The Teton County Commissioners, meeting July 16, granted a tax abatement to the proposed Greenfield Wind energy development, but denied a tax abatement to the Fairfield Wind development that started operating in May 2014.
Representatives of Fairfield Wind L.L.C., that constructed a $20 million, six-turbine industrial wind farm southeast of Choteau last year, applied on June 11 for tax abatements for the project and for the proposed $47 million, 15-turbine Greenfield Wind project under the state’s business tax incentive rules that benefit “new and expanding” industries.
Teton County Commissioners Joe Dellwo, chairman, Ron Ostberg and Jim Hodgskiss held a June 25 public hearing on the abatements and gathered information on the tax implications of 10-year tax abatements from the Fairfield and Greenfield wind developers John Pimentel and Matt Wilson and from the staff of the Department of Revenue during the past month.
All three commissioners voted for the Greenfield Wind tax abatement but Ostberg and Hodgskiss voted “yes” on a motion to deny the abatement for the existing Fairfield Wind, while Dellwo voted not to deny it.
This round of tax abatements was the second time the wind developers had approached the county. The commissioners denied a tax abatement for Greenfield Wind last year (Hodgskiss and Ostberg were against it and Dellwo was for it) and they returned the application for Fairfield Wind on a technicality while they invited a resubmission that, according to Ostberg, was never submitted.
A 10-year tax abatement for eligible Class 14 renewable energy developments would cut the tax rate of 3 percent in half for the first five years and then increase it by 10 percent each year thereafter until the original tax rate of 3 percent is reached.
The tax rate multiplied by the market value equals the taxable value and that multiplied by a local taxing authority’s mills equals the amount of money the taxing authority collects. Any tax rate and thus, taxable value reduction; would be applicable only to mills levied for the local high schools and elementary schools, the county and special districts within the county.
Because in this case, the wind developers lease, not own, the land, the tax bill they receive is for personal property, that is, the turbines, towers, etc., attached to real estate.
It took about five minutes for the commissioners to address the two abatement items. Greenfield was first.
Ostberg made the motion to grant the abatement after stating that the commissioners had written confirmation from the Revenue Department that for those entities that are not yet built, “there is no tax passing [shift] on to the other taxpayers in the county.” The motion carried 3-0, after Dellwo invited discussion and received none.
On to the Fairfield Wind abatement, Ostberg began again, but this time said, “On the Fairfield Wind, there still is a tax shift and that’s [confirmed] by the comment from the Department of Revenue as well.”
Ostberg then listed his concerns including negative public comments, developer statements made in June about less energy being created because of lower wind speeds with the implication that there is less revenue coming in than projected, and previous developer comments about mechanical problems with turbines.
He continued, “They [Taxpayers] don’t think that they should be contributing tax dollars there for operation of a facility that has those other problems added to it.” He said the wind developers asked for, but were denied, a reassessment of Fairfield Wind’s market value from a cost approach to an income approach, and referred to a document from the Revenue Department that he said indicated that “use of the income approach would actually result in a market value at or above the Revenue Department’s appraised value, and so that kind of goes against what the Fairfield Wind folks were telling us in that they didn’t have enough revenue, they could not afford to pay the tax and they did not have enough revenue to make the operation financially feasible.”
Ostberg then moved to deny the tax abatement. Hodgskiss seconded, and added his opinion that “Fairfield Wind is going get a defacto tax abatement for that first year.” It was his belief that the turbines are improvements on the real estate, which are taxed in two installments, and he argued that the developer’s taxes were originally due on June 30. Then the Revenue Department converted the tax bill into a real estate tax bill that splits the taxes due, half on Nov. 30 and half on May 31.
The Acantha reported on July 1 that the Revenue Department assesses the value of the turbines, etc., as personal property. Although the $323,569.83 personal property tax bill was due June 30, Doug Roehm, the Revenue Department’s unit manager in the business tax and valuation bureau, said on July 16 that instead of a “defacto tax abatement” the department “made a concession for the wind farm to be treated like the majority of other taxpayers rather than to pay it all in June.” No reduction of the amount of 2015 tax bill was considered in granting the concession.
Dellwo said the Revenue Department confirmed for him that while the wind farms would pay less taxes for 10 years, if the abatement were granted, but the net effect because of the large addition to the tax base of Greenfield Wind, would be lower taxes for the people of Teton County.
After asking for further discussion and receiving none, the motion to deny the abatement carried 2-1.
About 20 people attended the July 16 commissioners meeting and Shane Stern afterward, said he was “here for the wind farm.” As an employee of Dick Anderson Construction that has a contract to build the Greenfield Wind farm, he said, “We are happy, very happy.”
Retired Choteau businessman and former city Councilman Denny Perry, after the meeting, said, “I am happy with their Greenfield decision. I thought that they, excluding Joe [Dellwo], were incorrect on the abatement for the existing [Fairfield] wind towers.”
He added that he wants to see the commissioners reconsider their 3-0 vote in January to deny a tax abatement to the Stage Stop Inn motel expansion in Choteau. He said the commissioners made a mistake in “extrapolating that small statement” – the Revenue Department’s use of the term “tax shift” – from a department report as the reason for not granting the tax abatement.
Pimentel and a business partner, Martin Wilde of rural Fairfield, exited the meeting after the votes. Wilde did not want to be interviewed and deferred to Pimentel.
“We’re pleased by the commission’s action on Greenfield Wind. We think it’s the right decision and it is consistent with what we believe is good policy for the taxpayers of Teton County. However, the decision on Fairfield Wind is troubling, and we’ll try and work with the commissioners to make sure they understand the facts around Greenfield Wind as well. We need to understand our tax basis for both projects in order to move forward on Greenfield Wind,” Pimentel said.
When asked if that means that Greenfield might not be built, Pimentel said, “We are going to go back and work with our banks to try and determine the path forward.”
These two projects cost a total of $70 million. Our financing arrangements to build the projects are dependent on the bank’s analysis of the wherewithal of the projects. So we have borrowed money to build the projects and in order to borrow the money we have to show the banks that the projects can repay the debt. And so we are going to endeavor to make sure the commissioners understand the facts around the Fairfield Wind as well.”
Pimentel would not say whether the developers would proceed with a formal appeal of Fairfield Wind’s $19 million market value. Pimentel said, “We already have been rejected on our informal appeal. We will try and figure out our next step [on that] as well.”
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