June 21, 2012

State data: Taxes would generate nearly 4 times more local revenue than PILOT

KATHLEEN FOX, Assistant Editor | The Urbana Daily Citizen | www.urbanacitizen.com 21 June 2012

While local officials and residents await figures on potential local revenues yielded from taxes vs. payments in lieu of taxes (PILOT) for EverPower’s Buckeye 1 and 2 wind turbine projects, the state Department of Taxation has information about the amount taxes may yield, based on a study of six wind farm scenarios.

A taxed wind turbine project may yield $34,000 per megawatt for the first year of energy generation, based on the average figure of these scenarios, according to Gary Gudmundson, department spokesman. He noted a wind farm depreciates over time and that, based on the study, local funding would decrease to $24,000 per megawatt in the 10th year.

The exact revenue Champaign County would garner from wind projects is not known yet, although estimates have been reported the past few years.

It is known that a county commission may establish an annual PILOT fee up to $9,000 per megawatt for wind farms.

Since 2010, Daily Citizen articles have quoted EverPower officials saying they prefer the PILOT fees over taxes because the cost will be less. In a 2010 article, Mike Speerschneider, EverPower development director, said taxes may be three or four times more than annual PILOT fees.

Paying taxes rather than PILOT fees “would make the project extremely difficult to finance,” Speerschneider said in 2010.

EverPower project spokesman Jason Dagger in an April 30 article said paying the higher taxes, rather than PILOT, would not be feasible. He estimated PILOT fees from Buckeye 1 and 2 would yield more than $1.5 million annually for Champaign County.

Both EverPower officials said the PILOT program enables Ohio to be competitive with neighboring states.

Wind companies must file for tax-exempt (PILOT) status with the Ohio Department of Development prior to Dec. 31, 2013, a step EverPower has not taken yet, according to ODOD. Companies wanting tax-exempt status also must be capable of producing power before Jan. 1, 2015.

As long as state requirements are met and the county commission approves, the annual PILOT fees go to school districts, libraries and other local entities that ordinarily would receive tax dollars.

When ODOD receives an application for tax-exempt status for a project, the local county commission, school districts and all others that would receive taxes are notified. The county commission has 30 days to approve annual payments in lieu of taxes or to stick with the regular taxation system.

While at least 10 of Ohio’s 88 counties have established “energy zones” where wind farms are guaranteed PILOT status, Champaign County commissioners thus far say they will consider the taxes vs. PILOT issue on a case-by-case basis.

While the Buckeye Wind 1 project has been approved by the state, the Buckeye Wind 2 project is in the early approval stages. The Ohio Power Siting Board will be scheduling a public meeting in which people can review the proposed Buckeye 2 and talk to project representatives. Combined, the projects would include up to 110 turbines in eastern Champaign County.

URL to article:  https://www.wind-watch.org/news/2012/06/21/state-data-taxes-would-generate-nearly-4-times-more-local-revenue-than-pilot/