competitive, all-source procurements. In SRP's 2026 All-Source Request for Proposals (RFP), for example, bids from solar, storage, and other developers are compared against SRP's own self-build options for natural gas, solar, and storage.³ Every resource competes on price for the same contracts.
 
For that reason, community benefit requirements should apply equally to every form of generation, not to renewable energy alone. SRP's approach reflects this principle, because its one-time community contribution is a minimum requirement for every proposal regardless of the resource technology proposed.⁴ Some local requirements in Arizona, by contrast, apply only to renewable energy facilities.⁵ When a requirement falls only on solar and storage, it raises the cost of those projects alone and can price them out of the competitive solicitations that determine which resources get built. The community then loses the project, along with the jobs, tax revenue, and water savings described below. Electric bills for all customers also rise when new power costs more to build
 
The Value Solar Projects Already Provide
AriSEIA commissioned Elliott D. Pollack & Company to analyze a representative utility-scale project in Arizona: a 400-megawatt (MW) solar facility with 400 MW of four-hour battery storage on about 2,400 acres, with a taxable original cost of approximately $874.8 million. The full study is attached. It found that the project would support approximately 690 construction and related jobs and $63.2 million in wages, and would generate $170.1 million in total economic impact from construction, including $101.4 million in direct construction spending. Once operating, the project would generate an estimated $14.2 million in economic activity each year and more than $736.7 million over its life.⁶
 
The tax benefits are equally significant. Over a 40-year life, the project would generate approximately $36.4 million in tax revenue for local taxing jurisdictions, averaging about $905,770 per year. The local school district would receive the largest share, an estimated $18.8 million over the project's life or about $468,800 per year. These figures do not include the increase in real property taxes when land is reclassified from vacant to commercial or industrial use, which has raised assessed value per acre by an average of roughly 50 percent. They also exclude use taxes on non-exempt equipment.⁷
 
The study models a project in Maricopa County, so figures for projects elsewhere would reflect local tax rates and the specifics of each project, but the scale of benefit is representative. Because equipment value depreciates, property tax revenue is highest in a project's early years. That is one reason AriSEIA favors pairing tax revenue with a community fund designed to last the life of the project, as described below.
 
Water
Water deserves particular attention in the Willcox Basin. In December 2024, the Director of the Arizona Department of Water Resources designated the Willcox Groundwater Basin as Arizona's seventh Active Management Area, finding that active management was necessary to preserve the basin's existing groundwater supply for future needs and that land subsidence and earth fissuring were endangering property and groundwater storage capacity.⁸ The Department is now developing the first management plan for the new Active Management Area.⁹
 
A 2024 analysis prepared for AriSEIA by WestWater Research, using Arizona Department of Water Resources data, is also attached. It compared solar with other uses land might be put to and found that solar uses far less water than any of them. Solar facilities use about 0.03 acre-feet of water per acre per year, compared with 2.3 acre-feet for subdivisions, 3.6 for manufacturing, 4.1 for irrigated agriculture, and 6.3 for data centers. Per megawatt, solar uses about 0.16 acre-feet per year, compared with 4.3 acre-feet for natural gas generation and 18.7 acre-feet for nuclear.¹⁰ For a basin working to preserve its groundwater, few forms of development place less demand on the aquifer.

Per-Megawatt Benchmarks
The City asked whether developers commonly use a per-megawatt benchmark. Such benchmarks are a common reference point, and there are two Arizona examples the City may come across. The first is SRP's 2026 All-Source RFP, which is publicly available on SRP's website. Section XII.H of that RFP requires a non-recurring, one-time contribution of $1,500 per megawatt of nameplate capacity, dedicated to supporting the surrounding community, and the requirement applies to every proposal regardless of technology.¹¹
 
The second is a proposed development agreement between Navajo County and the developer of the Chimney Canyon solar and storage project. For that 975-megawatt project, the agreement calls for a one-time payment of roughly $6.8 million, or about $7,000 per megawatt, after a credit for the County's estimated share of project property taxes.¹²
 
AriSEIA believes the Navajo County payment is much too high and that the SRP framing is the more appropriate benchmark, for four reasons. First, SRP applies its requirement equally to every technology competing in its solicitation, while the Navajo County requirement applies only to renewable energy. Second, at about $7,000 per megawatt, the Navajo County payment is more than four times the SRP benchmark and adds substantially to the cost of solar and storage projects that must compete on price against other resources. Third, the Navajo County agreement requires payment before a project operates, with $250,000 due when the building permit application is submitted and the balance due within 270 days after the building permit is issued.¹³ Fourth, a payment at that level would make Arizona communities less competitive for the projects they hope to attract.
 
