UPPER THUMB – In efforts to have something in place to tax wind turbines in the event the state eliminates or changes the personal property tax, State Sen. Mike Green intends to introduce a bill to change the designation of wind turbines from personal property to real property.
“There’s a lot of talk in Lansing about eliminating the personal property tax, which if that happened – and I hope it does – it’s going to put everyone that has wind turbines in a very precarious position because (wind developers) wouldn’t pay personal property taxes,” Green told the Tribune in an interview Friday.
Green is opposed to the personal property tax, but he’s maintained there still must be a mechanism in place to tax wind turbines, because turbines currently are classified as industrial personal property and only pay personal property taxes. As a result, if the Legislature votes to eliminate the personal property tax, the area will lose all tax benefits it would receive from future wind developments.
Green, who represents Huron, Tuscola, Sanilac, Arenac and Bay counties, said he’s requested a bill that would classify wind turbines as real property, so if the personal property tax is eliminated, areas with wind developments still would benefit on a county-wide basis.
And it’s a lot of benefit at stake, as Huron/Tuscola Equalization Director Walt Schlichting said the combined 2011 taxable value of just the two existing wind developments in Huron County is more than $108.7 million.
“It’s substantial,” Schlichting said, noting the taxable value of the two wind parks is just about equal to the combined 2011 taxable value of the City of Bad Axe ($83.7 million) and Bloomfield Township ($27.6 million).
As soon as it’s returned from the Legislative Service Bureau, Green said he is going to introduce the bill as a starting point to developing legislation that puts something in place to secure future revenue from wind developments for local communities, Green said.
“We can work out the details to it later, but at least this gets something on the board,” he said.
Green said State Rep. Kurt E. Damrow, who represents Huron and Tuscola counties, also supports legislation establishing a different mechanism to tax wind turbines.
He said there will be hearings in Lansing on proposals to change the personal property tax in the summer, and it’s hoped to have something in place by the fall. Green said he wants the way wind turbines are taxed changed before the changes to the personal property tax are finished.
There are efforts to meet with officials from the Thumb Regional Renewable Energy Collaborative (TRREC), along with other officials from other areas affected by wind developments, to brainstorm how communities want turbines to be taxed, Green said. He’s also met with representatives from DTE Energy and Consumers Energy, and both companies are aware of the problem and are willing to work toward a solution.
Green said he hasn’t discussed the issue with other developers, but they should realize that if they don’t pay “the proper taxes that need to be paid, then the local communities won’t be willing to work with them as they need to be.”
Because wind turbines are considered industrial personal property, they are exempt from the State Education Tax and Local School Operating Tax, which would total 24 mills (total) for future wind turbines. Also, their taxable value depreciates quite rapidly, resulting in local communities initially collecting large sums of revenue and the amount dwindling each consecutive year up to the 15th year of the project’s life.
If wind turbines are considered real property, they would pay the same taxes that a home would be assessed, Green said. Also, it would result in each year’s revenue stream being more equal, rather than decreasing each year and having a large difference between the amount of revenue received the first year of the project and what’s received the 15th year.
Green noted there are other ways turbines could be taxed, and that is something that will be discussed by TRREC and other county officials in the near future, and the ideas there will help craft future legislation changing the way wind turbines are paid.
“Before we do anything, we have a bill to make it back to real property,” Green said. “But we’re certainly willing to make changes on it, depending on what the local communities want.”
Ron Wruble, Huron County Board of Commissioners chairman, said county officials have been in contact and working with both Green and Damrow to get together and work on a solution that’s acceptable to communities with wind developments.
“Once we get something established, it would give us a little more comfort that the county, local units of government and the schools are going to get funding from these projects and aren’t going to get left out in the cold,” he said.
Echoing similar thoughts expressed by Huron County Planning Commission members during Wednesday’s planning commission meeting, Wruble stressed turbines have to be taxed in a way that benefit all the respective local units of government, libraries, schools (for school debt), the Huron Intermediate School District and the county (i.e. county millages, which include county operating, veterans, senior citizens, medical care facility, transit and roads).
“That has to be in place if they are going to commence with these things because everybody in the county needs to benefit from these projects, not just a handful of people – otherwise we don’t want them here,” he said.
TRREC officials – including Huron County Economic Development Corporation Executive Director Carl Osentoski and Mike Krause, of the Huron County EDC Executive Board – have a wealth of information that will be useful when it comes to writing any new legislation governing how wind turbines are taxed, Wruble said.
“They have a great handle on this,” he said, adding the goal is to get with state lawmakers to develop a package that suits wind developers and gives local officials comfort that there will be tax revenue coming from wind turbines for years to come.
Wruble said there are some issues, though, with changing wind turbines to real property because developers would no longer be exempt from paying school operating and state education taxes. Unless there’s an exemption from those taxes, which would total 24 mills, he’s not sure if it will fly with the energy companies.
But, by Green introducing legislation to classify wind turbines as real property, it helps moves things to the next level, Wruble said.
“There’s been a lot of work behind the scenes that no one’s seen even to get us to this point. … We have a pretty good handle on what everybody wants to see happen and we’re hoping we can convey that message to our (Legislature),” he said. “(And we’ve) also had discussions with wind developers, and they’re not opposed to paying taxes, (we) just have to make sure that they’re on the same page with us on how it’s going to be paid and what they’re going to be paying. If they’re in agreement and we’re in agreement, it will be a lot easier for Legislature to achieve change.”
Green said he believes his Senate counterparts will be receptive to changing the classification of wind turbines.
“I can’t imagine those in other counties that don’t have windmills would even care,” he said, noting those lawmakers are more concerned with looking at whether the local communities that are affected by wind developments are being satisfied. “ … Both caucuses in House and Senate – we’re not looking to hurt communities, we’re in the business of doing what’s right for the whole state.”
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