Article

Tax breaks for developers could cut county tax revenue; Highland supervisors oppose wind energy bill

The $200,000-plus Highland County hoped to receive from the proposed wind utility here could be cut to $120,000 if a legislative proposal survives the General Assembly this session, according to county officials. Sen. Frank Wagner (R-Virginia Beach) submitted a bill that would allow wind energy facilities an exemption on state and local taxes up to 80 percent of the value of their projects if their capacity is less than 100 megawatts.

MONTEREY - The $200,000-plus Highland County hoped to receive from the proposed wind utility here could be cut to $120,000 if a legislative proposal survives the General Assembly this session, according to county officials.

Sen. Frank Wagner (R-Virginia Beach) submitted a bill that would allow wind energy facilities an exemption on state and local taxes up to 80 percent of the value of their projects if their capacity is less than 100 megawatts.

Highland New Wind Development hopes to break ground on its 39-megawatt utility this year, but it's unclear whether the bill, if passed, would affect that project.

Highland supervisors oppose the measure nonetheless. "I don't like it," said supervisor Jerry Rexrode this week. "Like any other industry, (wind energy) should be able to pay its fair share of taxes."

Rexrode noted supervisors have expressed their opposition to Sen. Emmett Hanger and Del. Chris Saxman. "I understand it, I know they're trying to create incentives, but I don't like it," Rexrode added.

A few years ago, the General Assembly passed legislation at the request of Highland's board to secure tax revenue from HNWD's plant. That measure requires wind energy facilities to be... more [truncated due to possible copyright]  

MONTEREY - The $200,000-plus Highland County hoped to receive from the proposed wind utility here could be cut to $120,000 if a legislative proposal survives the General Assembly this session, according to county officials.

Sen. Frank Wagner (R-Virginia Beach) submitted a bill that would allow wind energy facilities an exemption on state and local taxes up to 80 percent of the value of their projects if their capacity is less than 100 megawatts.

Highland New Wind Development hopes to break ground on its 39-megawatt utility this year, but it's unclear whether the bill, if passed, would affect that project.

Highland supervisors oppose the measure nonetheless. "I don't like it," said supervisor Jerry Rexrode this week. "Like any other industry, (wind energy) should be able to pay its fair share of taxes."

Rexrode noted supervisors have expressed their opposition to Sen. Emmett Hanger and Del. Chris Saxman. "I understand it, I know they're trying to create incentives, but I don't like it," Rexrode added.

A few years ago, the General Assembly passed legislation at the request of Highland's board to secure tax revenue from HNWD's plant. That measure requires wind energy facilities to be assessed on real property values, and assures Highland County about $200,000 annually if HNWD's estimated $60 million utility is constructed. "A fair tax is fine," Rexrode said, "$5,000 per megawatt was fair, but they passed (legislation) too open-ended.

"To me, it's just one of those things," he continued, referring to similar measures in other states where promised sums of tax revenue from wind utilities never materialized. In West Virginia, he said, Tucker County is only getting about 20 percent of the value of the facility, "but they were looking at getting a lot more."

Supervisor David Blanchard doesn't care for most of the bill, which also proposes to take the permitting process out of the State Corporation Commission's hands and put the Department of Environmental Quality in charge of oversight. "I would think the SCC would always play an important role on impacts to communities (from utilities) ... so no, I don't think this is a good thing," he said.

Blanchard, too, said the idea behind the proposed legislation is to create incentives for wind energy development in Virginia. "But I don't think it's right for the state to determine what communities can charge in taxes," he said. "Wind energy has been presented in rural areas as economic development. The few jobs created (by wind utilities) aren't long-term, so the real economic development is the tax revenue, and that should be left up to supervisors and governing bodies to work out with developers."

Blanchard said wind power is still a touchy issue. "It looks like a great thing, but so much needs to be fleshed out to make sure we're not creating a false economy that's going to get stripped away. It's discouraging when the county looks like it's not being sold the project it thought it was getting," he said.

The potential drop in annual tax revenue for Highland, he said, is huge. "At that amount, the county's going to have to work really hard to 'sell' this project here, and look at other sources of revenue, too," he added. "Rural communities just don't have the resources to fight this stuff."

County administrator Roberta Lambert sent an e-mail to Sen. Emmett Hanger, copied to Del. Chris Saxman, and Mike Edwards of the Virginia Association of Counties, on Jan. 20. "It appears that this bill, if passed, could dramatically impact the county's ability to tax the proposed wind project in Highland County," she wrote. "The Highland County Board of Supervisors is very opposed to the proposed language ... dealing with the valuation and taxation of wind turbines. As you are aware, you previously introduced legislation to deal with the issue of taxation of wind turbines ... (which) appears to be a fair and equitable taxing solution for wind turbines and follows the same State Corporation Commission process as other utilities."

Wagner's office did not return phone calls from The Recorder by deadline this week, and Rexrode reports the senator did not return calls from county officials, either.

