UPPER THUMB – For quite some time now, local officials have been quietly working with other municipalities and state lawmakers in efforts to establish the most fair way to determine the value of used wind energy turbines.
Why? Because that value determines how much local governments, schools, libraries, fire departments and other entities receive in tax revenue from wind energy developments.
“In a nutshell, I think we’re moving in positive directions. We’re very cautious about the outcome, and we have professional consultants helping us with this process and we just appreciate the seven counties that are involved and all the various townships,” said Mike Krause, member of the Huron County Economic Development Corporation and Michigan Renewable Energy Coalition (MREC).
MREC, which consists of counties in Michigan that are experiencing wind development, has been lobbying for the State Tax Commission to institute a fair process to determine accurate turbine values.
In fall 2011, the commission changed the depreciation schedule for wind turbines, which resulted in lower taxable values for wind projects.
Officials from counties experiencing wind energy development protested the change, and were upset that it was done in an over-night fashion with no input from local municipalities. Local officials have been working with state lawmakers to get the tax commission to institute a fair process that doesn’t under value – or over value – turbine values.
Krause said progress has been made in getting a process put in place, as Sen. Mike Green, R-Mayville, and Lt. Gov. Brian Calley helped form multiplier committee at the State Tax Commission that consists of a cross section of MREC and local equalization officials and utility representatives.
“That’s very positive,” Krause said. “ … All we’ve been asking is that we want a voice to be heard … We felt that the State Tax Commission basically didn’t hear our voice. So now we have an avenue to speak to them and present our case, and I think we’ll do it very professionally.”
Green told the Tribune that through a meeting with Calley and representatives from the tax commission and Michigan Department of Treasury, he learned there is a policy to follow when a depreciation schedule is being changed, and that includes utilizing a multiplier committee. However, for whatever reason, the policy wasn’t followed when the tax commission made the changes to depreciation rates for wind turbines in fall 2011.
Green noted he’s currently drafting legislation that would require the tax commission follow its policy when any depreciation changes are made.
The wind turbine multiplier committee is expected to hold its first meeting next month, Green said. He noted it’s his hope that the committee will come up with something that all sides can agree to – and that decisions are made based on facts, rather than assumptions.
“And I think that is what’s going to happen,” Green said.
Krause said local government officials are happy the process is moving forward, and the end goal remains establishing a fair procedure to determine accurate values/depreciation schedules for wind turbines.
Per the state tax commission’s ruling in the fall 2011, 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. Last year, Huron County officials estimated that based on about 20 mills, a new wind turbine that previously would have raised about $32,000 the first year it’s taxed, would now raise only $25,000, per the tax commission’s changes.
County officials garnered legal opinions stating 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. They had urged townships with wind energy developments to have their respective board or review adopt the older values, rather than the ones approved by the tax commission in fall 2011.
Townships in Huron County did just that in 2012, as did a number of other townships with wind projects around the state. However, in Gratiot County’s Wheeler Township, DTE filed an appeal with the Michigan Tax Tribunal. DTE officials at the time said the utility’s rates are scrutinized by the Michigan Public Service Commission, and DTE has to show prudent and responsible decisions when incurring any costs, including abiding by the current tax multiplier tables.
“So if a local jurisdiction recommends we pay under the old (tax multiplier tables), we have an obligation to appeal based on the current tax law,” DTE Energy Spokesman Scott Simons previously told the Tribune.
Because Huron County officials – along with officials from other turbine-heavy counties, including Sanilac and Tuscola – saw the potential for a similar appeal happening in their areas, they formed a collaborative with Gratiot County through MREC to support Gratiot’s cause and share legal costs.
Krause said the appeal to the Michigan Tax Tribunal is a very slow process.
“That may take, oh, anywhere from two to three years to get to the Tax Tribunal,” he said.
This year, MREC encouraged local townships with wind developments to continue going with the older values, rather than the new ones, Krause said.
“They’ve already taken their action,” he said. “… We’ll see what happens.”
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