Wind farms and “fair share” of local property tax. (Ne’er the twain shall meet!)

More “woulda, shoulda, coulda” riding along with the wind?

From The Star Press (Indiana):  Value of wind farms to local governments questioned


MUNCIE — Wind farms could be more valuable to local communities than riverboat casinos, but not if they don’t pay their fair share of local property taxes.

“The ones we’ve looked at, on average, the state is assessing each windmill an average of $1 million,” said accountant Gregory Guerrettaz, president of Financial Solutions Group in Indianapolis. “So right there, you could be losing a differential of $4 million on taxes during the life of that windmill.”

Guerrettaz, a municipal financial consultant for more than 20 years, spoke to local planning officials recently at a Communities at the Crossroads conference in Indianapolis.

“I’m saying, when we looked at it, on average, a wind farm is not going to bring in its proportional share of property taxes that it should,” he said. “And it will not bring anything in on an income tax.”

Four wind farms have been proposed in East Central Indiana, and others are already being built in West Central Indiana.

Wind towers are assessed by the state, not by local assessors, who do, however, assess the land on which the structures sit.

Wind tower assessments are based on “federal cost less federal depreciation as reported by the company on its federal income tax return,” said Amanda Stanley, a spokesman for the Indiana Department of Local Government Finance.

“The company reports its cost to build the wind tower structure and calculates the depreciation of that structure on its federal income tax return.”

Many counties have granted property tax abatements to wind farms that essentially exempt part of the assessed value of the wind tower structure from taxation, she explained.

“So while the assessed value of the wind tower structure may be $5 million, an abatement may reduce the taxable assessed value of the tower to $1 million,” Stanley said. “The granting and amount of these abatements is a local decision, even though the property itself is assessed by the state.”

Benton County will begin collecting property taxes from 87 windmills this year, and many more are being built there.

“We gave them a 10-year abatement,” said Benton County Assessor Kelly Rose.

The wind farm will pay zero percent of what it normally would have paid in property taxes the first year, 10 percent the second year, 20 percent the third year and so on until paying 100 percent in the 11th year.

The 87 windmills were assessed by the state at $85.8 million. The assessed value of the land for the 87 towers is $806,000. The land is assessed the same as cell towers.

But the county is also receiving payments in lieu of taxes from wind farm developers.

For example, an agreement with BP Wind Energy, which is developing a $700 million wind farm, calls for BP to pay Benton County $1 million 30 days after starting construction, plus another $1 million a year for three more years.

The payments are being made to “correct current shortfalls in local government revenues so as to better enable Benton County to provide the abatement contemplated herein, and to offset revenue which Benton County would otherwise lose as a result of the abatement,” the agreement states.

Paul Cummings, project developer for Horizon Wind Energy, which is planning a wind farm in Randolph County, said Indiana’s property taxes on wind farms are “pretty high” compared to other states. Local communities approve abatements and receive payments in lieu of taxes to “make the projects work in the beginning,” he said.

Full property taxes are paid after 10 years “when we’re able to afford it,” Cummings said.

This entry was posted in Industrial Wind Taxes, industrial wind vs. property value, Wind Energy Shenanigans and tagged , , , . Bookmark the permalink.

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