Statewide, Wagner's bill is getting other opposition from groups, like the Virginia Conservation Network, concerned about fewer environmental impact studies.

Blanchard agrees the section proposing to limit post-construction monitoring is troublesome. The bill calls for small wind companies to pay for and study impacts for only one year after a utility is up and running. Beyond that, if more monitoring is needed, the company cannot be required to pay for it. But Wagner's proposal does not say who would incur that expense, and Blanchard doesn't want localities to be stuck with the bill. "Who would be responsible for monitoring if DEQ didn't do it? I'd hate for the counties to be held responsible in some manner," he said. If the state cannot afford to pay for further studies, he said, "We certainly aren't interested in doing that, either."

By contrast, HNWD's permit from the SCC, which it received in December 2007, contains conditions requiring the company to monitor environmental and wildlife impacts of the project, if needed, for the life of the utility, estimated at 20 years. HNWD is required to pay for those studies.

Should the new bill pass into law, most agree HNWD would be able to take advantage of the break in local and state taxes. Rexrode said HNWD's project, under the proposal, would drop Highland's tax take down from roughly $200,000 a year or more to about $120,000 annually.

If the bill applies to HNWD, its owners Henry T. "Mac" Bride, his wife Lola, and their son, Tal, could also get a break on their personal income taxes. The bill allows developer shareholders to get a tax credit of 35 percent of the cost of constructing, equipment, or leasing options, over a period of five years.

Frank Maisano, spokesman for HNWD, said he wasn't sure whether his client would actually take advantage of the new legislation, should it pass, since they'd had already agreed to the current "partnership with the community." He said the new permitting regulations proposed would definitely not apply to HNWD since it already has an SCC permit.

To take advantage of the new legislation, if passed, HNWD would have to withdraw its permit and start all over. Having gotten through the SCC process already without an appeal, HNWD would be reluctant to go through that again, he said. "If you start over, you're subject to what's popular at the time, and that's an uncertain thing."

Further, he said, even if the McBride family is allowed to take the income tax credit, or HNWD is allowed to apply the 80 percent break in state and local taxes on the facility, they may not choose to do so.

Maisano stressed that HNWD "has never been opposed to 2-3 years of post-construction monitoring." The company believes that after a few years, the studies will show the utility is not negatively impacting wildlife, and is hopeful the SCC would then cap further studies.

"My client will be ready to write the check to Highland County for the building permit soon," Maisano added. "I know they're committed to breaking ground this year."

He is optimistic than despite financial problems nationwide, HNWD will eventually locate investors to back the project. "Whether you're BP or Dominion, its going to be a challenge finding financing right now," he said, but added that he believes such projects will be at the top of the priority list for the new administration and Congress.

"Highland New Wind doesn't have a locked in (power purchase agreement) yet ... but this will unthaw itself soon, and there are things we can do."

It is HNWD's intention, he said, to break ground before the conditional use permit and state certificate expire this year.

Rick Webb, Highland resident and co-founder of wind education web site, Virginia Wind, strongly takes issue with Wagner's bill, and HNWD's position. "Mr. Maisano and Mr. McBride seem to think they're dealing with a community of dimwits," he said.

"My understanding is that this bill came straight from the lieutenant governor's office, and I don't think it's a coincidence that Frank Maisano, HNWD's spokesman and lobbyist, met with the lieutenant governor before the General Assembly session to discuss ways to advance the wind industry," he said. "The bill absurdly defines 'small' wind projects as projects of 100 MW or less.

A 100-MW project can consist of 50 two-megawatt turbines and can occupy over seven miles of ridgeline. The current generation of turbines can be up to 550 feet tall, requiring up to five acres of clearing per turbine, with 100-foot wide connecting roads and transmission corridors. There is nothing 'small' about commercial wind projects.

"Frank Maisano would like someone to think that the only thing HNWD must do to begin construction is to write a check for a building permit," Webb continued. "HNWD has not yet provided a detailed site plan that is designed, as required by the conditional use permit, to mitigate environmental and visual impacts. It has no approved E&S plan, and it has not yet provided information requested by the Department of Historic Resources as required by the SCC.

All of that comes before the county can consider a building permit.

"I still don't think smart investors will be interested in HNWD," he added. "My real concern now is that the wind industry and its politician allies will successfully eliminate state-level review of wind projects or create a process that overrides local concerns. Highland and Bath counties need to develop protective ordinances now. Later may be too late."

The permit issued by Highland County requires the company to start construction within two years. County administrator Roberta Lambert said the exact expiration date has not yet been determined. If the two-year period began the day the State Supreme Court heard the last legal appeal, then the permit likely expires locally in September this year.

The state certificate was also good for two years, and expires this December.


Source: http://www.therecorderonlin...

JAN 29 2009
http://www.windaction.org/posts/18817-tax-breaks-for-developers-could-cut-county-tax-revenue-highland-supervisors-oppose-wind-energy-bill
back to top