In the halls of the state Capitol, lobbyists for the wind industry have been handing out brochures touting the millions of dollars in property tax revenues that Oklahoma schools and counties have received as a result of wind farms being built in their jurisdictions.
But there’s something those brochures don’t say: Most of those property tax payments to date have not been paid by wind company owners.
Instead, they’ve been paid by Oklahomans whose income tax and other tax payments have been used to reimburse school districts and counties for revenue lost due to a five-year property tax exemption granted to wind farm owners by the Oklahoma Legislature. New wind farms no longer qualify for that exemption, which is being phased out.
There’s something else those brochures don’t say: Once the five years of exemptions are over, wind companies have been sending lawyers to county courthouses to file tax protests and lawsuits contending the value of their equipment is worth hundreds of millions of dollars less than the values assigned to them by county assessors.
Wind industry representative claim they have good cause for their tax protests – that counties have been billing them based on inflated appraisal amounts that county assessors have prepared, usually with the aid of consultant Jerry Wisdom of Total Assessment Solutions Corp.
“I think there is sort of this bias or willingness to attack wind farms in a way that is completely different than the way other taxpayers are treated, and that is wrong,” said attorney David Elder, who has been representing Blue Canyon Wind Power LLC in a property tax dispute with the Comanche County assessor. “That is constitutionally wrong, both at the state and national level. It is wrong morally. That’s what’s happening.
“What he’s trying to do is essentially hold these companies hostage to provide more tax revenue for counties,” Elder said.
Wisdom denies the allegation, saying the appraisals are based on the amounts wind companies paid for their equipment, wind farm sales and other acceptable appraisal techniques and data. Wisdom said the cost of wind turbine equipment has been dropping, so wind companies may have a legitimate reason to protest a small portion of their appraisal amounts. But he contends the size of the tax protests far exceed amounts he considers to be reasonable.
“They’re all happy when we had the five-year (exemption) to put the total investment in there and let the state pay the taxes or let other taxpayers pay it, but when it comes off, now it becomes somewhat of an issue,” Wisdom said. “I think it’s certainly an injustice for the companies to come in and put such a low value (on their property) and tie up the tax dollars for the school kids and the counties for so many years.”
Some of those lawsuits have dragged on for years, leaving millions of dollars in disputed tax payments sitting in escrow while some school districts have struggled to make bond payments and pay operating expenses.
A good example is Comanche County, where the owners of Blue Canyon Wind Farms have tax protests pending covering five consecutive years.
In 2018, the Comanche County assessor placed a value of $125,700,971 on Blue Canyon property. The company is contending it should only be valued at $68,623,030. Similarly huge discrepancies exist for the previous years.
As a result, more than $3.28 million in disputed property tax payments from Blue Canyon currently are being held in escrow, awaiting the results of a trial currently scheduled for May.
If the county wins the tax protest, well over $1 million of that would go to Elgin Public Schools.
In the meantime, the school district has found itself in a bit of a financial bind.
The Elgin school district didn’t have enough money to make a bond payment June 30, so it had to raise the tax rate by a mill on all its taxpayers to make up the shortage, said Superintendent Nate Meraz.
“Anybody has the right to protest their taxes and we understand that,” Meraz said. “Does it cause a problem? Yes, but life’s full of problems.
“The only thing I would ask is let’s speed all this up,” he said. “Let’s make a decision and move on.”
Meraz said the positive aspect of Blue Canyon locating wind turbines in the district is that the district was able to pass a bond issue based on the anticipation of receiving reimbursement money from the state during the five-year tax exemption. The district used that money to build nice sixth- and second-grade centers, he said.
Dewey County is another county that is experiencing a major wind farm property tax protest.
The Dewey County assessor placed a value of more than $180 million on Taloga Wind LLC’s property in both 2017 and 2018. The company protested both years, contending its property should have been valued at $60 million or less each year. The consolidated cases are pending in Dewey County District Court.
More than $1 million in disputed tax payments by the wind farm are currently being held in escrow, with $611,104 more expected to be added to that total by the end of March, when the second half of tax payments are due.
Taloga Superintendent Darci Stephenson said school district officials anticipated a tax protest was possible after the five-year tax exemption period ended.
“That has been the pattern, is that they protest these taxes at the end of the five years,” she said.
District officials prepared for that possibility by using the reimbursement money received from the state for one-time expenditures like replacing its bus fleet and the school’s heating and air-conditioning system, Stephenson said. They also eliminated combined classes for students in different grade levels.
With additional money coming in from the wind farm, the district has at times granted signing bonuses, loyalty bonuses and Christmas bonuses, but has stayed away from permanent teacher pay hikes except for those mandated by the state, she said.
Tax protests like those in Comanche and Dewey counties also are going on with wind farms in Garfield, Grant, Kiowa, Canadian and Kingfisher counties.
Issues vary some from case to case, but there are common themes.
Several wind farm owners complain that the appraisal method being used by county assessors is less generous to them than the appraisal method used by the Oklahoma Tax Commission for the first five years while the wind farms are exempt from property taxes and the state is paying the tab.
The Tax Commission depreciates the value of wind turbines using an anticipated 25-year economic life for stationary parts like the towers and a 12-year economic life for movable parts like the generator, blades and gearbox.
Counties have been using a 25-year depreciation schedule for everything.
Wind company attorneys contend that’s unfair, but Wisdom disagrees.
Wisdom said industry repair and replacement data he has seen doesn’t show that the moving parts are typically wearing out in 12 years.
Wind companies are projecting that their wind turbines will have a useful life of between 25 and 40 years, depending on the company, he said.
Some companies also argue that the Tax Commission has been overvaluing wind farms by initially valuing them at the price the companies paid for their equipment. Companies say they have been overpaying for equipment because they know they can use it to attract lucrative subsidies.
Wisdom is unimpressed with that argument.
“That’s the spin they’re making now … but we’re talking about the tangible cost of the equipment,” Wisdom said. “That’s the cost of the equipment that’s there and that’s the actual cost that it was.”
The dispute in Comanche County has become heated, with county officials now attempting to tax wind farm property they contend was omitted from earlier company disclosures.
“There was no omitted property,” Elder, a wind company attorney, said. “It’s a nonsense argument. It’s just another way for them to essentially get more tax revenue.”
Elder said he ultimately expects the tax issues will be decided by the Oklahoma Supreme Court.
“If for whatever reason we were to lose, which I don’t think we will … what’s going to happen is wind farms are going to go out of business,” Elder said.
“You combine the fact that they have done away with a lot of incentives and then you throw on top of that counties can essentially manufacture completely false tax bills that make wind farms uneconomic, there’s no reason why anyone would continue to operate one. And that’s what’s happening now.”
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