Wind farm here could power 100,000 homes
Credit: Written by Silver City Daily Press on October 17, 2018 | scdailypress.com ~~
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Ten to 15 long-term jobs could be created by a southern Grant County wind farm project that’s on the agenda for Thursday morning’s meeting of the Grant County Commission. Commissioners will be asked to begin a process that could result in the county’s issuance of nearly a half-billion dollars in Industrial Revenue Bonds to support the project.
The Great Divide Wind Farm, which has been proposed by Boulder, Colo.-based renewable energy developer Scout Clean Energy LLC, will be in the southern tail of the county, 14 miles east of Lordsburg. As envisioned, the wind farm would involve the construction of 60 to 100 wind turbines on land owned by a half a dozen private property owners, which collectively are expected to generate about 250 megawatts of power – enough, the company says, to power 100,000 New Mexico homes. Initial work on turbine foundations and access roads began in 2016 – which qualifies it for the greatest possible federal tax credits for alternative energy production.
“You primarily access the project from Separ Road, and you come north” from Interstate 10, said Mike Greczyn, a consultant to the project’s developer. Greczyn made the bulk of the presentation on the project to county commissioners during Tuesday morning’s work session.
The area has been under development and study for two years, and the developers say their studies have demonstrated adequate wind potential along with low environmental risk to birds and bats. The construction of the project, which could begin in earnest in the middle of next year, would take from one and a half to two years, and employ 275 to 300 construction workers during that time.
The IRBs that the commissioners will consider are essentially a vehicle for the county and the Silver Consolidated School District – the two entities that primarily benefit from property tax collected in the area – to offer wind farm developers a tax break, while simultaneously collecting more revenue than they would receive otherwise. The Silver school board would have to negotiate their own deal with the developers separate from the county.
“Industrial Revenue Bonds are used to avoid certain tax liabilities that would be in place – personal property tax, and to some extent gross receipts and other taxes,” explained attorney David Buchholtz of the Rodey Law Firm in Albuquerque. And while the move would represent a major tax exemption based on the value of the completed wind farm project, the developer would make payments in lieu of taxes, or PILOT payments, to the county and school districts that would be considerably larger than they would collect in taxes on what is now undeveloped grazing land.
“It would be something like $4 million in property tax a year,” Buchholtz said. “It would be a very significant property tax if you went forward with the project without the abatement.”
Instead of that $4 million, the county would receive the PILOT payments from the project – and the amount of those payments is the largest negotiating point, from the county’s perspective.
“We’re raking them over the coals over the PILOT payment,” Charlene Webb, Grant County manager, told the commission. “In my opinion, you don’t lose money on this type of deal.”
Webb had experience with similar projects in her previous position as Roosevelt County manager in eastern New Mexico, an area of the state where wind generation projects have been under development for years.
“I’ve never seen disagreement on the PILOT payment stop a project,” Webb said. “They’ve already got too much invested.”
The wind farm’s developers, for their part, are looking to negotiate a more favorable deal than they would seek elsewhere, because, they said, the economics of building a project in Grant County are different.
Greczyn compared the proposed Great Divide Wind Farm in Grant County with a recently completed project in Oklahoma.
“That was a 200 megawatt project on 13,000 acres, and this would be 250 megawatts on 23,000 acres that’s somewhat mountainous,” he said. “The cost of the land area is going to be higher than in eastern New Mexico.”
On the other hand, Greczyn said, alternative energy projects in that area have a more difficult time transporting the energy they produce to the west, toward the lucrative California market. An El Paso Electric-owned transmission line that crosses southern Grant County would provide a direct conduit westward.
The issuance of Industrial Revenue Bonds is a complex process specified in New Mexico law, but essentially the county would own the project for the life of the bonds – which can be up to 30 years, but can be less. The developer and operator would make rent payments on the project to a bank designated by the agreement, which would then use that money to make payments to bondholders.
And while the deal would be exempt from most state and local taxes, because the development would essentially use the county’s government tax exemption, gross receipts taxes would still be payable on construction expenses, which would provide an additional boost to the area.
According to attorney Buchholtz, who is working for the county on the deal, the issuance of the bonds would carry essentially no risk to the county or its taxpayers, with provisions to allow the government to get out of the deal in case of default.
“The PILOT payments and so-called clawbacks will be negotiated between [Thursday’s] inducement resolution and the final ordinance,” Buchholtz said. That period of time will be at least 35 days, but will likely take longer – and will include additional public hearings before any deal is finalized.
“The only thing the county does is collect PILOT payments,” Greczyn told the Daily Press. “If there was a default, the county would just deed the project back to the developer” – which would also end any tax breaks under the deal.
Also on the agenda Thursday will be a closed session of the commission to discuss one-year contract renewals for both County Manager Webb and County Attorney Abigail Burgess – specifically “some discrepancies between those two contracts,” said District 3 Commissioner Alicia Edwards. Burgess told the commission that her contract was exactly the same as last year’s, while Webb said her contract also remained unchanged – “except for a cost-of-living increase that everyone received.”
The commission will decide whether to sign on to the legislative priorities of New Mexico Counties for the upcoming 2019 session of the Legislature. Those priorities would include seeking a seat at the table for any discussion of tax reform by legislators, lobbying for allocation of $5 million to county governments to cover the cost of detaining state prisoners in county jails, reimbursement for transportation of state prisoners, $5 million for emergency medical transportation, and support for a move of the state fire marshal and the state’s fire protection fund away from the state’s Public Regulation Commission. They would also seek funding for behavioral health services and forfeiture act reform changes that would relieve burdens on county sheriffs.
Commissioners will also consider approval of a new union contract for county employees, and a revised employee manual to cover non-union county staff. Two road vacations will also be on the agenda – Burcher Road, near Mule Creek, and another small, dead-end section of dedicated right of way.
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