The Navajo County agreement does include useful structural features, which AriSEIA recommends below: a one-time payment rather than annual payments, no escalator, a credit for property taxes, and firm commitments from the County in return. AriSEIA views contributions consistent with the SRP benchmark as reasonable and competitive for Arizona. Where a project already provides SRP's community contribution, those funds should be directed to the host community and credited toward any local agreement rather than duplicated.
 
Payment Only After Commercial Operation
AriSEIA's most important recommendation concerns timing. Any community contribution should be due only after a project begins commercial operation, and never at approval, at permitting, or at the start of construction. Many projects that receive local approval never reach construction because of interconnection delays, financing, or the outcome of competitive utility solicitations. A payment required before a project is built is a payment for a project that may never exist. Developers must recover that cost from the projects that do get built, which raises their prices in the same competitive procurements described above.
 
Tying payment to commercial operation protects both parties. The community receives its contribution from a project that is actually producing jobs, tax revenue, and power, and the developer is not asked to put capital at risk before the project is certain. The same principle should apply to every element of a community contribution. The one-time payment, the initial funding of any community fund, and the first scholarship awards should all begin once the project is operating.

Annual Versus One-Time Payments
AriSEIA recommends a one-time contribution, made at commercial operation, rather than annual payments. A one-time contribution gives the community certainty about what it will receive and gives the developer certainty about its costs, without creating an open-ended obligation over decades.
 
To meet the goal of benefits that extend over a project's useful life, a one-time contribution can be combined with an endowed community fund and a local scholarship program, both beginning at commercial operation. A fund held by a community foundation, for example, can provide grants to local organizations every year for the life of the project and beyond, while scholarships continue over the project's operating life. The total value of these contributions should be considered together and kept consistent with the SRP benchmark. Where the City receives property tax revenue from a project, that revenue should also be credited against the contribution, as in the Navajo County agreement,¹⁴ since it serves the same purpose.
 
Escalation provisions
AriSEIA does not recommend escalators. Neither SRP's benchmark nor the Navajo County agreement includes one.¹⁵ A one-time contribution and an endowed fund do not require them, and a project's property taxes are set under state law rather than by agreement.
 
Agreement Duration
The fund and scholarship program can begin at commercial operation and run for the full operating life of a project, typically 30 to 40 years, with a clear end date tied to decommissioning. This addresses the City's concern that benefits not end well before the project does. Construction-related obligations, such as road repair, would end once they are satisfied.
 
Solar Versus Battery Storage Capacity
SRP's benchmark counts a paired project once, rather than adding solar and storage capacity together. Its example is a 200 MW solar plus 200 MW storage project that contributes $300,000, which is $1,500 per megawatt applied to 200 MW, not 400 MW. The Navajo County agreement likewise bases its payment on generation capacity at the point of interconnection, and AriSEIA recommends the same approach.¹⁶
 
Other Community Investments
The most common additional commitment is repair of any damage to City roads caused by project construction, documented through pre- and post-construction road surveys. AriSEIA considers this appropriate. AriSEIA also suggests that a developer be permitted to satisfy part of its contribution through direct support of local 501(c)(3) organizations, so that the benefits reach the community directly.
 
Mutual Commitments
An agreement of this kind works best when it provides certainty to both parties, as the Navajo County agreement does.¹⁷ This approach is consistent with national research on renewable energy siting. A 2026 white paper, A Win-Win Solution for Clean Energy Siting, was prepared by the Siting Solutions Project with Dr. David E. Adelman of the University of Texas School of Law. It recommends development agreements and payments in lieu of taxes as tools that deliver visible benefits to communities while giving developers the certainty they need to build.¹⁸
 
The authors point to Riverside County, California, which adopted development agreements for solar projects in 2015 and now ranks second in the state for installed solar capacity.¹⁹ Following that model, in exchange for the community contribution, the agreement should do five things:
 
·         confirm that no contribution of any kind is due before the project begins commercial operation;
·         assure the developer that the project may proceed under the rules in effect when the agreement is signed;
·         set reasonable deadlines for City review of complete permit applications;
·         commit that no additional fees or exactions will be imposed; and
·         recognize that the agreed contribution fully addresses the project's community impacts.
 
