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Winds of change blowing through wind power industry  

Credit:  By Ross Courtney | Yakima Herald-Republic | March 3, 2013 | www.yakimaherald.com ~~

BICKLETON – As the superintendent of the Bickleton School District, Ric Palmer negotiates contracts, supervises the district’s single K-12 building, teaches classes, schedules sports and dons coveralls and a welding mask to fix buses in the garage.

Starting in 2016, however, the 58-year-old plans to cut his eclectic schedule in half for the remainder of his career to save money for taxpayers.

That’s because taxpayers, at the same time, may begin shouldering a larger burden of paying off the district’s new school that the once-booming wind power industry was supposed to finance.

“We could look at not having a music program,” Palmer said. “We’re trying not to do that.”

The winds have shifted in Klickitat County, the arid plateau of south-central Washington that has hosted the state’s most prolific growth of wind power generation in the past eight years. New laws in California, low prices for natural gas and the county’s own policy changes mean revenues from property taxes assessed on wind turbines are uncertain at best. At worst, residents fear a future with less tax revenue for schools, fire protection, ambulances and hospitals than they once counted on.

Nothing is certain. Property values ebb and flow with the economy, and predicting assessments three, four, five years in the future is a guessing game.

But officials in the Bickleton School District, home to just 96 students, say projections show voters may see their tax rate nearly double to pay off a new school they approved just three years ago, Palmer said.

“We sit with a bond that we sold the people and they voted on it on good faith,” Palmer said.

The wind has always blown in Klickitat County.

It rushes from the Pacific Ocean, through the Columbia River Gorge and across wheat fields and cattle ranches. Gusts have been known to lift motorcycles off their wheels, drift snow up to the eaves and kick up enough dust to close state highways.

Trying to capitalize on what residents had always cursed, Klickitat County authorities in 2005 courted wind energy development companies eager to fill their renewable energy portfolios with what is called an energy overlay – a designated region where much of the environmental and legal paperwork to build and site the windmills was done in advance. Many of the companies were based in California, a state with some of the most strict renewable energy requirements.

Turbines sprouted rapidly on land leased from farmers who continue to graze cattle and combine wheat right under them. One of the largest wind farms in the world – Windy Point/Windy Flats – stretches for 30 miles along the ridge line south of Goldendale, the county seat.

The developments meant huge property tax gains for the county. Five years ago, wind turbines accounted for just 1 percent of the county’s overall assessed value. Today, those turbines account for a whopping one-third of the value.

Taxing districts, also eager to capitalize, pitched bonds and levies to local voters, hungry for better services and paid for largely by assessments on property belonging to corporations based in California, France, Spain and Portugal.

Klickitat Valley Health, the public hospital in Goldendale, built a new imaging room and emergency department in 2006. Fire District 2 purchased a new ambulance and drew up plans for a new Bickleton station – this one with restrooms and a shower.

In 2009, the Bickleton School District convinced voters to approve by nearly 80 percent an $8.9 million bond for a new school and the district’s first-ever maintenance and operation levy, used to supplement general expenses such as books, programs and staff.

Now, those districts are going back to the drawing board due to a series of changes.

For one, Californians don’t want Washington state’s electricity as much as they used to. In 2011, the California Legislature passed laws that encourage utilities to generate most of their renewable power from within the state.

That left up to $5 billion worth of proposed projects for Washington and Oregon suddenly without investors, said Dana Peck, a senior developer for the western region of San Diego-based EDF Renewable Energy.

“For all practical purposes, they closed the borders,” said Peck, who is partially responsible for much of the county’s wind power growth as the former economic development director for Klickitat County.

Peck, who still lives in Goldendale, believes wind turbine development will resume someday. The industry has seen cycles before, he said.

Other changes happened, too. The price of natural gas has been low, making renewable energy such as solar and wind less attractive. The federal government hesitated in renewing energy generation tax incentives until late last year, making investment risky in the eyes of development companies.

Also, the Northwest’s transmission lines have been reaching capacity, prompting the Bonneville Power Administration to occasionally order wind turbines off line to make way for water flowing past the Columbia River’s hydroelectric dams.

Last year, Darlene Johnson, the new Klickitat County assessor, threw another wrench in the works by changing how the county calculates the value of wind turbines, switching from a fixed value to a flexible – and unpredictable – system based on a depreciation schedule recommended by the state Department of Revenue. It works out to turbines depreciating – or dropping in value as they age – by roughly 6 percent to 7 percent each year.

As with all property, wind turbine value is subject to change with the economy, said David Saavedra, a Department of Revenue property tax division program manager. Meanwhile, energy companies constantly upgrade equipment, which slows depreciation.

“The trend downward is not as steep as everyone might think it is,” Saavedra said.

Kittitas County taxing districts saw no change because wind turbines there are newer, said Marsha Weyand, Kittitas County assessor. The county began assessing turbines in 2011 based on the depreciation schedule from Day 1.

In Klickitat County, the new uncertainty leaves taxing districts fearing that wind turbine companies over time will pay less for projects and programs already under way.

They don’t worry about losing money overall. By state law, officials levy for a total amount and then divide by the overall property value to determine rates. When one person pays less, somebody else must pay more.

In fact, the new depreciation schedule actually will help in the short term, Johnson said, by temporarily bumping up the value of the turbines, meaning less so-called “tax burden” on voters.

“Some people want to say this is bad for my county,” she said. “It’s actually good for my county.”

It also better follows the spirit of state law, she said. Assessors are required to assess as closely as they can to fair market value.

In Bickleton, school district voters saw their rates drop from $2.69 per $1,000 of assessed value – $269 per year on a $100,000 home – in 2011 to $1.64 in 2012.

But several years down the road as the turbines lose value, district officials fear the opposite may happen: Wind companies pay less and residents pay more.

District officials have been planning ways to soften that blow, if it happens.

Fire District 2 officials have begun scaling back their new station plans, said Miland Wayling, fire commission president.

“We’ve kind of downgraded,” Wayling said.

Klickitat Valley Health, which already closed its assisted living center due to reimbursement changes, is looking for other places to cut, said CEO John White.

Bickleton School District officials expect levy rates to shoot up to nearly $4 per $1,000 by the time they pay off the 10-year construction bond in 2019. They can’t change much about that.

However, they have decided to not ask voters to renew a maintenance and operation levy in 2016, 2017 and 2018, the years when the rates will reach their highest. The move will cost the budget about $165,000 per year and save residents about 25 cents per $1,000 on their levy rates, Palmer said.

To make up for it, they plan to cut Palmer and Judy Naught, the longtime business manager, to half-time employees and not replace a few other employees when they retire.

“That’s really all that we can do,” Palmer said.

Source:  By Ross Courtney | Yakima Herald-Republic | March 3, 2013 | www.yakimaherald.com

This article is the work of the source indicated. Any opinions expressed in it are not necessarily those of National Wind Watch.

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