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SolarWorld could be on the hook for millions in abated taxes, and is hoping to recoup millions from lawsuit against Calif. companies

SolarWorld Americas Inc. could be on the hook for millions in abated taxes, should the solar manufacturing plant cut too many jobs or close in the next several months.

On top of that, in a lawsuit filed in early June, SolarWorld is demanding that two California-based companies — PD Solar Inc. and Petersen-Dean Inc. — repay more than $8 million it says the companies owe after refusing to pay for solar panels they bought in 2014.

SolarWorld, located at 25300 N.W. Evergreen Rd. in Hillsboro, is the largest solar panel maker in the country. The company has struggled financially for years, which it blames on Chinese interference in U.S. markets. The company announced last month that it could lay off as many as 711 people.

Paying up

It was May when SolarWorld announced possible mass layoffs at its Hillsboro plant. The plant could cut between 500 and 711 of its 800 workers, a move which could violate agreements made under the city's Enterprise Zone program.

Enterprise Zone participants receive tax abatements in exchange for local investments and job creation. Investments are typically for significant new equipment or a new plant. The list includes some big-name companies — First Tech Credit Union, Amazon and Salesforce.com, among others — who pay into community fees that help fund projects like Centro de Prosperidad, an economic development center in downtown Hillsboro.PAMPLIN MEDIA GROUP: FILE PHOTOS - The solar plant could cut between 500 and 711 of its 800 workers, a move which could violate agreements made under the citys Enterprise Zone program.

SolarWorld has made three Enterprise Zone agreements representing seven investments, saving $39 million in abated taxes from 2008-2016.

The company has paid $1.9 million in community service fees since 2008, according to Hillsboro spokesperson Patrick Preston.

SolarWorld's tax savings have dwindled following a high of $8.8 million in 2011-12, with $2.2 million in abated taxes for the 2015-16 tax year. Enterprise Zone agreements can run as long as five years, with tax abatements running out as projects expire.

But if a company loses eligibility for the Enterprise Zone program before the period is up, the company can be hit with a nasty penalty.

"If a company were to end its Enterprise Zone agreement, any and all property taxes abated would be owed," Preston said.

The company only owes abated taxes under current agreements, not expired agreements.

Preston emphasized he spoke generally, and there are workarounds.

According to Enterprize Zone rules laid out by Business Oregon, an economic development arm of the State of Oregon, companies facing ineligibility can pay back the latest year of abated taxes to avoid being removed from the program. If the company reinstates workers, participation can continue. If the company closes or doesn't add enough jobs, it could be forced to pay back the remainder of the abated taxes.

Getting paid

As for the lawsuit, SolarWorld argues PD Solar Inc. and Petersen-Dean Inc. breached their contract and failed to pay for solar products they purchased several years ago.

Petersen-Dean Inc. is a California-based home improvement contractor specializing in installing solar panels. PD Solar, the company's subsidiary, is an engineering and construction firm.

Collectively, SolarWorld argues that the two companies owe more than $8.2 million in unpaid debts, including more than $2.7 million in overdue invoices, and refused to pay for an additional $5.5 million in outstanding bills.

The company is asking a federal judge to force the companies to pay their debts, as well as any "further relief as the court deems just and proper."

Petersen-Dean began buying solar panels from SolarWorld in early 2014, but refused to pay for any of the products, the lawsuit says.

The companies have refused to pay for years, according to the lawsuit. The companies were expected to pay SolarWorld $2,727,038 by May, but never did. The company also has $5,520,146 worth of other products it has purchased, but not yet paid for.

In May, officials at SolarWorld contacted Jim Petersen, president of Petersen-Dean Inc., who was "unresponsive" when the officials asked for payment.

Later, during a meeting with SolarWorld's vice president of sales Shane Messer, Petersen-Dean officials said they would not be paying for any of the products the companies had purchased, according to the lawsuit.

Geoff Pursinger and John William Howard contributed to this report

Contract Publishing

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