Mineral County Commissioner: “If you make a promise, why be afraid to sign a contract to keep that promise?”

This will be a little long, but sometimes clarifying a point takes longer than making it in the first place.  So please bear with me.

At the beginning of an editorial some months ago, Mineral Daily News-Tribune (Keyser, WV) writer Richard Kerns noted, “Two semesters in Maryland’s journalism grad school that I spent 10 years paying for, taught me that, as a human, which most reporters are, one cannot truly be free of bias. The trick is to keep it out of your reporting, as opposed to column-izing.”  In an article dated October 11, 2009 titled “Wind funds eyed for judicial annex” Mr. Kerns begins with this paragraph, “Although they have never endorsed the proposed Pinnacle Wind Farm, the Mineral County Commissioners welcome the tax revenue the project would generate, saying they would dedicate the estimated $125,000 a year to a desperately needed judicial annex.

It seems to this reader, having read some of Mr. Kerns previous work, he might be, perhaps unintentionally, planting a little seed in the opening of the article that could lead the reader to believe that the Mineral County Commissioners are a little hypocritical for being skeptical of the need, performance and financial viability of the proposed Pinnacle Wind Farm, while, at the same time, discussing how, should the project move forward, the revenue generated from the installation might be used for the benefit of Mineral County.

Beginning his article with “Although they have never endorsed the proposed Pinnacle Wind Farm … they welcome…” Mr. Kerns simply sets the stage for readers to perhaps see their Commissioners as weak and indecisive on the issue, while drooling over the potential for money to spend.  This serves no purpose but to cloud the factual content of the story, which I take as the Commissioners doing their job by challenging all aspects of what will be a significant, life altering addition to our community; while discussing options for the new tax revenue and working toward a commitment from US WindForce.  I’m frankly confused by Mr. Kerns’ intent.  Project approval, as far as I know, is pretty much outside of the Commissioners’ control.

Mr. Kerns notes in the next line that “The commissioners are also working with the Pinnacle developer, US WindForce, to develop a mutually agreed upon “floor” for taxes from the project, in the event that revenue falls below current projections as a result of future tax-rate reductions adopted at either the county or state level.”  That would seem a reasonable action in advance of an installation they can do little to prevent.  To construct a measure to require US WindForce to live to it’s promises seems reasonable.

Following this, Mr. Kerns states “Commissioner Wayne Spiggle, who acknowledges his “skepticism” about both the 23-turbine Pinnacle project and the wind industry in general, nevertheless said any public official would recognize the importance of a revenue source that promises to pump $11 million in taxes into the Mineral County over the next 25 years.  County schools are slated to receive about $308,000 a year from the project, for a total average tax windfall of $433,000 annually.”  I’m not sure if Mr. Kerns learned in writing school to put quotes around “skepticism” whenever it pops up in a sentence, or if Mr. Kerns simply wants to emphasize his “amazement” that  Commissioner Spiggle might hold a position counter to his own.  Mr. Kerns, if one hasn’t noticed, sees the Pinnacle project as a noble step toward the future.  For me, if Commissioner Spiggle did acknowledge his skepticism, the quotation marks serve no purpose.  But maybe I’m just picky.

By the way … hang onto that “promises to pump $11 million in taxes into the Mineral County” thought for a little while.

Mr. Kerns did offer this quote from Commissioner Spiggle, “There’s no question that for any county commissioner it would be fiscally irresponsible not to favor initiatives that increase tax revenue.”  Of course, we residents also expect our Commissioners to evaluate the source of such revenue.  One would hope that the source of any tax revenue would be generated from a profitable industry able to compete in the energy market by improvements in efficiency and reduced costs and not simply from tax subsidies provided by other government agencies and increased utility rates paid for by the citizens.  One would hope that our Commissioners are forever skeptical of the offerings of businesses that have a poor track record of performance on which planned revenues are based.  We expect our Commissioners to wade through the hype of the sales pitch and secure a commitment.  It shouldn’t be a stretch for WindForce to confirm their commitment since, according to Mr. Kerns, Scott Burgess, assistant director of property taxes for the state of West Virginia, confirmed that the estimates developed by WindForce were “very solid numbers.”

