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Michigan wind farm communities seek tax changes

LANSING – Communities currently hosting wind farms asked the Michigan House Tax Policy Committee to support legislation that would provide them more certainty of the revenue they will see from the facilities, but many said they would be happy with direction to the Tax Commission to change its depreciation tables back.

The committee took testimony Wednesday on legislation (HB 5278 , HB 5279 ) that would change the property tax on wind turbines from the current tax based on personal property value to one based on their power output.

The change would actually give the turbine owners a tax break at the beginning of the life of the turbine and would give local governments more certainty of the revenue they would see from the wind farms, said Rep. Kurt Damrow (R-Port Austin), sponsor of the package.

“They ensure that local governments receive some tax on these wind farms,” Damrow said. “We’re looking for a stable tax commitment that will not change overnight.”

So far legislation proposed, and the actions of the Tax Commission, have been aimed at the opposite, he said. “Se we have something going on behind the scenes to eliminate all taxes on commercial wind, or greatly reduce them,” he said.

The plan would also ensure uniformity across the state, said Walt Schlichting, equalization director for Huron and Tuscola counties.

Sanilac County Administrator Kathleen Dorman agreed the plan would be fair, but said the bill needed to specify to which annual payment, summer or winter, the tax would be assessed and should include a deadline by which the county had to disburse the money it collects to the other local governments, as the property tax act does.

Richard Vander Veen with Wind Resource, which operates a wind farm in Gratiot County that now has 133 turbines, said the bill would allow his company to live up to its agreements with local governments in terms of the contributions it would make to their operations.

“We did not want to reduce the amount of taxes we were going to pay,” he said, adding those tax rates were already built into the power purchase agreements the facility has to sell its power to the larger utilities.

But not all developers supported the proposal. “It would impose a dramatic tax increase on existing projects,” said Rick Wilson, vice president of development for Heritage Sustainable Energy in Traverse City.

The bill would push wind development out of the state, Wilson said.

And he said the developments his company has made have not included any agreements with local governments on levels of taxes they would see.

In lieu of the Damrow package, Vander Veen said his company would be happy to see the Tax Commission ordered to reverse its new depreciation tables or at least to apply those tables only to facilities built after they were adopted.

Bill Anderson with the Michigan Townships Association said he had requested documentation to back up the new depreciation tables and so far had not been provided that from the commission.

“If it was done on an arbitrary basis, that’s a big concern,” Anderson said. “If it was done with a study, why will it not be released?”

Kenneth Wimmer, assessor for Delaware Township in Sanilac County said both the current depreciation tables and the proposed legislation make life for assessors difficult.

The new tax would be duplicative and require assessors to become expert in electric generation at a time when state resources to assist them in some of that work have been pulled back, Wimmer said.

But he said the Tax Commission decision leaves assessors vulnerable to challenge because the commission did not include documentation to back up the new tables.

“Assessors should not be placed in a position of having to choose a fully documented study from the Public Service Commission or an undocumented study from the Tax Commission (as the basis for their assessment decisions),” he said.

Rep. Kenneth Horn (R-Frankenmuth) questioned the need for local taxes on the turbines, given the relatively little additional local services they require, and argued cutting the taxes on them would be better for all residents.

“Repealing the personal property tax not just from wind energy but from baseload could reduce energy costs,” Horn said.

Damrow said there is a cost to the communities because the same areas that are attractive to wind farms are also attractive to tourists.

“There’s a potential for a tremendous loss of property value because you have this 300-foot-tall wind turbine next to your home,” he said. “But if you have excellent schools and the ability to do road and bridge projects (the loss can be offset).”

MoReno Taylor with the Michigan Association of Counties said the projects often face objection from residents. “Seeing the resources from these was one of the things that helped people overcome that drawback,” he said. “The communities that are taking on these are taking on a tremendous burden for the rest of the state.”

Horn also questioned taxing the turbines on their generating capacity when testimony before his Energy and Technology Committee has been they rarely run at more than 36 percent of that capacity.

Schlichting said residents are already paying toward that with the renewable energy assessment they pay to their utility.

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