April 10, 2008
Texas

Abatement debate: Industry asks for review of opinion on tax breaks for wind developments

The Texas attorney general is looking at tax breaks for wind farms, and early signs are he doesn’t think the law allows them.

“Fixtures and improvements owned by the wind turbine company as personal property would not be ‘real property’ that may be the subject of a tax-abatement agreement,” according to a legal opinion issued by Attorney General Greg Abbott on Jan. 29.

The wind industry wants a another chance.

“We have asked the attorney general to review it and take a second look,” said Paul Sadler, executive director of The Wind Coalition. “If they will not, it may be necessary to tweak it in the next legislative session.”

In addition, Texas Comptroller Susan Combs has asked Abbott to look at the way school districts promote business. Districts can’t grant abatements, but the Texas Economic Development Act gives them the ability to provide property tax relief to encourage development.

Districts can tax the owners of a project at full valuation for the first two years of operation and then freeze the valuation at a low value for a set number of years.

The owners then share with the district a percentage of their tax savings.

The request for a review came when a citizen expressed concern about rules the comptroller’s office was creating to implement the development act.

Several counties and school districts already have given tax help to companies, including wind developers, to lure investment.

Oldham County gave Edison Mission Group, operator of the Wildorado Wind Ranch, an abatement of all taxes for 10 years. The company instead pays a flat $100,000 per year.

In his opinion, Abbott said tax exemptions have to be carefully implemented and strictly enforced “because they undermine equality and uniformity by placing a greater burden on some taxpaying businesses and individuals rather than placing the burden on all taxpayers equally.”

The AG’s office does not enforce the opinions.

Instead, local prosecutors must handle the matter in the court system where a judge can uphold, overrule or modify the opinion.

Oldham County Judge Don Allred is unsure how to interpret the legal opinion.

“It’s concerning for not only what we have in place but for the future,” he said.

Even if it takes legislative action, Allred is optimistic.

“I really think this is not going to have a long-term effect,” he said. “There’s too much economic opportunity in the state.”

By Kevin Welch