Damrow wants to ensure wind turbine tax revenue 

UPPER THUMB – As the certainty of steady revenue from local wind developments remains up in the air, a lingering question on the minds of some local officials is just how serious wind developers are about their support for long-term tax revenue for local units of government.

“Today, I’d like to ask just what kind of partners they really are,” said Rep. Kurt E. Damrow, R-Elkton, on Wednesday.

During a meeting with wind developers and government officials Wednesday, Damrow presented the need for legislation to stabilize the position of tax revenue to the local bodies of government.

“In my opinion, not having the tax revenue somewhat protected through legislation is unacceptable,” he said.

In terms of backing the county’s quest for support, one wind developer already has stepped up to the plate. RES Americas has hired a firm to lobby to keep funding for local governments. Brad Lila, development manager for RES Americas, told the Huron County Board of Commissioners earlier this week that the company’s lobbyist has focused its efforts on retaining the personal property tax for wind developments.

County officials said Lila’s intent was to notify the county that RES supports having local governments financially benefit from wind developments.

“He made the comment, ‘if you guys aren’t happy, we know we aren’t going to be happy,” said Clark Elftman, board of commissioners chairman.

Both Elftman and Commissioner John Nugent said Lila was very sincere, and they believe his intent is to support the county, in terms of its work to make sure the area continues to receive tax revenue from wind developments.

Commissioner Ron Wruble said he hopes Lila is sincere in supporting the county’s effort to retain taxes on wind turbines – not on just reinstating the previous taxable values because the industrial personal property tax may be eliminated by lawmakers in Lansing.

Just this week, the Holland Sentinel reported Lt. Gov. Brian Calley spoke in favor of cutting the Michigan personal property tax for the industrial sector.

Last week, House Speaker Jase Bolger, R-Marshall, told the Kalamazoo Gazette the personal property tax can’t be eliminated until lawmakers have a means to replace the roughly $1.3 billion in revenue it raises each year. However, local officials fear that even if the revenue is replaced in the industrial sector, it won’t be replaced for commercial-scale wind developments. As a result, the area would lose revenue that developers and wind proponents promised local residents during the early stages of area wind developments. This includes developments that still are in the planning and design phases that have preliminary or site plan review approval, but haven’t been constructed.

“We just went into this thing being promised property tax, and we just want to see that both ends of the bargain are held up here,” Wruble said.

While other businesses pay both real and personal property taxes, wind developments only pay personal property taxes. Thus, the only revenue the area receives from wind developments is from personal property tax – of which, the taxable value is determined by the Michigan Tax Commission. The values depreciate each year, which means the county, local townships, schools and libraries receive less funding from wind developments each year.

Because the Michigan Tax Commission lowered the values last fall, the revenue local entities receive will decrease even more this year than was previously expected – by $260,000, according to estimates from county officials.

In addition to decreases in taxable values, other threats to local revenue from wind developments have been in the form of proposed legislation seeking to completely eliminate taxes for commercial wind developments. Since December 2010, there have been three such attempts through the House and Senate, according to Damrow.

He sponsored a plan that would create a separate category to tax commercial wind developments. The Alternative Commercial Energy Systems (ACES) plan is a county-levied tax with 40 percent of the revenue going to the county general fund, 40 percent to the township general fund and 20 percent divided among the host county public schools.

If lawmakers in Lansing approve the ACES tax, rather than paying personal property taxes, wind developers would make ACES payments. The payments either would be a base fee that’s established based on rated megawatt hour capacity or $4 per megawatt hour generated for sale – whichever is greater.

Damrow said during Wednesday’s meeting, some wind developers were concerned about paying $4 per megawatt hour if turbines were, over the years, modified and/or replaced with ones that have greater generating capacity.

“I just stated that, remember, you guys wanted to be our ‘partners,’ if you make more money on higher efficiency turbines, then so does the county and township,” Damrow stated.

He also referenced a study by the Lawrence Berkeley National Laboratory that found wind developments have no significant impact on nearby property values.

“ … The property values showed no loss, and (there were) even some increases in areas because the local body of government received tax revenue,” he stated. “One of the driving factors in the stabilization and increase of values in cities I spoke with was their investment in their local schools.”

During Wednesday’s meeting, Damrow asked the developers and local officials to review the legislation and present any proposals or comments by the end of this month.

“During the first two weeks of April, I will be in district, which will allow me the time needed for a last review with our township and county zoning boards,” he stated.

Damrow said his goal is to have the proposed legislation before the Michigan House Committee on Tax Policy during the third week in April. He said he anticipates he will ask the committee to vote on the bills at that time.