In South Carolina, fee‑in‑lieu of tax (FILOT) agreements were created as a special‑purpose tool, not a default discount for every big project—and they are especially questionable for utility‑scale solar farms and data centers.
What FILOT is supposed to do?
A FILOT is a negotiated property‑tax deal between a company and a county. Instead of paying normal ad valorem tax, the company pays a contract fee based on a lower assessment rate (often 6% instead of the standard 10.5% for manufacturing/utility) and a fixed millage for up to 30 or even 40 years.
State law spells out the purpose:
The county must find that the project benefits the general public welfare by creating services, jobs, or other public benefits that would not otherwise exist, and that “the benefits of the project are greater than the costs” before granting a FILOT.
In other words, FILOT exists to help South Carolina’s high property‑tax structure compete for footloose, job‑creating, capital‑intensive industries—think factories and major employers that bring serious payroll and long‑term tax base.
Why solar farms are a poor match:
Utility‑scale solar certainly checks the “capital‑intensive” box, but it often fails the rest of the test:
- Very few permanent jobs. After a burst of construction work, a large solar farm might support only a handful of long‑term on‑site jobs, far fewer than a comparably expensive factory or distribution center.dor.sc+1
- Land‑intensive, low‑employment use. A solar array can tie up hundreds or thousands of acres for 30–40 years, with limited local economic activity beyond lease payments to a few landowners.
- Long‑term cleanup risk. Panels and infrastructure must eventually be removed; if decommissioning bonds are weak, counties risk being left with a degraded industrial site, not a restored landscape.
When a county locks in a solar FILOT at a low effective tax rate, it can easily give away more in forgone taxes than it ever recovers in jobs and genuine local benefit. That’s the opposite of “benefits greater than the costs.
Why data centers are also problematic:
Data centers look better on paper but raise similar concerns:
- They are capital‑heavy and often qualify for FILOT plus state sales‑tax exemptions on computers and electricity.
- They can pay good wages for a relatively small number of tech jobs—but job counts are still low compared to multihundred‑million‑dollar investments.
- They heavily stress local power (and sometimes water) infrastructure, requiring costly upgrades that the public may partially shoulder.
- When a data center gets both a FILOT and state exemptions, the county may be left with high‑impact infrastructure demands and modest net tax revenue, especially if the FILOT terms are overly generous and run for decades.
The core problem is locking in long discounts on low‑job projects
Structurally, FILOT for solar farms and data centers has three big flaws:
- Misaligned purpose. The tool was designed to attract job‑creating industrial projects; using it as a blanket subsidy for low‑employment, land‑intensive facilities stretches it far beyond its original rationale.
- Long terms, changing technology. FILOTs can fix assessment ratios and millage for 30–40 years. Solar and data‑center technology, markets, and environmental expectations will change much faster than that, yet counties are stuck with yesterday’s deal and tomorrow’s costs.
- Hidden opportunity cost. Every dollar of tax capacity given away to a lightly staffed solar farm or server farm is a dollar unavailable for future employers that actually bring broad‑based jobs—and for schools, roads, and services taxpayers already struggle to fund.
A Better Approach
For utility‑scale solar farms and data centers, counties can—and arguably should:
- Use land‑use authority (setbacks, buffers, decommissioning rules) to control siting and protect neighbors, without feeling obligated to add tax subsidies on top.
- Reserve FILOT for projects that clearly meet its intended test: substantial, enforceable job creation, high wages, and net fiscal benefits that exceed the costs.
- If a FILOT is used at all, make it shorter, performance‑based, and subject to clawbacks, rather than a 30‑year automatic discount for simply pouring concrete and erecting hardware.
In short, FILOT in South Carolina was meant to be a scalpel, not a blank check. For utility‑scale solar farms and data centers, it often cuts in the wrong direction—away from taxpayers and toward projects that do not return enough jobs or long‑term value to justify the break
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