From the Urbana Daily Citizen:
Adams, Faber and local officials contest Strickland’s plans to “erase” turbine taxes
While Ohio Governor Ted Strickland touted elimination of tangible personal property taxes for wind and solar companies Tuesday, that prospect didn’t sit well with representatives of the entities that stand to lose up to $1.4 million in first-year tax revenue if the Buckeye Wind project gains approval to construct 70 turbines in Champaign County from the Ohio Power Siting Board this year.
Everpower, the New York-based developer of Buckeye Wind, and other alternative energy developers have been actively lobbying the state government to reduce taxes applied to utilities, claiming that Ohio’s rates are a barrier to competition compared to neighboring states.
“Ohio’s tax structure discourages wind and solar companies from coming to Ohio to generate renewable energy,” Strickland said during his State of the State speech Jan. 26, according to the Associated Press. “We should give those companies every reason to choose Ohio. That’s why I am asking the legislature to erase Ohio’s tangible personal property tax on generation for wind and solar facilities that break ground this year, create Ohio jobs and begin producing energy by 2012.”
State Rep. John Adams of the 78th Ohio House District and State Sen. Keith Faber of the 12th Ohio Senate District agreed that the governor’s proposal will face challenges.
“In discussion after the State of the State address, some in the (House) leadership believe it would be unconstitutional for him to do that for wind and alternative energy only,” Adams said. “I would be opposed to it.”
Adams said he’s against further subsidies or tax reductions for Buckeye Wind, which has already been promised a $5 million grant through the Ohio Department of Development, along with the possibility of federal stimulus dollars in the form of tax credits if construction begins in 2010.
“Those are determinations I have no say in,” he said of the ODOD grant and federal dollars. “I can’t stop it, is the bottom line. But I don’t believe the state is qualified to pick winners and losers when it comes to business. That’s why I opposed Third Frontier dollars as well.”
“It was long on rhetoric and short on details,” Faber said of Strickland’s proposal. “I’ve since heard he’s talking about eliminating the generation tax and keeping the transmission tax. I haven’t seen the numbers, but when you consider that 70 percent of those taxes go to the schools and 30 percent to the other local jurisdictions – until I see the details, it’s very difficult for me to have an opinion.”
Faber said he understands the logic of equal footing used to support Strickland’s position.
“Eliminating the tangible personal property tax is something the state has done for other businesses,” Faber said. “However, I’m very concerned that local communities get enough revenue to justify taking on the extra burden of a turbine project. I’ll be looking forward to the input of local stakeholders as this goes forward.”
Faber noted that Buckeye Wind has faced concerns about factors such as setbacks, infrastructure and decommissioning. Champaign County Commissioner Bob Corbett said Strickland’s proposal would potentially make the negative aspects of the Buckeye Wind project outweigh the benefits.
“It’s been one of my big fears all along, that if (TPP) is gone, we lose all of the tax revenue the company is claiming we’d get,” Corbett said. “I think that’s treating local governments very unfairly. That’s the only tax revenue we were looking forward to. When our budget is hurting as bad as it is, we need all the help we can get.”
In an e-mail Friday, Everpower Director of Development Michael Speerschneider said that Buckeye Wind would benefit from Strickland’s idea, but added that, from the company’s perspective, the economic impacts of the project would still be positive overall.
Everpower is working to understand how this proposal would take shape and determine what it means to wind power in Champaign County and Ohio,” Speerschneider said. “Everpower invites an open dialogue about this issue, as we have done in the past on other issues related to wind generation in Ohio. It is important to realize that the governor’s proposal is meant to promote the timely construction of projects like the Buckeye Wind Project, which will result in significant economic benefits that will stimulate the entire region. As Everpower approaches the final stages of development for the Buckeye Wind Project, we want to assure you that our commitment to being a productive and long term member of the community is as strong as ever.”
By the numbers
Champaign County Auditor Karen Bailey said she wasn’t surprised at all by Strickland’s statements.
“I knew it,” she said. “I said back in October that while (Buckeye Wind) was advertising that this project would bring a lot of tax money into our community, I knew that they were lobbying to end tangible personal property taxes. It looks like the governor now agrees with them. That’s a huge loss. If they were to put up a $1.5 million turbine, for example say in the West Liberty(-Salem) district, the first year that would generate in the neighborhood of $19,000 in county taxes, about $12,000 of which would go to the schools. So they will be the ones really losing out.”
