THUMB AREA – The financial windfall taxing entities were to reap from wind farms that was touted by a developer may be turning into hot air.
When the first wind farm in Tuscola County was being developed by NextEra Energy Resources LLC, company representatives met with Tuscola County Advertiser staff.
They outlined the scope of the project and also said the company planned to pay property taxes at current model even though the state at that time was just talking about changes. They said the cost of taxes was “built in” with project costs. They also told county commissioners the same and gave them a letter saying they would pay taxes at current rate.
However, that’s changed. NextEra is challenging Gilford Township’s tax levy, and the State Tax Tribunal (STT) drastically changed the tax model on wind development just as several new projects were underway with more proposed.
“Deceived” was said several times by commissioners Thursday when they were told of NextEra’s appeal.
“Many of the communities approved wind development because of what they were told they would be able to get in tax revenue, and how it would help with them,” said Commissioner Chris Trisch.
The company built 68 turbines in Gilford township, and is in the process of building more in four townships as part of their phase two project.
“If I were those township officials I’d be outraged, and stop development,” said Trisch who suggested locking down NextEra’s Fairgrove development site and selling what’s there to recoup the revenue they promised.
About $20 million in tax revenue over the life of the wind farm is at stake in the challenge.
However the tone of Friday’s county meeting wasn’t as scathing when it was noted a NextEra representative expressed interest in meeting with commissioners to discuss the issue.
The controversy is from when STT’s changed the tax multiplier in Oct. 2011. The tax model for each turbine went from 100 percent assessment in year one with 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.
Although the state changed the tax schedule, local assessors and boards of review could use the old depreciation schedule if they felt it was a accurate cash value of turbines, which Gilford Township did. That is what NextEra is challenging.
It could take STT two or more years to make a decision.
Plus, overall the anticipated revenue loss in the tax challenge could be even more. NextEra is getting ready to start construction of Tuscola Wind II Energy Center which calls for 59 turbines in part of Fairgrove, Akron Gilford, and Wisner townships.
With the challenge in Gilford Township from the first wind farm, it is anticipated the company will also challenge taxes when the second project is completed.
The tax appeal complicates the county and other taxing entities financial status because the amount of anticipated revenue from wind farms is unpredictable making budget development difficult with less money than projected.
While the challenge is pending, Hoagland suggests the county escrow the money until STT makes a determination.
When state officials started talking amount changing the wind development tax methods, counties with wind farms formed the Michigan Renewable Energy Collaborative (MREC) to share resources and expenses to try to get STT and lawmakers to use the old tax schedule.
NextEra Energy Resources LLC officials responded late Friday afternoon when they were contracted about the county’s dissatisfaction. Because of the short notice, they were not able to fully explain their position. As of press time, the company is in the process of setting up a phone interview with the Advertiser for Monday.
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