NextEra Energy Resources responds to criticism of tax assessment appeals 

TUSCOLA COUNTY – In Saturday’s Advertiser some Tuscola County officials were upset on what they viewed as a breach of trust with NextEra Energy Resources LLC over tax money.

“Deceived” was said several times by commissioners as well as other scathing remarks during county meetings last week when they were told of NextEra’s appeal on tax assessment of the 68 turbines in Gilford Township.

NextEra officials contacted the Advertiser just after press time so a telephone conference was set up Monday so they could explain their stance.

Both county and NextEra officials point to an Oct. 2011 letter written by the energy company and conversations that NextEra representatives said that they would pay its share of taxes and that taxes were built into the cost of the project.

NextEra’s spokesperson Steven Stengel and property tax manager Chris Cothran each pointed to the date of the letter and its intent.

At the time the company wrote that letter, the state was talking about eliminating personal property tax for businesses; the intent of that letter was that if the state did that, then the company would still pay property tax at the same rate that was in place when the project started, explained Cothran.

“The state was talking about total elimination of taxes; and we understand how important that money is, so it was to make sure of a tax money to them,” explained Stengel.

“It was never about NextEra not wanting to pay property tax. It was about what if the state did eliminate it.”

However, since that time, the state didn’t eliminate property tax, but rather changed the taxing method on wind development. The state’s change in the multiplier used for wind turbine taxing means about a $20 million loss to taxing units in Tuscola County over the life of the project.

The State Tax Commission (STC) changed the tax multiplier in Oct. 2011 without giving a rationale or reason. 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.

The state’s arbitrary action on the way turbines are taxed means the loss of billions of dollars in tax revenue for the six counties in the state that have or will soon have wind farms.

Because of the way the STC is set up, they do not have to show the documentation they used to substantiate their rationale for changing the tax model on wind turbines.

However, even though the state changed the tax schedule, local assessors and boards of review could use the old tax depreciation schedule if they felt it was an accurate cash value of turbines, which Gilford Township did.

“The Gilford Township assessor was not satisfied with level of detail of the property tax forms in the rendition for 2013 taxes permitted by the state of Michigan,” said Cothran. “It was not clear from Lansing why (tax) tables were presented.”

According to Cothran, Gilford Township Assessor Todd Fackler recommended filing an appeal with the State Tax Tribunal (STT).

“We are appealing and continuing discussions on the (state) tax changes, and with Gilford Township” he said. “We want a fair assessment for us and for the community.

“We continue to talk to Mr. Fackler as we work on this and wait on Lansing. We are willing to pay our fair share and achieve a fair market value on our assets.”

“NextEra Energy Resources is currently working with and will continue to work with the townships and the State in order to develop a well-documented and reasonable methodology to value our affiliate wind farms in Michigan,” said Stengel.

According to documents filed with the STT, NextEra is petitioning to have the tax on the 68 turbines reduced.

The petition claims the assessment is too high: “The property was assessed at a taxable value of $97,892,750 based on the use of incorrect depreciation tables developed by the county. The true value of the property based on the proper application of the state’s depreciation table is $54,705,373. The amount in controversy is $43,187,377.”

It could take STT two or more years to make a decision.