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Challenging claims: a look at NextEra’s economic impact  

Credit:  John Green | The Hutchinson News | Apr 23, 2019 | www.hutchnews.com ~~

A pro-wind group out of Lenexa this weekend purchased a full-page color ad in The Hutchinson News claiming NextEra Energy’s proposed Reno County wind farm would add more than $130 million to the county economy, including $50 million in land payments for local farmers. NextEra made a similar claim in a half-page ad in The News on March 31.

The claims in both ads are based on an economic impact study by a fellow at the Docking Institute of Public Affairs at Fort Hays State University.

Opponents of the 80-plus turbine wind farm, however, challenged the numbers during public hearings earlier this month on NextEra’s application for a conditional use permit.

A separate cost-benefits study by the Center for Economic Development and Business Research at Wichita State University came to a different, much smaller conclusion, though that analysis did not include all the same data.

There are also questions The News has asked NextEra about the employment levels it has promised – a key element of each study – but that NextEra officials declined to respond to until after the hearing process is over.

Construction

Both studies, based on information provided by NextEra Energy, include a construction payroll estimated at $8.437 million.

While the Fort Hays study uses a construction estimate of 250 employees stated by NextEra, it doesn’t include the entire payroll in determining its impact. Instead, it uses a $60-per-day per diem for each employee – for food, housing and incidental costs – over a projected 185 days of construction.

The study assumes the majority of the payroll, in fact, won’t be spent in Reno County.

The per diem projects $2.775 million will be spent by employees in the county. The study then estimates those expenditures will generate 40 percent more in indirect and induced effects using modeling software called IMPLAN, for a total direct private sector impact of $3.885 million. The additional dollars are from them turning over in the communities where they are spent, helping support other jobs and purchases.

The study also estimated nearly $72,000 in sales tax collections for Hutchinson and Reno County based on those direct expenditures.

Opponents point out, however, that it cannot be assumed all of the per diem spending, or even a majority of it, will occur in Reno County.

Speakers during the public comment sessions, including some who worked building other wind farms in the state, noted many of the workers will live in trailers or RVs during the project and not stay in local hotels or apartments.

NextEra officials agreed some lived in trailers, some rented homes and some stayed in motels.

The project area is in the southeast quadrant of the county, so parts of the footprint are closer to Wichita than to Hutchinson.

Mapping from a point that’s about in the middle of the proposed complex shows its some 22 miles to downtown Hutchinson and 23 miles from the same position to Maize. Closer towns include Haven at 6 miles away, Andale at 10, and Cheney Marina at 7.

While there are numerous sites for RVs in Hutchinson, there are more than 500 sites at Cheney Reservoir, as well as sites in Goddard, Yoder, Valley Center and Spring Lake between Hutchinson and Newton on U.S. 50.

Brandon Horsch noted he worked on the construction of the wind farm in Gray County and spent very little of his money in that county, instead of sending most of it home. He lived near the site in a trailer, he said, until the first turbines were turned on, and then he relocated to Dodge City to be away from the noise.

Long-term impact

The Docking Institute study next makes assumptions about the economic benefit of the projected 30-year life of the operating contracts.

NextEra forecast a 30-year payroll of nearly $35.137 million, employing 17 workers, and states it will pay $50 million in land lease payments over the period.

The study projects a 15 percent “multiplier,” creating indirect and induced economic benefits of an additional $12.2 million, for a total private sector impact of some $97.4 million.

Again, however, the study includes assumptions opponents challenge.

First, nearly a third of the landowners collecting payments don’t live in Reno County. That would reduce local land lease payments some $18 million, reducing the indirect benefits some $2.7 million, or a nearly $21 million reduction overall.

There are also questions about the overall NextEra payroll.

NextEra has stated the project in Reno County will permanently employ between 15 and 20 people, and in its application, stated it would employ 17.

The company made similar statements while promoting its wind farms in Pratt and Kingman counties, variously stating from 12 to 20.

After the wind farms went into operation, however, the number of employees was lower, based on employment reports by local media and business websites.

The Pratt Tribune reported in February that the larger 98-turbine Pratt Wind Farm was employing 12 people full time, only one of whom lives in Pratt.

The Ninnescah wind farm, with 121 turbines, employs – depending on the source – just seven to nine people.

The company did indicate during the Reno County meeting that it employs others who monitor the wind farms remotely, 24/7. Those employees, however, are in Florida. It’s unclear if the total employment figure includes them.

Taxes

The company has pledged to pay $2.8 million in “in lieu of” payments for the first 10 years of the operation, or $280,000 a year to the county, and $50,000 a year to be split between four area school districts. Under state law, the county cannot collect property taxes on the project for the first 10 years.

After that, the Fort Hays study projects property tax payments of $27 million over the following 20 years, or $1.35 million per year. The study estimates those payments will generate nearly $290,000 in additional sales tax for the city and county, though it didn’t say how.

Residents who live in the southeast quadrant of the county, however, contend the commercial wind farm will have an overall negative impact on taxes, by halting home development in one of the few growing areas of the county.

The region recorded more than $700,000 in new development last year, and more than $4.2 million in new homes since 2014, data from the Reno County Appraiser’s Office shows.

If that development stopped, that would reduce county property taxes by at least $7.5 million over the 30 years, according to an anaylsis presented to the Planning Commission by resident Kristy Horsch. Coupled with projections that homes values would decline by 25 percent once the turbines went up and property owners would demand reassessments, that would have a potential impact of nearly $10 million.

On top of that, Horsch stated during a hearing two weeks ago, a study on tourism from North Caroline State University found a wind farm on the skyline at a tourist destination could cut attendance by 50 percent. That could reduce visitors to Cheney State Park by some 250,000 a year. The study, incidentally, was based on the construction of off-shore turbines off a Carolina beach.

WSU study

The WSU study projected an overall $54 million favorable impact for Reno County based on the construction of the wind farm. It was based on the same project payroll, though it showed only 160 temporary jobs. The study applied a 3.4 percent “job multiplier” and 2 percent wage multiplier, based on the assumption the payroll would create an additional 100 jobs and $4 million in wages in the community.

It projected the $37 million in payroll over 30 years would generate an additional $75 million in direct benefits.

The study impact included projections two permanent employees would move in from out of state and two from out of the county. It also included, however, a projection of 180 out-of-county visitors per year, in the form of vendors or employees, spending an average four days and nights in the area. The study did not explain the number.

The net benefits, however, would be offset by an estimated $30 million in public costs, including lost taxes on the $260 million in capital investments.

The WSU study also assumed the full land lease payments would remain in the county and wages would increase 2 percent a year with full employment.

Source:  John Green | The Hutchinson News | Apr 23, 2019 | www.hutchnews.com

This article is the work of the source indicated. Any opinions expressed in it are not necessarily those of National Wind Watch.

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