Interesting term “very solid numbers.”  Efficiencies for wind power are all over the map and even the Secretary of Energy Chu acknowledges wind energy’s unreliablity, noting that Bonneville Power in the Northwest “gets about one-fifth of its power from wind energy when the wind is blowing.”  “But when it stops blowing, that share drops to zero.” (The Wind Energy cart. Will the horse ever catch up?)”  Even the Department of Energy’s “West Virginia Wind Resource Map” carries this disclaimer, “Note: Wind resource at a micro level can vary significantly; therefore, you should get a professional evaluation of your specific area of interest.”

Similarly, Ofgem, Britain’s Office of the Gas and Electricity Markets, highlighted the “variability” of wind as a source of energy supply, and stated that the wind is “so variable in fact that the energy regulator is currently assuming that, in the future, windfarms are available for just 15pc of the time.”

Perhaps the independent professional evaluation recommended by the Department of Energy has, in fact, been done for the Pinnacle project and shared with the Commissioners, or better yet, the Citizens via the News Tribune.  Maybe I missed the publication.  But then, US WindForce must have some means of generating the “very solid numbers” on which they base their contribution.  Perhaps, Mr. Kerns can assist.

But back to Mr. Kerns article.  He notes that “Pinnacle opponents, pointing to other West Virginia counties that did not reap the promised tax benefits of wind farms, had challenged the WindForce numbers, saying they were inflated to make the project more appealing.”  To clarify, Mr. Kerns also noted that “Burgess, though, said the project most often mentioned in that regard, in Tucker County, predated a 2007 state law that firmly establishes how wind farms are to be taxed.”

So, why all the questions, Commissioners?  As Mr. Kerns notes, “With that tax policy pegged to the overall project cost, the $131 million Pinncale wind farm, to be located on Green Mountain just west of Keyser, would provide a major infusion for perpetually stretched county finances.”  Commissioner Spiggle commented that, “The presentation (WindForce’s Community Advisory Panel meeting this week in Elk Garden) confirmed that the publicized figures are correct.”

Hey, Put me in Coach!  I’m ready to play, today!

But wait!  Way down in the article where my ADD normally won’t let me go, after all the critical projects to benefit from this “total average tax windfall” are listed, I see this little gem, “One question mark that hovers over the equation, however…”  Well, that sure blew a fuse on my little “skeptical” meter!  Seems we have “two special tax levies that together form a substantial part of Mineral County’s 2.58 percent tax rate and, ominously, must be approved by county voters every five years. The fear is that voters, who have consistently rejected an additional levy for school projects, might view the Pinnacle revenue as extra funding that negates the need for the special levies, and vote against one or both assessments. If that happens, Pinnacle would also pay a reduced tax rate, and the $433,000 annual payment could be significantly cut.”

And there’s more.  “Spiggle also noted that Burgess, speaking at the Elk Garden meeting, referred to an active “wind lobby” in Charleston. It is possible, the commissioner said, that the wind industry might eventually prevail upon the Legislature to reduce the tax on wind turbines, which would also undermine local tax revenue.”  Hmmm!  So what are you gonna do about that?

To address such concerns, the county is currently negotiating with WindForce to establish a minimum tax in the event that revenue from the project declines significantly, for any reason. A similar agreement was put in place for a wind farm in Greenrier County.”  Commissioner Janice LaRue confirmed “US WindForce is currently working on that.”  Sounds good!

The article confirms that “David Friend, vice president of sales and marketing for WindForce, said a draft agreement has been prepared for the commissioners, establishing $250,000 as a minimum annual tax contribution. Friend said the proposed minimum is “significantly higher” than the Greenbrier County figure,” adding, “We have heard what the commissioners have said about their concerns, and told them we would be happy to look at a ‘floor’ agreement.”  The article says “Friend noted that such an agreement would go “above and beyond” any state requirements. “We’re trying to show the commissioners and the public that we’re trying to be good neighbors,” he said.

OK!  Are we done?  Of course not!  Here comes Commissioner Skeptical again.  Seems “Spiggle appears to be taking a harder line on those negotiations than his two fellow commissioners. He wants WindForce to agree to provide annual tax payments based on current projections for the life of the project, regardless of tax rates.”

