Huron County has already gone through nearly 10 years of fighting with utility companies over their fair share of taxes. That fight will have to continue for a while longer.
In June, the tax tribunal ruled that Huron County would have to pay DTE back taxes from 2016 and 2017 at 6% interest, saying that DTE paid its taxes at a higher rate than agreed upon.
The ruling only affects Sigel and Bloomfield townships, with the county having to pay back between $60,000 and $70,000 for each of them. The two townships have already filed an appeal to that decision.
Because the county is appealing the decision, it does not owe DTE anything yet.
Carl Osentoski, the director of the Huron County Economic Development Corporation, said the wait from the initial trial with the tribunal to a final decision took 20 months, while that process usually takes 90 days. He did acknowledge the pandemic and the judge in question working to get reappointed did cause some of the delay.
This was the first case to make it before the tax tribunal on this issue. There are roughly 1,500 pending tax appeals on turbines across the state that are being held in advance until the Sigel and Bloomfield townships case is resolved.
Huron County was not the only county involved with this tribunal case. It worked with Tuscola, Sanilac, and Gratiot counties and paid its attorneys about $4.1 million in fees, with $1.3 million coming from Huron County, over the last 10 years.
Osentoski explained that the original tax depreciation schedule and trending tables would have the turbines depreciate at 5% per year until year 20, which all wind developments were based around.
Huron County Commissioner Todd Talaski said that when the commissioners of that time first heard presentations from the wind developers, they stated they would pay their fair share of taxes and the county had projected the taxes coming in on schedules in place at the time.
“The county commissioners then heard it and it sounded good,” Talaski said. “We were led to believe this would develop the county. Then it changed dramatically.”
In 2011, the three-member state tax commission met unexpectedly, which none of the impacted units were notified of. The commission then changed the tax tables in a way that would benefit wind developers dramatically.
“We as a county, an association of counties, requested all information they had based their changes on because maybe they had studies done,” Osentoski said. “They had nothing.”
The new tax table instead would have the taxable value of the turbines drop by 30% in the second year, with the value reaching zero in year seven.
After several meetings with the tax commission, the affected counties and townships were told to come up with their own depreciation tables, which Osentoski said was based on use studies and reviews of sales. Ninety percent of the local taxing units with the turbines are using those, which caused developers and utilities to start appealing.
“They’re saying from a tax appeal standpoint, the turbines are worth 40% less than everybody else thinks they are,” Osentoski said. “Its anywhere from a 40-86% reduction in value. But in their securities and exchange commission filings, and public service filings, they don’t mention that reduction in value.”
Osentoski noted that project developers do get a 10% rate of return on new construction costs guaranteed on its original value, with that money coming from the amount rate payers pay.
The ruling from the tribunal did have some aspects that went the way of the counties. The developers claimed that if they applied for a federal government tax credit for clean energy that gets them 30% of the project costs back, the project’s value should decrease by 30%, which the tribunal ruled against.
Osentoski said that this case does have the potential to go to the state Supreme Court, though these usually end up being decided in the Court of Appeals.
Legislation is also being worked on in the state Legislature to codify the depreciation tables used by the 90% of local taxing units, clean up the language used, and hopefully hinder further tax appeals on the turbines. It was introduced in the Senate by State Sen. Kevin Daley, whose district covers Tuscola County.
For Osentoski, a happy ending for Huron County and other taxing units would be if DTE and other utilities agree to the county’s tax depreciation table and that the county does not owe anybody any back taxes plus interest.
If Huron County is ordered to make such a payback, while the county would pay it, it would fall on the other taxing units and services that rely on those tax dollars to determine how to repay the county. Those include the road commission, the Huron Intermediate School District, Thumb Area Transit, the senior citizen’s millage, and the veteran’s millage.
“That’s what concerns everybody,” Osentoski said. “Its not a county abstract, where the treasurer writes a check. There’s worries about how will it impact schools districts. Some will be, some will not, but those are paid back out of their operating costs. That holds true for all those.”
Osentoski said the county’s attorneys anticipate that the whole appeal process leading to a final decision could take about 18 months.
There is also the chance a situation like this could happen with solar farms.
“The likelihood of running into this with solar is pretty good,” said Jodi Essenmacher, the administrative assistant for the Huron County Board of Commissioners. “It would be nice to have something down before we deal with solar.”
Huron County’s wind farms contain 472 operational turbines capable of having a capacity of 878 megawatts of power. Sigel Township has 24 turbines as part of the DTE Sigel wind farm, while Bloomfield Township has 41 turbines within its borders.
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