AriSEIA would welcome the opportunity to meet with the City to discuss any of this further. Thank you again for reaching out, and for approaching this question in a way that considers both the needs of the community and the realities of the industry. This is an evolving area of practice and we will reach back out if we gather additional information that may be helpful to the City.
 
Respectfully,
/s/ Autumn T. Johnson
Executive Director
AriSEIA 
(520) 240-4757
[email protected]
 
Attachments:

1. Elliott D. Pollack & Company, Gila Bend Solar (Example Project) Economic Impact and Tax Revenue Analysis (June 2026).
2. WestWater Research, Arizona Water Demand Analysis by Land Use Category (October 9, 2024).

 
¹ Ariz. Pub. Serv., APS Uses "Growth Pays for Growth" Model to Develop New Natural Gas Plant, APS Newsroom (2025), https://www.aps.com/en/About/Our-Company/Newsroom/Articles/APS_Uses_Growth_Pays_For_Growth_Model_to_Develop_New_Natural_Gas_Plant.
² Salt River Project, 2026 All-Source Request for Proposals § I (Feb. 23, 2026), https://azure-na-assets.contentstack.com/v3/assets/bltefc1fc708dcc94e7/blt7c2744713c80d9b9/2026-All-Source-RFP.pdf.
³ Id.
⁴ Id. §§ XII, XII.H.
⁵ Development Agreement Between Navajo County and Chimney Canyon Energy Ctr. 1 LLC recital D (proposed 2026) (on file with the Ariz. Solar Energy Indus. Ass'n) [hereinafter Navajo County Development Agreement] (citing Navajo County, Ariz., Zoning Ordinance § 1201), https://www.navajocountyaz.gov/DocumentCenter/View/10209/Chimney-Canyon-Development-Agreement.
⁶ Elliott D. Pollack & Co., Gila Bend Solar (Example Project) Economic Impact and Tax Revenue Analysis 1-2 (June 2026) (prepared for the Ariz. Solar Energy Indus. Ass'n) (attached).
⁷ Id. at 1, 4-5, 9.
⁸ Ariz. Dep't of Water Res., Findings, Decision and Order Designating the Willcox Groundwater Basin as a Subsequent Active Management Area (Dec. 19, 2024), https://www.azwater.gov/ama/willcox-ama.
⁹ Willcox AMA, Ariz. Dep't of Water Res., https://www.azwater.gov/ama/willcox-ama (last visited Sept. 18, 2026) (describing the informal comment period on the draft First Management Plan, Aug. 3 to Sept. 3, 2026).
¹⁰ WestWater Rsch., LLC, Arizona Water Demand Analysis by Land Use Category 3-6 tbl.1 (Oct. 9, 2024) (prepared for the Ariz. Solar Energy Indus. Ass'n) (attached).
¹¹ Salt River Project, supra note 2, §§ XII, XII.H.
¹² Navajo County Development Agreement, supra note 5, §§ 11.3, 11.5.
¹³ Id. § 11.4.
¹⁴ Id. § 11.3.
¹⁵ Salt River Project, supra note 2, § XII.H; Navajo County Development Agreement, supra note 5, §§ 11.3-11.5.
¹⁶ Salt River Project, supra note 2, § XII.H; Navajo County Development Agreement, supra note 5, § 11.3.
¹⁷ Navajo County Development Agreement, supra note 5, §§ 7.2, 8.1, 10.3, 11.2.
¹⁸ Siting Solutions Project & David E. Adelman, A Win-Win Solution for Clean Energy Siting: State Policy Tools for Improving Community Outcomes, Providing Developer Certainty, and Accelerating Deployment (2026).
¹⁹ David E. Adelman & Nelson Falkenburg, Communities and Clean Energy Can Both Win. Here's How., PV Mag. USA (June 30, 2026), https://pv-magazine-usa.com/2026/06/30/communities-and-clean-energy-can-both-win-heres-how/.