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Farm windmill generates tax puzzle  

The Municipal Property Assessment Corp., a non-profit organization responsible for assessing municipal property taxes in Ontario, has asked the finance ministry to clarify rules that could prove a major setback for renewable energy projects in the province.

At issue is whether wind turbines and solar panels add enough value to a property to trigger an increase in annual property taxes. The concern is that the tax increase would offset energy savings or the revenues from clean electricity sold into the grid, reducing the incentive to embrace renewable-energy technologies.

“What we’ve decided to do is bring this issue forward to the Ministry of Finance to find out whether that’s their intention,” said Rose McLean, director of legal and policy support services at the assessment agency, which is funded by 445 municipalities in Ontario and is responsible for assessing 4.4 million properties.

“You’ve got anaerobic digesters going on farms and solar farms in southwestern Ontario. We need to understand what the assessment needs to be for these types of properties.”

The uncertainty was raised last month when Guelph-area resident Max Woschnigg was told that the 80-kilowatt, 40-metre high wind turbine he installed on his farm in December had increased his property’s assessed value by $59,000.

“I came back from holidays and had a note to call them back, and that’s what they told me,” Woschnigg, a 74-year-old retiree, told the Star.

“I was quite upset.”

Woschnigg purchased the turbine from Holland and installed it at a cost of $160,000. The electricity produced from the turbine, more than double what he uses, is fed back into the grid under the government’s net-metering program and saves Woschnigg an average of $3,600 a year.

He said the increase in property value, and anticipated property tax hike, would likely erase a lion’s share of his energy savings.

McLean said the property assessment was sparked after Woschnigg obtained a building permit to erect the turbine. An assessor visited the property and, under regulations passed in 2004, determined the property’s value should be increased.

“The regulation doesn’t specify private or commercial. It’s silent on the issue,” said McLean, adding that Woschnigg’s assessment is on hold until the ministry evaluates the matter.

She said smaller wind turbines and residential solar panel systems have not yet been considered, though the regulation remains unclear.

It was the size of Woshnigg’s turbine that triggered the assessment. “You would expect something of that magnitude would be assessable, but at what point do you draw a line, or is everything assessable?”

Renewable-energy experts worry the tax rule could hurt Ontario’s new standard offer program, designed to encourage the production of clean energy from farmers, community co-operatives and local institutions as well as homeowners.

Under the program, the government will pay 11 cents per kilowatt-hour for electricity from wind and biomass projects under 10 megawatts. For solar projects, a premium of 42 cents per kilowatt-hour is offered.

Since the electricity would be sold to the province, such projects would be considered commercial generating stations, and therefore subject to property assessment under current rules. A tax hike could ruin the business case for a project.

“We’re definitely concerned,” said Deborah Doncaster, executive director of Ontario Sustainable Energy Association.

By Tyler Hamilton
Energy Reporter
Toronto Star


27 March 2007

This article is the work of the source indicated. Any opinions expressed in it are not necessarily those of National Wind Watch.

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