BAD AXE – The legal fight to get utility companies to pay what county representatives say is their fair share of taxes for wind turbines took another step this week.
Carl Osentoski, the executive director of the Huron County Economic Development Council, and Richard Sundquist, of Cark Hill PLC, provided the Huron County Board of Commissioners an update on the tax appeal efforts.
It involves five Michigan counties, Huron, Tuscola, Sanilac, Gratiot, and Mason, who have pooled together their resources to take on the legal teams of the utility companies like Consumers Energy and DTE.
Hearings before the tax tribunal have occurred since 2011, with the most recent ones involving Sigel Township.
The current tax depreciation table for the wind turbines has their taxable value bottom out at 30% after seven years instead of a timeline municipalities prefer of 15 years.
The counties, calling themselves the Michigan Renewable Energy Conference (MREC), hired the New Jersey-based Appraisal Economics to develop their own tax depreciation table based on historical figures of wind turbine lifespans and other taxation nationwide and globally.
The current taxation table used, Ostentoski says, is not based on anything.
The judge is due to give a verdict in the case sometime in January, with the goal to find a depreciation table that works for everyone.
Osentoski said that millions in potential tax revenue for local municipalities, schools, and road commissions have been lost over the years because of the current taxation tables.
‘We host these installations and deal with the issues along with them,” Osentoski said, talking about zoning and mechanical issues involved with the turbines.
Huron County has been dealing with tax issues surrounding the turbines since 2006, when the first turbines were built near Ubly and Elkton, and the state Legislature passed the renewable portfolio standard, which required utilities to have 10% of their baseload power come from renewables.
Osentoski said having wind investment at that scale was phenomenal back then, since it is difficult for the county to attract new manufacturers and it only gets retail stores.
Developments along the taxation route include a tax abatement where utilities apply to the state instead of townships, the state tax commission changing the depreciation tables in 2011 so that it goes from 100% to 80% after the first year and down to 30% by year seven, and former Gov. Rick Snyder attempting to change the tax structure so that turbines could be tax free.
Sundquist believes that no matter what the tax tribunal’s verdict is, DTE and Consumers will appeal the decision, as they have with with other decisions they didn’t agree with in the past.
Osentoski said MREC representatives have offered to meet with DTE and Consumers to discuss the issues between them, but every attempt was rejected.
The case could potentially go on for another two years, with it going before the state appeals court and possibly the state Supreme Court, but that depends on what the tax tribunal’s decision is.
Osentoski said the only other case like this occurred in California in the 1980s, and that not applicable to this situation, so the five Michigan counties are breaking new ground while others nationwide let the utility companies have their way.
“There is no established case law for this,” Osentoski said. “What makes this difficult is that there is no precedent.”
Some of the commissioners and Osentoski believe that when the county’s solar energy ordinance is adopted, and when solar farms become more prevalent, a similar situation involving taxation will happen.
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