According to Speerschneider, if all 70 proposed turbine sites are approved by the Ohio Power Siting Board, Triad would get 27 turbine sites, followed by Urbana with 16, WL-S with 14 and Mechanicsburg with 13.
Urbana Treasurer Mandy Hildebrand said while it would have helped local school districts to receive extra tax revenue from turbines, it wasn’t factored into planning such as five-year forecasts.
“To be honest, it was not money we had placed in our budget because it was such an unknown quantity,” she said, noting that until the publication of the proposed turbine site maps in the Daily Citizen, she and other school officials believed Urbana would have just a few turbines in the district.
“It will be unfortunate if (Strickland’s) plan does go through,” Hildebrand said. “Everpower representatives came in almost a year ago and met with the superintendent and myself but at that time we had no idea how many turbines would be in our district. We still don’t. It wasn’t money we were counting on for that reason.”
West Liberty-Salem Treasurer Steve Godwin said he also declined to use tax revenue touted by Everpower representatives when planning the district budget and five-year forecast.
“Who knows when and if we’ll get turbines,” he said. “As far as what the governor said in his speech, that’s all speculation. How do you promote energy services? You decrease what they have to pay. I don’t put a lot of stock in something until I know for sure it’s going to happen. It doesn’t pay to speculate.”
Mechanicsburg Treasurer Pat Sheffield echoed Hildebrand and Godwin regarding the futility of trying to plan for revenue from a wind facility.
“We don’t even know how many turbines we’re supposed to get,” she said. “We have not had any discussion with (Buckeye Wind) – good, bad, or indifferent.”
Sheffield brought up another taxation issue that wasn’t addressed by other school officials – abatement, rather than elimination of turbine taxes.
“If they’re talking about an abatement, they are supposed to come talk to the district first,” she said. “This process has not been transparent to the parties involved. We don’t know what’s going on.”
“I have not received any information regarding the final position on the taxation for the proposed wind turbines,” said Triad Superintendent Craig Meredith, noting that the OPSB could still deny the project as a whole or excise proposed turbines sites from an approved layout. “At this time there are just too many variables left to be determined… we are certainly not planning on new revenue at this point.”
Meredith said he was under the impression that “Buckeye Wind Project representatives have testified under oath that they will guarantee new revenue to school districts and other government entities at a predetermined level.”
Speerschneider said such a commitment was made in the application as an “alternative tax,” even though the OPSB has not imposed any conditions requiring such payment in lieu of taxes in order for the application to proceed.
“In the socioeconomic study that was submitted as part of the OPSB Application, Alternative Tax revenues to local municipalities were discussed,” Speerschneider said, noting that the calculations by Saratoga Associates were “meant to approximate the expected tax for this project … not necessarily a direct reflection of current Ohio tax code.”
“In that sense, we still fully expect a contribution to the community at the same level as that described in the application,” Speerschneider said. “A payment in lieu of taxes is certainly a possible mechanism to achieve this level of support, but it really depends on what form Gov. Strickland’s proposal takes and what ultimate tax payment will result. Contrary to initial interpretations, it is not clear at all that the proposal would erase all tangible personal property tax associated with the project. If and when the Governor’s proposal takes shape, we will be able to give more clarity on this issue.”
Meanwhile, the adjudicatory process continues, with Monday as the filing deadline for reply briefs from all parties involved in the Buckeye Wind application.
Champaign County Prosecutor Nick Selvaggio said while he can’t speak to Strickland’s comments in the next filing from the county and townships due to procedural rules, taxation of turbines is an issue that must be resolved.
“We’re not going to address it in our reply brief because it was not among the evidence introduced at the (adjudicatory) hearing, but I was not surprised at the inclusion of wind in Strickland’s speech for several reasons,” Selvaggio said, noting that Strickland recently accompanied President Barack Obama on a tour of a wind turbine technology lab at a community college in Lorain. “Gov. Strickland has the responsibility for moving Ohio toward compliance with renewable energy standards … and wind provides an expansion of manufacturing opportunities related to the cottage industry. Because of the continued debate in the legislature, I’m not comfortable relying on particular figures to determine the benefit to Champaign County, when it could be as high as the current valuation or as low as what Strickland has proposed. At this point, I don’t think Champaign County can realistically rely on tax revenue from turbines. There are too many variables at work here.”
Breanne Parcels can be reached at email@example.com