Commissioner Spiggle said, “I know all three of us think the county should have a contract to provide what Commissioner LaRue calls a ‘floor’…,” and “If those numbers are correct, let that be the floor. If you make a promise, why be afraid to sign a contract to keep that promise?”  Hey, sorta like the one I told you to hold on to before … “promises to pump $11 million in taxes into the Mineral County.”  Perhaps Mr. Kerns can help us get to the mechanics of the calculation.

But, finally, that promise thing sounds pretty good to me, Commissioner!  Asking someone to live to their word?  What a novel concept!  Thanks for being so “skeptical.”  Thanks to the Commissioners for doing their job.

The full News Tribune article is here, for your convenience.

This entry was posted in Pinnacle Wind Farm, Wind energy and tagged , , , , . Bookmark the permalink.

2 Responses to Mineral County Commissioner: “If you make a promise, why be afraid to sign a contract to keep that promise?”

  1. Frank O'Hara says:

    So how much is $433,409 in real dollars? The County will receive $124,085 and the school tax (based on 70%) will be $307,504. The state average for the B & O taxes will be $1,820.32.

    The average state B& O tax amounts to $151.69 per month or 41 cents per day. How fair is this tax structure for producing limited power that is going out of state? How does this B & O tax compare to a ‘mom and pop’ store? How does this compare to a similar business in our area? How does this project contribute to WV renewable energy plan, if we sell electricity to another state?

    These numbers continue to change. The county is considering a sellout of $250,000 for the project life. While $250,000 appears to be a large amount, consider what this county will receive.

    • $250,000/27,0789 Mineral County residents = $9.23 per person/12 months = 76 cents a month
    • $250,000/10,784 households = $23.18 a year/12 months = $1.93 a month/30 days = 6 cents a day
    • $250,000 @ 70% for school use = $175,000/4,492 Mineral County students (2009) = $38.95 per student/12 months=$3.24 a month for education, less than a fast food value meal.

    AFA believes that Mineral County government, agencies, and organizations are eligible to apply and obtain federal, state, and private grants that match this proposed tax structure.

    AFA expressed concern that large tax structure that US Wind Force proposes may have an opposite impact. Voters may view this large industrial wind tax offered as an incentive not to vote for any future special levy because the county has too much. This is not AFA position.

    Property owners within view turbines are filing for reductions in taxes, asking for relief because their home is valued less, remains on the market longer, and loses its market / curbside appeal.

  2. Jon Boone says:

    What should be kept in mind is not claims made either by Windfarce or the state tax office, since these are based, in the case of the former, on self-interest, and, in the case of the latter, on general formulas that only indicate what may be obligated BEFORE ANY DEDUCTIONS THAT WINDFARCE MAY USE TO REDUCE THAT FORMULA OBLIGATION. This is really what industrial wind is all about, after all–finding ways to shelter income through tax avoidance.

    The county commissioners should demand promissory notes from Windfarce that unambiguously obligates the company to paying specific amounts of revenue at specific times. Here I would consult a tax attorney who is knowledgeable about tax sheltering arcania in order to understand what is possible.

    All of what is stated in Kerns’ article is nothing but the hottest air, blown hard to sell soap. What Kerns has written is little more than promotional fluff for Windfarce, since, given how wind limited liability tax sheltering specialists can find ways to reduce tax obligations, it is not at all clear what the bottom line taxes for Windfarce would actually be. One should ask, further, if this $11-million “projection” is accurate, then why hasn’t Windfarce provided surety IN WRITING guaranteeing this amount over this time?

    At the same time, one should get accurate information about actual revenues receive from the Thomas wind project and any others constructed so far in West Virginia, COMPARING THESE REVENUES WITH THE REVENUES PROMISED BEFORE THE PROJECTS WERE BUILT. Here Wayne Spiggle might use his office to write specific requests from the appropriate officials of those neighboring jurisdictions. But you should challenge Kerns’ journalistic methods, since he has done evidently no fact checking.

    Finally, someone should fire this fastball to Friend: Ask whether he personally would guarantee paying the difference between the revenues projected in Kerns’ article and any shortfall that may accrue due to legal, but arcane, tax deductions.

    Be mindful that when asked a direct question when he was under oath at the MDPSC hearing about the amount of tax revenues he had promised in writing in his application,Wayne Rogers of Synergics, a Maryland wind LLC, refused to answer, saying, after a lot of brow-beating, that he “would do what the law required.” He refused to stand by any figure, even the one stated in this application.

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