November 25, 2014
Texas

Tax abatement set for wind project

By HOMER MARQUEZ | Plainview Daily Herald | November 24, 2014 | www.myplainview.com

On Monday, Hale County’s Commissioners Court unanimously approved and authorized County Judge Bill Coleman to sign a county tax abatement agreement with Hale Community Energy, LLC, which is a joint venture made up of four wind farm projects in Hale County, including Cotton Wind Farm, LLC; Lakeview Wind Farm, LLC; Hale County Wind Farm, LLC; East Mound Renewable Energy Project, LLC; and Tri Global Energy, LLC, the project’s developers.

“This will serve as a template for other wind energy projects in the county,” Coleman said back in October. “And it’s about half the going rate that other counties are offering for these projects.”

The Court had previously approved the form of a tax abatement agreement on Oct. 27, which was the product of negotiations between the County and Hale Community Energy, LLC. After several weeks of negotiations, the wind company agreed to the final offer from the County for annual payments in lieu of taxes during the 10-year tax abatement period defined in the agreement.

The agreement, which is applicable to Phase 1 of the Hale Community Energy’s five phase project plan, calls for payments in lieu of taxes during the first five years of the tax abatement period at $1,000 per nameplate megawatt capacity each year, and payments of $1,250 per nameplate megawatt capacity during the second five years. The economic incentive for Hale Community Energy during the 10-year abatement period is abatement of substantial property taxes that would otherwise be due on the wind farm turbines and other structures once operational.

Lanny Voss, legal representative for Hale County Energy, said that the proposal made by the commissioners in October was determined by HCE’s management to be acceptable when compared to tax abatement agreements approved in other Texas counties with wind farm projects in operation.

“The spirit of the negotiations from the perspective of both the commissioners and our company’s management was conducted constructively at every point, and with the understanding on both sides that reaching an equitable agreement was in the best interests of both the County and the landowners and investors in our wind farm projects. I believe we achieved that goal,” Voss said.

Hale Community Energy had initially asked commissioners to cap the payments in lieu of taxes at $200,000 annually since the project was facing higher than anticipated costs on interconnect fees. However, commissioners decided not to include the cap.

Hale Community Energy will face potential payments of up to $300,000 annually during the first five years of the agreement if it reaches its full 300 megawatt production capacity. That could climb to $375,000 annually in years six through 10 if the same production target is reached.

The County said they had a goal of providing tax abatement incentives that would encourage economic development and replicate future projects, but also preserve on behalf of Hale County residents the ability to collect enough payment in lieu of taxes to avoid the necessity of raising ad valorem taxes to make up the difference.

With the final offer, the Hale County Court said they were able to accomplish that medium.

URL to article:  https://www.wind-watch.org/news/2014/11/25/tax-abatement-set-for-wind-project/