B Y W E S F R A N C O A N D J O N AT H A N B A C H
TAXPAYER-SUBSIDIZED
BIOGAS PLANT UNDER-
PERFORMS, ASKS FOR
MASSIVE TAX BREAK
AERIAL VIEW OF JC-
BIOMETHANE
PHOTO COURTESY DEAN FOOR
A
Junction City biogas plant that’s already received
millions of dollars in taxpayer subsidies is now
more than $325,000 behind on its property tax
bill and is fighting Lane County in court over
making good on what it owes.
JC-Biomethane opened its plant in 2013 with the prom-
ise it would generate electricity to power homes by burning
off gases from food wastes. The plant is the first in Oregon
to use wastes from businesses and restaurants to generate
power, according to records and interviews.
But the plant hasn’t performed as promised. Public re-
cords show JC-Biomethane officials claim the company
doesn’t have the money to cover its property tax bill. Court
documents also indicate the plant hasn’t generated all of
the electricity it projected it would, and that the company
has faced higher costs than its owners expected.
Now, court records obtained by EW disclose the biogas
plant’s CEO is trying to win an extraordinary break from
Lane County that would retroactively give the plant a five-
year free pass on paying any property taxes.
Court documents show the plant is asking for relief
from its last two property tax bills. The additional subsidy
could cost the county and other local governments more
than $700,000.
Lane County Tax Assessor Michael Cowles declined
to talk about JC-Biomethane’s refusal to pay its property
taxes. County officials initially rejected a public records
request for documents regarding JC-Biomethane’s unpaid
tax bill, but have since said they would look into disclosing
some of the records.
So far it appears county and state officials have refused
to go along with the plant’s plan to rid itself of the hefty
bill. State law, for example, allows counties to create a so-
called Rural Renewable Energy Development Zone, which
could give renewable energy projects up to a five-year
property tax break. JC-Biomethane mentions the zone and
others in its court documents.
“If JCBio was in a different location,” the company
says in court documents, “it would presently qualify for
property tax exemption.”
Business Oregon, a state agency, approves these RRED
exemption zones. Arthur Fish, the business incentives co-
ordinator at Business Oregon, said no request has been
filed for Lane County.
What’s more, the court documents reveal that Oregon
tax officials dismissed the plant’s appeal for its 2014-2015
property tax bill in late May.
8
June 16, 2016 • eugeneweekly.com
And there’s another problem with the plant’s request:
The state’s rules regarding these tax-free zones appear to
prohibit the county from retroactively creating a zone and
allow JC-Biomethane to walk away from its current unpaid
tax bill.
In March, JC-Biomethane sued Lane County and the
Oregon Department of Revenue in Oregon Tax Court,
seeking the special exemption.
In May, JC-Biomethane CEO Dominic Vacca told EW
his company is disputing the current county valuation of
the plant. “JC-Bio believes there were errors in the original
[property tax] filing and assessment,” Vacca said. He de-
clined to talk about the disputed bill in detail.
The additional
subsidy could cost
the county and other
local governments
more than $700,000.
JC-Biomethane’s refusal to pay its property taxes raises
bigger questions: What, exactly, have taxpayers gotten for
their earlier subsidy of the plant?
The plant uses anaerobic digestion to process food
wastes shipped from the Portland area and uses the “meth-
ane-rich biogas” emitted to power an engine that generates
electricity, which is then sold to Portland General Electric,
according to documents from the Energy Trust of Oregon,
a clean energy-focused nonprofit that created a case study
on JC-Biomethane.
According to former CEO Dean Foor, the plant was
projected to produce enough continuous power for be-
tween 1,400 and 1,500 homes.
The $16 million plant received an array of state and fed-
eral subsidies totaling more than $6 million.
The Energy Trust documents show the subsidies in-
clude around $4.7 million in federal funding. Court docu-
ments show a $1.35 million business tax credit was also
secured from the Oregon Department of Energy for the
biogas plant.
The Energy Trust says in its case study that it also contrib-
uted $2 million to JC-Biomethane’s project costs. The Energy
Trust gets its funding from Oregon utility ratepayers.
The plant sits along Hwy. 99 near Junction City. Lane
County values the company plant at around $13.4 million,
documents illustrate.
With interest, county records show, the biogas plant’s out-
standing tax bill will be $329,585.61 as of June 16.
Vacca says the plant “naively and incorrectly” provided
the county with information on the plant’s market value when
it was first started, court documents show.
That assessed value is based in part on the plant’s perfor-
mance. Court documents say the plant has processed more
than 46,000 tons of food waste — but that amount is well
below its targets, judging by its output figures.
In the court documents, JC-Biomethane says it’s been hurt
by higher than expected operating costs. For example, the
company claims, some wastes shipped to the Junction City
facility contained metals and concrete, which damaged the
plant’s equipment. The company also claims the plant has de-
sign and construction flaws, and that a recent fire damaged
the facility.
“These issues will continue to hinder cash flow,” the com-
pany says in court documents. “Subsequently, JCBio is un-
able to pay its property tax bills.”
The company is now trying to get its entire overdue tax
bill wiped out by an appeals process and asking the county to
create the special exemption.
This new tax court case isn’t the plant’s first excursion into
court. In June 2014, records show, the company fired Foor,
one of the plant’s founding executives. Foor turned around
and sued for wrongful termination.
Records from the 2014 lawsuit reveal trouble for the young
plant: In his lawsuit, Foor claimed it suffered from “numerous
defects” because of design and construction issues based on
the work of entec, an Austrian contractor. Foor’s suit said the
plant faced about $3.5 million in damages as a result.
The higher profile Seneca biomass plant has been in
court fighting over paying its property taxes as well as a
“public benefit” payment to local governments, according
to Oregon Tax Court and Lane County documents. Seneca
had been granted a three-year enterprise zone property tax
waiver by Lane County and the city of Eugene. What re-
mains to be seen is whether the county will entertain the
idea of giving the biogas plant the exemption it seeks.
This story was written as part of the investigative reporting project at the Uni-
versity of Oregon School of Journalism and Communication.