- National Wind Watch: Wind Energy News - https://www.wind-watch.org/news -

Lawsuit brought against Taylor County Commissioners Court for tax abatements

Two area wind energy opponents filed a lawsuit Monday against the Taylor County Commissioners Court for granting what the plaintiffs say are illegal tax abatements to wind farms developed within the county.

According to the lawsuit, wind energy equipment is not eligible for tax abatements under the state tax code.

In 2004 and 2006, Taylor County commissioners granted five tax abatements potentially worth $5 million to $10 million to three companies that have built farms of wind turbines in rural areas of the county.

“That’s my money the county is giving away illegally. We’re asking the court to rectify this,” said Dale Rankin, one of two plaintiffs in the lawsuit. “… I’m not doing this for any kind of personal gain. I’m just doing this because this situation needs to be corrected in the state of Texas.”

Rankin, a longtime opponent of wind energy from Tuscola, is a current member of the Abilene Reporter-News advisory board, which helps craft the paper’s editorial opinions.

Earlier in the year, Attorney General Greg Abbott issued an opinion concerning whether a county commissioner in Sterling County should abstain over a vote that would grant a tax abatement agreement to a company planning to build a wind farm on the commissioner’s land. In the opinion, Abbott questioned whether wind farms are eligible for abatements.

The Texas Tax Code allows a county to grant a tax abatement to the owner of taxable real property, which is defined as improvements, which include buildings and structures erected on a property. According to Section 312.402(a) of the code, ordinarily improvements owned by a company leasing land are not real property, but personal property not eligible for an abatement.

Therefore, the lawsuit alleges, wind farms, which are built on leased land, are not eligible for the abatements, which would give tax relief to the wind energy companies for up to 10 years.

“What astounds me is how the commissioners – not just our commissioners, the whole state – have granted abatements willy-nilly in violation of the Texas tax code,” Rankin said. “That just boggles my mind that the commissioners simply didn’t know the tax code and granted millions of dollars in abatements.”

Taylor County Judge George Newman denied to comment about the lawsuit and directed all questions to District Attorney James Eidson, who said he had not seen the lawsuit and declined to comment, citing ethical concerns. Two of the companies that were granted abatements – AEP and AES Seawest Wind Power – did not return calls for comment, while representatives of FPL Energy were unprepared for comment.

Although Rankin said the tax code is clear, Greg Wortham, executive director of the pro-wind power West Texas Wind Energy Consortium, called the situation “murky” and said it was not “cut and dry.”

The other plaintiff in the suit, Patricia Lapoint, also denied comment. She and Rankin were among those involved in an earlier lawsuit against FPL Energy, which owns the Horse Hollow wind farm near Tuscola.

Their first lawsuit attempted to halt construction of wind turbines in the Elm Valley area, and they purport the noise and visual impact of the turbines has decreased their land value. The 11 plaintiffs lost the lawsuit, but have appealed the decision.

Proponents of wind power said that wind energy has improved the area’s tax base and provided jobs that have kept the Big Country’s unemployment rate low.

“Wind energy has done massive things for our region, and it continues to do fundamental revitalization of our region,” Wortham said. “If two or three people want to oppose something that is this beneficial to the region, then I want them to tear down the schools and tell the kids, ‘I’m sorry, but you don’t get this.'”

Aside from abatements, wind energy companies can receive an income tax credit of 2 cents per kilowatt hour of wind energy they produce for the first 10 years of production, according to the American Wind Energy Association. The tax credit expires at the end of the year but can be renewed.

Rankin said the companies would not build the turbines if the abatements and tax credits were not available because the energy production system is too inefficient to be profitable.

“No matter where you put them, and we don’t think a wind farm should be built ever with public money,” he said, noting that taxpayers pay the majority of costs to build the turbines. “The problem is that the public is being sold a bill of goods about the wind farms.”

At first, Rankin said, he opposed wind farms because the Horse Hollow farm, valued at $357.5 million and purported to be the world’s largest wind farm, harmed his property value. After researching turbines, he decided that wind farms should not be built anywhere and has since became a staunch opponent.

Rankin and other plaintiffs came across the tax code issue several months ago and decided, with the help of attorneys, that the best route to action was to file a lawsuit against a county that granted abatements.

“We narrowed it down to bringing suit against a specific commissioners court in Texas. It didn’t have to done in Taylor County, but I am a resident in Taylor County, so we figured this would be as good a place as any. Plus I personally know most of these commissioners, and they would know what I am talking about. This should not be a surprise to them,” he said. “This suit is valid for the whole state of Texas. We’re just starting in Taylor County. I think this action will affect every single county in Texas that has abated taxes for a wind farm.”

Wortham said that the tax code is not meant to prevent counties from granting tax abatements to projects that can help the local economy, and he said the state Legislature would most likely address the issue in the future.

“Certainly if they address it, I would certainly think they wouldn’t negatively address it,” he said. “You might as well as tell everybody to shut down their chambers of commerce and close down their malls and not invite Toyota to the states. If we’re going to start unraveling economic incentives to bring billions of dollars to the state, we might as well quit as a state, not as an industry.”

But until the Legislature meets again in 2009, Rankin said, counties will have to deal with lawsuits.

Wind farm tax abatements granted by Taylor County

Wind farm Taxable value Abatement plan

AES/ Sea West Buffalo Gap: $28,844,957 55 percent/5 years, 40 percent/1 year, 10 percent/1 year

FPL Energy Callahan Divide: $50,951,090 55 percent/5 years, 40 percent/2 years, 30 percent/1 year, 20 percent, 1 year, 10 percent/1 year

FPL Energy Horse Hollow: $250,259,346 30 percent/8 years, 20 percent/1 year, 10 percent/1 year

Trent Wind Farm LP: $648,451 55 percent/5 years, 40 percent/two years, 30 percent/1 year, 20 percent/1 year, 10 percent/1 year

AES Sea West Buffalo Gap III: Not yet online 55 percent/5 years, 40 percent/2 years, 30 percent /1 year, 20 percent /1 year, 10 percent /1 year

AES BG – $135,773 taxes according to current 47.07-cent rate = abatements of $74,675; 54,309; $13,577 = $441,261

FPL CD – $108,245 taxes = $59,534; 43,298; 32,473; 21,649; 10,824 = 297,670 + 64,946 + = $468,473

FPL HH – $1,177,970 taxes = $353,391; $235,594; $117,797 = $3,180,519

Trent – $3,051 taxes = $1678; 1220; 915; 610; 305 = 6100, 1830, = $9,760

AES BG: $373,375; = $441,261

CD: $112,886 = $62,087; $45,154; $33,865; $22,577; $11,288 = 310,435; $90,308; =468,473

By Kyle Peveto

Abilene Reporter-News

28 April 2008