The Teton County Commissioners have 120 days to decide whether to grant tax abatements to one existing industrial wind farm and one proposed wind farm within the Choteau, Greenfield and Power school district boundaries southeast of Choteau.
Meeting in the conference room in the Courthouse Annex in Choteau on June 25, Commissioners Joe Dellwo, chairman, and Jim Hodgskiss and Ron Ostberg during the statutory public hearing on the matter, listened to a dozen supporters, who were part of an audience estimated at 50 people, most of whom had marked a sign-in sheet as being “for” the abatements.
The supporters included two Greenfield School District representatives, former and current elected local government officials and area business owners.
One resident spoke against granting the abatements, saying that the wind developers “did not do their homework” and the commissioners noted a list of people, many of them farmers and ranchers, who had phoned them with an opinion. Power School District Superintendent Loren Dunk was among the 12 people on the list who were opposed to the abatements. His letter to the commissioners said it was in the school’s and taxpayers’ best interests to “uphold the school system’s tax authority.”
Representatives of Fairfield Wind L.L.C., that constructed a $20 million, six-turbine industrial wind farm, completed in May 2014, applied on June 11 for tax abatements for the Fairfield Wind project and for a proposed $47 million, 15-turbine Greenfield Wind project under the state’s tax incentive rules that benefit “new and expanding” industries.
A 10-year tax abatement cuts the taxable value in half for the first five years and then increases it by 10 percent each year thereafter until the original taxable value is reached. Taxable value multiplied by a local taxing authority’s mills equals the amount of money the taxing authority collects. Any tax reduction would apply only to taxes levied for the local high schools and elementary schools, the county and special districts within the county.
As the Acantha reported on June 17, John Pimentel and Matt Wilson of Foundation Windpower in San Francisco, California, (it has a 90-percent ownership interest in Fairfield Wind) said they were surprised at Fairfield Wind’s $323,569.83 tax bill they received in May. They had built into their financial assumptions a much lower tax amount, and that, they said, along with several other issues at the operating wind farm made them halt construction of the Greenfield Wind project while they assess the two projects’ profitability.
They applied for a tax abatement for Fairfield Wind last year but an issue with the date it was received by the county commissioners stopped the application from going forward nor did they reapply to overcome the technicality. On the second project, the Teton County commissioners last summer voted 2-1 to deny Greenfield Wind a tax abatement.
Now they have reapplied for both tax abatements, while they wait for an informal review of the Department of Revenue’s determination that Fairfield Wind has a $19,118,781 market value. Department of Revenue Director Mike Kadas said at the hearing via a conference call, that his staff would finish its review the week of June 29.
Commissioner Hodgskiss said on Monday that the commissioners would not vote on the abatements until the Department of Revenue provided them with an updated estimate of the taxes the two projects would generate with and without the abatements.
The wind farm owners disagreed with the valuation of their improvements made on the leased farmland. If the owners disagree with the results of the review, they may file an appeal, in this case, with the state appeal board, because the wind farm is appraised as a large industrial property by a special bureau in the Department of Revenue.
The project is in the Class 14 category that has a property tax rate of 3 percent. The taxable value listed on the 2015 tax bill is $573,563 and that, multiplied by 564.14 mills, equals the amount due, $323,569.83.
The amount was originally due on June 30, but on June 24, Department of Revenue official Kory Hofland, the head of the Business Tax and Valuation Bureau, said that that tax payment deadline was cancelled. Instead of issuing a tax bill for personal property due June 30, the Revenue Department converted the taxes due into a 2015 real estate tax bill listing it as “improvements on real property” with the typical due dates for that type, i.e., half due on Nov. 30 and half on May 31, 2016.
The June 25 public hearing lasted a little more than an hour, during which time the commissioners heard supporters say that granting the abatements is a “win-win,” that the larger project is “at risk of not happening” without the abatement, that denying the abatements would be a “great injustice,” and that the construction alone would put $1.82 million directly into the local economy by way of jobs and local business trade.
Significantly, at the hearing, Kadas explained how an abatement that is applied before a project is added to the tax base, does not create a “tax shift” to other taxpayers. Dellwo said this was the first time he had heard a Revenue official say that, having consulted with three of them since April.
Ostberg stated that they have been denying tax abatements, such as one in April for the Stage Stop Inn expansion in Choteau, because they relied on explanations by Department of Revenue staff and that department’s biennial report to the Legislature.
It stated in part: “Property taxes are not like other taxes in the state. Property taxes are an ad valorem tax meaning the tax is levied in proportion to the value of each property relative to the total value within each taxing jurisdiction. Therefore, reducing a tax rate or exempting a certain type of property from the tax base does not reduce the amount of taxes collected but instead shifts the tax liability to other taxpayers in the affected jurisdiction.”
Kadas said that if an abatement were granted to Greenfield Wind, only a certain percentage, starting at half its taxable value, would be added to the tax base for the term of the abatement.
Local governments set their mills based on their budgets and their tax base, after the half, not the whole, taxable value would be included.
Kadas said that it might mean that if a tax abatement for Fairfield Wind were granted now, after it has been added to the tax base, the tax base would be reduced, but because Greenfield Wind, if built, would have a taxable value more than twice the value of Fairfield Wind, the end result would be an increase overall in the tax base, even if the two amounts are halved for a certain time period.
All other things being the same, when new construction comes in, Kadas said, it creates a decrease of taxes for everyone else.
By statute, the commissioners have 120 days to grant or deny the abatements, but Dellwo said but he told the wind project developer Pimentel that the commissioners “would do it sooner rather than later.”
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