Some Big Country counties raising taxes as wind farm values decrease 

Area wind farms aren’t worth as much as they were last year, leaving some counties looking at raising taxes to make up for lost revenue.

Hardest hit were Shackelford and Nolan counties.

In Shackelford County, the total tax roll has dropped by 11 percent, mostly due to a decrease in the value of the three wind farms in the county, said Chief Appraiser Teresa Peacock.

In Nolan County, the taxable value of wind farms dropped by 14 percent.

The decrease in valuations means tax hikes are likely for each county. School districts generally are not as affected because of Texas tax code Chapter 313 agreements, which limit the taxes wind farms pay. Cities aren’t affected because wind farms are built outside city limits.

Nolan County Judge Tim Fambrough said his county’s proposed tax rate is 42.3023 cents per $100 valuation, an increase of nearly a nickel over the present rate of 37.536 cents.

“We’ve been very fortunate in past years. We’ve been able to drop the tax rate because of the wind farms,” Fambrough said. He estimated if Nolan County didn’t have wind farms, the tax rate would be near 60 cents.

Shackelford County began working on its budget Tuesday, but County Judge Ross Montgomery said, “I don’t believe we’ll be able to leave the tax rate where it stands.”

To raise the same amount of money as the present county tax rate of 42.33 cents, the tax rate would have to be set at 47.34 cents, Peacock said.

“Hopefully, the public will understand what has happened,” Montgomery said. Commissioners will be keeping expenses to a minimum, he said, especially since the tax rate will be going up about 8 cents the following year to begin repaying $5.85 million in bonds voters approved to build a new jail.

Keith Ellis, senior industrial and personal property appraiser for Pritchard & Abbott, a Fort Worth-based property appraisal consulting firm, said there are several reasons wind farms and wind turbines have dropped in value.

The price of electricity was low at the beginning of the year when values were set, he said, which means wind farms were not as profitable.

Also, production curtailments by the Electric Reliability Council of Texas, which manages the electricity grid in Texas, limited the amount of wind-generated electricity, he said.

The main reason for curtailments was the lack of transmission lines to carry electricity to metropolitan areas, Ellis said.

The amount of electricity produced by West Texas wind farms was down by more than 30 percent compared to previous years, he said.

Normal depreciation was a factor, Ellis said, plus Florida Power & Light did a study which resulted in lower values.

Scurry County, which has 397 wind turbines, saw a decrease in their worth. Chief Appraiser Larry Crooks said the market value of the wind farms dropped 13 percent this year.

Crooks said he hopes that once transmission lines, which are under construction, are completed more wind-generated electricity will be used.

In Taylor County, wind farms dropped in value by $60 million, or about 11 percent, which Taylor County Chief Appraiser Richard Petree said was not a significant amount in the overall tax roll.

The decrease was due mainly to limited production because of the lack of transmission lines, he said. However, he added, the lack of wind or too much wind at times and downtime for maintenance also affects production.

Wind turbines in this area are expected to produce electricity 41 percent to 44 percent of the time, he said. However, in 2010 individual wind turbine production ranged from 33 percent to 41 percent of capacity.

One of the Shackelford County wind farms is in the Clyde school district, but its decrease in value “won’t have a big impact” on the Clyde budget, said Dobie Williams, assistant superintendent for finance.

Under the district’s Chapter 313 agreement, the wind farm only pays maintenance and operation taxes on about $5 million of its total value, a figure set by the state Comptroller’s Office, Williams said. Wind farms do pay debt service taxes on their full value, he said.

In addition, since schools aren’t allowed to give abatements, wind farms make payments in lieu of taxes (PILOT) to school districts, which is a percentage of the taxes they would have paid if the full value was taxed, Williams said.

“Wind farms have been a good deal for schools,” Williams said. Clyde has been able to replace its elementary school, build an auditorium and a football stadium thanks to a wind farm within the district.

In Mitchell County, the decrease in the value of wind turbines was canceled out by the addition of more turbines in the Loraine Windpark. This year’s wind turbine value was $276 million, a figure within $200,000 of last year.

The county’s total tax roll grew 5 percent to $1.7 billion due to higher oil prices, said Mitchell County Chief Appraiser Linda McSpadden.