Pipestone County and the city of Pipestone have sent letters to Minnesota Department of Revenue Commissioner Myron Frans expressing their disappointment that a tax payback was waived for Suzlon Rotor Corporation after the wind turbine manufacturer breached its JOBZ (Job Opportunity Benefit Zone) contract.
“We are extremely disappointed with the granting of this waiver to Suzlon Corporation,” wrote Bill Johnson on Dec. 29, 2014, then chair of the Pipestone County Commissioners. “We feel there was a lack of credence to our communicated opposition as stipulated per MN Statutes 469.319. The granting of this tax waiver was not in the best interest of the state or local units of government.”
Suzlon exposed itself to a tax clawback of $624,531 for 2013 and 2014 on its commercial and industrial improvements in Pipestone’s Skyway Industrial Park when it dropped down to 12 employees in September 2013. The JOBZ contract Suzlon signed in 2005 required the company to maintain a minimum of 23 employees until 2015 in order to receive benefits that included no property tax on commercial and industrial improvements; no sales tax on goods and services; no state income tax; no corporate franchise tax; no wind energy production tax; and a tax credit for high-paying jobs.
Suzlon asked the state to waive payment of the $624,531 clawback. The Department of Revenue was required to ask the city and county for their opinion on the request prior to making its decision. Both the county and city told the state they did not support the waiver.
In December, however, the Department of Revenue granted Suzlon’s request.
“It’s unfortunate they ask our opinion and they don’t care what it’s going to be,” said Councilor Kyle Caskey during the council’s Jan. 5 meeting. “They said that at the beginning, but without grounds to justify their decision I find that a little appalling.”
When the state requested the county’s and city’s positions, it also indicated that other factors would be considered when making its decision. Those factors included a business ceasing to operate as a result of circumstances beyond its control, such as natural disasters, unforeseen industry trends, and loss of a major supplier or customer.
Duncan Koerbel, CEO of Suzlon Energy Corp North American, personally appealed to the county and city for support back in August. He explained then that industry trends had negatively impacted Suzlon’s Pipestone manufacturing plant. He also highlighted the amount of money he said Suzlon had spent in Minnesota and in Pipestone, and said Suzlon had exceeded payroll amounts required under its JOBZ contract.
fter reviewing the letter Pipestone County submitted to Commissioner Frans, the Pipestone City Council also decided, Jan. 5, to send its own letter expressing disappointment.
“I think we should be on record as opposing their decision,” said Councilor Jim Stout.
Neither the county nor the city received an explanation from the Department of Revenue for its decision. When asked for that information, the Department of Revenue’s Ryan Brown told the County Star in an email, “Unfortunately, the information you’re requesting is considered taxpayer information and by law, the Department cannot confirm, comment on, nor disclose confidential or nonpublic taxpayer information.”
Suzlon Rotor Corporation had a peak workforce of 536 employees shortly after constructing its plant. The first layoff came in June 2009 when the company cut 160 employees; at that time, it had 324. The second mass layoff occurred on Dec. 29, 2010 when the company eliminated 110 jobs, but indicated it would retain about 30 employees.
There are two different companies at Suzlon’s 36-acre campus at the Pipestone site. Each had a separate JOBZ agreement. Suzlon Wind’s agreement requires it to have at least 15 employees to maintain its JOBZ incentives, a number the subsidiary reported last year it had maintained.
Suzlon’s Koerbel said back in August 2014 that their Pipestone manufacturing facility was on the market and that if it didn’t sell in a few years, the company may use the plant again if a new blade the company had developed was successful and the production tax credit was more consistent.
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