Logan County could be dealt a billion-dollar blow if Congress fails to extend the federal wind energy production tax credit (PTC).
The American Wind Energy Association on Thursday said the credit is not included in payroll tax legislation currently passing through Congress.
Construction for Logan County’s Sugar Creek Wind Farm One is slated to begin in 2013. If the credit isn’t reinstated by then, the project could be stalled, depriving the local economy of sorely needed, and highly anticipated, relief.
According to Chris Nickell, vice president of site establishment for developer, American Wind Energy Management (AWEM), the income tax credit amounts to a maximum reimbursement of 30 percent of the total construction bill. Each turbine costs between $3 and $4 million to construct. The proposed project in Logan County consists of 110 towers, so the tax credit represents a savings of nearly $132 million spaced out over the first 10 years of SugarCreek’s operations.
“When you multiply that by 100 turbines, even 30 percent of that in a large number… The simple answer is that we’re moving forward with the assumption that PTC will be reinstated,” Nickell said. “Of course, it’s a wildcard for us and it makes everyone in the industry nervous, because it would be a large hit to the ability to finance projects, but everyone is pretty confident that things will come our way.”
Nickell said 2012 is a planning period for the Logan County project, and a suspension of the tax credit wouldn’t affect that work, as long as it’s reinstated before next year’s construction. He didn’t say the entire project is jeopardy depending on PTC – it’s business as usual with an optimistic look into the future.
“Understanding the time frames that are involved, as a developer, each project could take between three and six years of development before construction,” he said. “We can’t really plan for the short term. We have to plan for the long term.”
The project has been considered a proverbial Godsend for cash-strapped Logan County. Operating nearly hand-to-mouth on a shoestring budget, the wind farm is expected to pay the county $1.15 million in permit fees alone.
Up and running, Sugar Creek would generate $1,000 per megawatt in property tax revenues, split between all taxing county bodies.
According to Logan & Lincoln Economic Development Partnership director Michael Maniscalco, that amount of money being pumped directly into the economy would greatly benefit lives locally.
“It would open up a huge economic revenue stream for Logan County and our Logan County communities,” he said. “It really would benefit the schools the most… Every dollar that flows into the community gets spent someway and somehow. It’s a huge trickle-down effect. From talking with the guys at AWEM, the development of Athe two wind farms that they’re looking at in Logan County would probably mean somewhere around $1 billion. Whether it’s tax revenue, or money being spent within the communities, we’re talking about a billion-dollar investment in Logan County.”
The suspension of the tax credit is expected to equal brutal means for wind energy in Illinois, where the number of projected wind projects have exploded in recent years.
“The stakes here could not be clearer,” American Wind Energy Association chief executive Denise Bode said Thursday in a released statement.
“Economic studies have shown that Congressional inaction on the PTC will kill 37,000 American jobs, shutter plants and cancel billions of dollars in private investment. Congress needs to understand that, with PTC uncertainty, layoffs have already begun and further job losses and even plant closings will accelerate each month as we near expiration in December… The fact that Congress is on the verge of reaching a compromise on such a major piece of legislation bodes well for other legislation. While Congress decided not to act on tax credit extenders or any energy provisions as part of the payroll tax bill, we are still committed to finding any opportunity for a first-quarter extension. Our campaign continues.”
Maniscalco and Nickell are asking citizens to contact their U.S. Congressmen and urge them to extend the tax credit.
The Lincoln & Logan County Development Partnership website, www.lincolnlogan.com, offers a pre-written e-mail for supporters of the credit to send to their congressmen.
The Chicago Tribune reported Friday that There is still a possibility the extension for wind power tax credits could come through as a stand-alone bill or tied to other legislation. But Washington insiders say that is unlikely to happen before the election in November. The tax credit doesn’t expire until the end of this year. In order for developers to receive it, they must have their turbines up and running before year’s end.