After months of debate and the submission of a new proposal from Pattern Energy, Lincoln County commissioners approved a plan for division of payments in lieu of property taxes to be paid over the next 30 years for a wind power project near Corona.
In a 4-1 vote last week with Commissioner Tom Stewart opposing, they adopted a proposal presented by Crystal Coffman, senior manager of business development for Pattern Energy, based on a PILT payment of $2,800 per megawatt for all megawatts installed from the commencement of the wind project, rather than the phased-in approach previously proposed by Clean Line Energy.
“Clean Line had proposed to phase in as built,” she said. “We would just start at the higher rate to simplify how the division occurs.
“Mesa Canyons Wind Farm (acquired from Clean Line) was taking a phased-in approach with the PILT payments on the phased year based on number of megawatts (installed), but with a 34-year timing. Because Pattern wants to get moving and we realize this has been a difficult discussion, we will come on line in phases, but when the second, third and fourth phases come on line, we will catch it up, as if they went went into service the first day. We would owe you lump sum cash brought forward.”
While the county’s financial advisor’s approach used the 2017 tax rates of the county and schools, Coffman proposed using a 20-year average, because rates could swing dramatically in years where debt is acquired or paid off, she said.
The previously approved split of 72 percent to the county and 28 percent to Carrizozo and Corona school districts under the 20-year approach would change to 67 percent and 33 percent, but the calculations also step up to higher dollars with the averaging, Coffman said.
“Even though the percentage may be lower, the actual dollar amount might be higher,” she said. “We made sure the Carrizozo district was included.” The portion allocated to the school districts would be divided based on the per megawatt installed within each district.
As background, County Manager Nita Taylor said during the commission’s May meeting, Clean Energy officials presented an analysis of the payment in lieu of taxes.
“The county’s municipal advisor, Erik Harrigan, managing director of RBC Capital Markets, proposed the allocation of money that would allow both the county and the school district to receive payments based on an equal percentage of potential property tax revenues, had the project been on the tax rolls at full value,” Taylor said.
The resulting motion that month approved unanimously by the commission was to direct Taylor and County Attorney Alan Morel to stop negotiations between the Corona school district, and move forward on the 72-28 percent split proposal.
During the commission meeting in October, commissioners learned circumstances had changed since Pattern Energy acquired Mesa Canyons Wind Farm from Clean Line Energy, and that Pattern was asking for a chance to go over those changes with the commissioners.
Those significant changes included the identification that Carrizozo School District also falls within the geographic footprint of the wind farm and a different approach for determining PILT payments was being developed.
Commission unanimously agreed at that meeting to reconsider the PILT terms during a future meeting.
Under the proposal approved last week, over 30 years, the county would anticipate collecting $56.3 million, or 101 percent of the Clean Line proposal, and the two school districts a total of $27.7 million for 127 percent of Clean Line.
The proposal changed the total PILT revenues over the 30-year timeline from $77.6 million to $84 million, Taylor pointed out.
Harrigan said he agreed with the figures from Pattern for both the current tax rate and 20-year average tax rate, and the decision was up to the commission.
Stewart offered a motion to go with the 2017 tax rate, saying the formula brings in twice the amount of money initially considered for the school districts and is based on the number of megawatts produced in each district.
“I’m trying to think of the varying needs of the schools,” he said. With the 20-year average, construction bond issues and other factors could skew the figures. He also wants to think ahead to next year when the county will be scrambling to finance the remainder of the new hospital project in Ruidoso.
Coffman agreed that if a school district had issued more debt, it would increase the percentage paid to it, but the company was trying to capture the long-term nature of each district
Stewart’s motion failed 4-1.
Commissioner Lynn Willard said he believed the 20-year average was more equitable.
Coffman said while the tax rate is higher for Carrizozo school district and Corona’s is lower because it carries less debt, fewer megawatts will be produced within Carrizozo’s boundary.
Commissioner Elaine Allen agreed with Willard that Pattern’s proposal seemed more balanced. She wants a fair return for the Corona School District, because the residents of that area worked hard for a long time to bring a wind power project to fruition, she said.
“The 20 years average gives schools a little more and drops the county just $3 million over 30 years,” she said.
Commissioner Dallas Draper offered a motion to go with the Pattern proposal and the 20-year average tax base, which passed 4-1, Stewart voting nay.