BAD AXE – Local wind energy developers have filed nearly 100 appeals to the Michigan Tax Tribunal in efforts to pay what the state – not what local governments – claim is the appropriate taxes for wind farms.
And local officials are anything but happy.
“The fact that all these developers went to the tax tribunal to fight the taxes that assessors put on them indicates that they reneged on their promises,” Huron County Commissioner Ron Wruble told the Tribune. “And those are promises they made to the people of Huron County.”
Wruble’s referring to statements developers made to Huron County officials, stating the area would receive a certain amount of revenue if it were to approve local wind developments. However, since the time a number projects were approved, the Michigan Tax Commission took action which, in effect, lowered the taxable value of wind turbines.
As a result, the area is receiving less tax revenue than it anticipated when officials approved the wind projects.
And that’s putting things in a nutshell.
More specifically, the issue boils down to tax tables that break down the depreciation schedule for wind turbines. In 2011, the State Tax Commission changed the tables by expediting the depreciation schedule for 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.
Following the State Tax Commission’s changes, county officials around the state garnered a legal opinion 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.
And they did.
What followed were appeals filed in Gratiot County by DTE Energy in 2012.
Local officials joined other turbine-heavy counties to form a coalition called the Michigan Renewable Energy Commission (MREC) to support Gratiot’s cause and share legal costs, as they saw the potential of similar appeals being filed in their jurisdictions.
And they were right.
A number of appeals have been filed for 2013 in Bloomfield, McKinley, Sigel, Bingham, Sheridan, Chandler and Oliver townships in Huron County, according to a compilation of appeals filed to the Michigan Tax Tribunal that the Tribune obtained from the Huron County Economic Development Corp. In neighboring Sanilac County, appeals have been filed in Delaware, Marion and Minden townships. And in neighboring Tuscola County, appeals have been filed in Gilford and Blumfield townships.
During this week’s Huron County Board of Commissioners meeting, Chairman Clark Elftman referenced various ads that have been placed in local media outlets by local developers, which touted them as being good community members.
“And yet, (there’s) appeal after appeal after appeal,” he said.
Scott Simons, of DTE Energy Media Relations, acknowledged DTE – which owns the Michigan Thumb Windpark in Huron and Sanilac counties and Gratiot County Windpark – has filed more than 60 appeals.
“There’s an appeal for every turbine, among other things,” he told the Tribune this week.
Simons explained that because DTE is a utility, it’s electric rates are scrutinized by the Michigan Service Public Commission. Therefore, it has an obligation to pursue paying the lowest rate possible.
“Essentially, this controversy stems from a revision to the wind property tax tables, and the revision was put forth by the State Tax (Commission) with no influence or input from DTE Energy,” he said. “So really, the controversy is between the state and the municipalities. And because of the state (rules), we were required to follow them, and that’s why we had to file the suits.”
Simons said DTE is hopeful Huron and Gratiot counties, along with MREC, will reach an agreement with the state regarding the appropriate taxable tables used to assess wind energy turbines.
“We’re required to follow the tax tables,” he said.
Exelon Wind – which owns the Michigan Wind I and II and Harvest I and II developments in Huron County and Beebe Windpark in Gratiot County – has filed 74 tax appeals involving all five of its wind projects in Michigan, Communications Manager Bob Judge told the Tribune.
“The tax appeals were filed to permit Exelon Wind to pay the property taxes at the rate recommended by the State of Michigan’s tax policy for wind projects,” he said.
NextEra Energy Resources has filed appeals for its Tuscola Bay Wind Farm in Gilford and Blumfield townships in Tuscola County.
“This is not about not paying taxes,” explained NextEra’s Resources Corporate Spokesman Steve Stengel. “… This is about what is the right amount, the fair amount of taxes to pay, and companies like ours wanting a seat at the table if there are going to be discussions occurring about how to value these assets.”
NextEra officials said the developer is looking for some consistency.
“Part of the problem is that the 2013 table is different from the 2012 table, which is different from 2010 and different from the 2009 table … so the level of certainty and predictability of tax is nonexistent right now,” said Christopher Cothran, NextEra manager of property tax.
NextEra currently is constructing what will be Huron County’s largest wind development. It will consist of 88 turbines in portions of Brookfield, Fairhaven, Grant, Oliver, Sebewaing and Winsor townships. It purchased the development rights from RES Americas in March.
Ryan Pumford, NextEra project manager, said NextEra personnel always have used the latest tax tables when citing revenue local governments will receive from the new development.
“I can’t speak intelligently on promises made during the overlay creation,” he said. “Our intent is always to pay every cent that we owe under the law, and that should have been the message that’s been trumpeted.”
Stengel said issues regarding taxing wind turbines have occurred elsewhere around the country in the past.
“And the issues are always resolved,” he said. “Again, this is a bit unusual, but at the end of the day, level-headed people sit down together, they share information and they work it out – and that’s what’s going to happen in Michigan as well.”
Wruble, who chairs MREC, recently announced the coalition has thrown its support behind a compromise tax table that’s been proposed.
Officials broke down what it would mean in terms of revenue potential for local units of government. Per the compromise, one wind turbine would generate $226,784 in local tax revenue over 15 years. That’s more than the current $199,015 but less than the $301,762 that would have been raised using the old table.
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