BAD AXE — The Michigan Renewable Energy Collaborative, a multiple-county organization including Huron, may be moving toward a compromise on wind turbine tax values with DTE.
Huron County Commissioner Ron Wruble said at Tuesday’s Board of Commissioners meeting of the whole that both entities were going to conduct studies on the value of wind turbines, in an effort to avoid a dispute in court.
“When the two studies were done, we would get together and find some common ground,” Wruble said. “(Then) we could both go to the tax commission and get something hammered out before this thing drags out three or four years down the road.”
Wruble said that DTE brought up its plans to conduct a study at a meeting between the parties on Oct. 3, before suggesting that the collaborative do the same.
The collaborative decided to follow suit at a meeting in Caro on Monday. Its law firm, Clark Hill, is currently searching for an appraiser.
Wruble said the study would cost between $50,000 and $100,000. He did not say how long the study would take, but expressed urgency, as there are more wind turbines going up, and with them more potential disputes.
The dispute’s roots go back to the fall of 2011 when the state tax commission lowered the taxable value of wind turbines. Wind turbines went from a 100 percent assessment in year one, with a scheduled depreciation to 30 percent value in 15 years, to an 80 percent initial assessment, with a depreciation to 30 percent value in six years.
However, local assessors and boards of review can go by the old depreciation schedule if they feel it more accurately describes the true cash value of turbines.
When that happened in Gratiot County’s Wheeler Township, DTE decided to file an appeal with the Michigan Tax Tribunal.
Huron officials, along with officials from other turbine-heavy counties, such as Sanilac, Mason and Tuscola, saw the potential for the same thing to happen to them. They decided to form the collaborative with Gratiot County, in an effort to support their cause and share legal costs.
A compromise between DTE and the collaborative could set a precedent that would save Huron County millions of taxable dollars on its wind turbines.
Wruble said he thought the State Tax Commission would accept any compromise the parties came to.
Along with other members of the collaborative, he met with Douglas Roberts, the State Tax Commission chairperson last Thursday.
Wruble claimed Roberts agreed that wind turbines should be viewed as real personal property versus industrial personal property, but that his hands were tied by the Legislature’s decision to classify them as the latter through Public Act 206.
Wruble said the difference was that real personal property is stationary like a house or a building, and industrial personal property is considered mobile, before explaining Robert’s logic in lowering wind turbine’s taxable value.
“If you went to sell it and move it, those devices would have practically no value,” Wruble said. “That’s the way he’s looking at it in his eyes. That $4 million piece of equipment, once it’s up, has practically no resale value.”
The collaborative is arguing that wind turbines are real personal property, much like a house, that long-term energy contracts make them fixed objects. Wruble said that at one point during their meeting a Clark Hill lawyer pointed at his coffee mug to illustrate their point and said, “It would be like me telling you this is a car.”
Wruble said that Roberts agreed with the statement, but again referenced that being the Legislature’s decision.
Commissioner John Nugent asked if there were any possibilities to reverse the legislation, and why the Legislature would make a law that went against the advice of one of the state’s experts on the subject.
Wruble said that proposed legislation by state Sen. Mike Green (R-Mayville) and state Rep. Kurt Damrow (R-Elkton) were both dead.
Several commissioners, including Steve Vaughan, expressed sentiments that the state Legislature was in effect choosing the interests of big-time energy companies over small-town people.
“If they were to switch it back to real property, it would cost the developers and DTE three times the taxes they’re paying now,” Vaughan said. “There isn’t any way they’re going to go for that. … We don’t want more than what was promised, we just want what they promised. Real property would cost them big bucks. They don’t want to touch that one.”
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