Comptroller’s office recommends school district not approve tax incentives for Petronila wind farm project
PETRONILA – The developer of a wind farm in Nueces County could scrap the project after the Texas Comptroller’s office recommended a local school district not approve tax incentives for the developer.
The comptroller’s analysis said wind turbines could cause the Navy to shutter its base in Kingsville, leading to major job losses.
“We’re evaluating (the comptroller’s analysis) right now,” said Patrick Woodson, chief development officer for E. On Climate and Renewables, which wants to erect more than 80 wind turbines at a site south of Petronila.
Woodson said other economic factors will affect the company’s decision, including whether the federal government renews tax credits for wind energy producers beyond 2012.
The uncertainty surrounding the Petronila project underscores new efforts to reduce interference between wind farms and military radar, which emerged in the past two years as a hurdle for wind developers in South Texas.
Wind turbines can create radar images that prevent air traffic controllers from seeing aircraft in certain areas.
The industry prizes the Coastal Bend for its strong, steady daytime winds, but the area also is home to bases that train naval aviators. The radar issue has cropped up at military installations nationwide, and the Federal Aviation Administration now includes the Defense Department when deciding whether individual turbines pose flight hazards.
In a Dec. 12 letter to the Bishop Consolidated Independent School District, the comptroller’s director of economic analysis recommended the district reject E. On’s application for tax incentives.
The incentives would limit the appraised value of the wind farm for taxing purposes.
In the letter, Robert Wood of the comptroller’s office tells school officials the military could downsize or relocate operations at Naval Air Station Kingsville because the proposed wind turbines could cause problems with radar.
The base trains 112 of the Navy’s roughly 200 tactical aviation pilots each year.
Wood’s analysis doesn’t appear to incorporate recent developments aimed at mitigating wind turbine interference. The analysis relies mainly on a Navy memorandum in which the Chief of Naval Operations suggests relocating the Kingsville operations is among many possible ways to deal with the radar issue.
“In the absence of further information from the Navy, we are left to conclude that relocating some or all of the mission to other installations remains a viable alternative for the Navy,” Wood wrote.
The analysis includes a letter from Kingsville Mayor Sam Fugate, who in 2010 asked Comptroller Susan Combs to place a moratorium on state assistance to wind farms within 25 miles of military installations. Fugate said in the next round of military base closures, the Defense Department could move the Kingsville operations to another base if it views wind farms as a hindrance to pilot training.
Officials at the Kingsville base said they’ve been working directly with E. On to make sure the development won’t impact the base’s mission, and they say proposed solutions to the overall radar problem are promising.
The commander of the base, Capt. Mark McLaughlin, said he’s not just worried about the Petronila project, but all of the proposed wind farms in South Texas, which could amount to as many as 1,400 turbines within range of Navy radar.
“I’m a whole lot more comfortable today than where I was six months ago when we didn’t have any technical mitigation,” McLaughlin said.
Raytheon, a company that builds military radars, has developed software algorithms that can correct for wind turbines. And radar operators are learning they can use software to stitch together data from multiple radar sites to further alleviate problems.
Patrick Paddock, operations specialist and radar expert at Naval Air Station Kingsville, said the Navy is working with the Federal Aviation Administration to get approval to test some of the new solutions using Navy-owned radar operated by the FAA at Corpus Christi International Airport.
E. On operates the Papalote Creek wind farm in San Patricio County, which can be seen on radar at the airport and the Kingsville base.
Even if mitigation efforts succeed, they could be costly, and it’s not clear who would pay for upgrades.
Paddock estimates the upgrades needed to protect the safety of training pilots in South Texas, including a new radar site at Orange Grove, would be $5 million to $12 million.
The Defense Department is looking at ways the wind industry could foot some of the bill, Paddock said. Possibilities including paying a percentage of development costs into a fund for radar interference mitigation.
Greg Wortham, director of the Texas Wind Energy Clearinghouse, an industry trade association, said he believes most developers are willing to share reasonable mitigation costs with the government.
He said the comptroller’s recommendation on the Petronila project sets a precedent that could send wind developers out of state.
“Property taxes are the highest cost in operating a wind project,” Wortham said.
E. On would invest nearly $236 million in the Petronila project, according to Wood’s analysis. The tax incentive would have limited the property value, for taxing purposes, to $30 million, and saved the company an estimated $14.2 million over 15 years.
Woodson said the district would gain revenue under the agreement because of the way state school funding formulas work. The agreement would include a yearly payment of $100 per student from E. On directly to the district, which enrolls about 1,200 students.
District Superintendent Christina Gutierrez said the school board has opposed tax incentives because economic losses from military cutbacks or closures could outweigh gains from the wind farm. The Kingsville base employed 597 military and 1,224 civilian personnel in 2010. Wood’s analysis shows the wind farm would have only four long-term jobs.
“A lot of those (military) families apply for transfers into our school district,” Gutierrez said. “We couldn’t in the long run have a base close and have hundreds of military families move.”
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