The Michigan Wind 2 project in Sanilac County brought with it a spike in tax revenue while it grew renewable energy.
But Sanilac County just returned more than $230,000 following a settlement with Exelon after the company alleged the local governments did not properly assess the wind turbine project's taxable value.
Taxes collected on 37 wind turbines in Delaware Township from 2013-14 were the subject of a successful appeal by the national energy company. The Michigan Tax Tribunal settled the case in early September and ordered the local governments to reimburse Exelon.
According to Delaware Township, the wind turbines had a taxable value of $69.91 million in 2013. The Tax Tribunal set their value at $57.48 million, a 14.7 percent reduction. In 2014, Delaware Township set their taxable value at $63.87 million; the Tax Tribunal lowered it 9.4 percent to $58.40 million.
While the turbines were in Delaware Township, the appeal impacted a variety of entities that had already captured those taxes. In Sanilac County, Delaware Township, Deckerville Community Schools, Sanilac County Intermediate School District and various county entities had to pay back part of the $230,000. In Huron County, Ubly Community Schools, Huron Intermediate School District, Harbor Beach Community Schools and various entities through Huron County also had to hand over funds.
DTE Energy also has similar cases against Minden and Delaware townships pending in the Michigan Tax Tribunal as well. While DTE Energy did confirm they had cases in the Michigan Tax Tribunal, DTE Energy Spokeswoman Cindy Hecht said they would not comment on the pending cases. She said the State Tax Commission and local communities were working together to address concerns surrounding the taxation of wind turbines.
The money gained
In 2012 Exelon built the Michigan Wind 2 project that brought 50 turbines to Sanilac County. DTE Energy built 20 turbines that same year.
The county captured an average of $1.5 million in tax revenue each year from the Exelon and DTE Energy wind projects.
But while the Michigan State Tax Commission updated assessment guidelines for the taxable value of wind projects several years ago, local governments did not follow suit, according to Exelon. Because of this, Exelon and DTE Energy both filed tax appeals to re-assess their wind projects. The companies are claiming that local governments collected too much tax revenue from the companies and should pay it back.
"For Michigan Wind 2, Exelon has appealed for Delaware Township," said Kristen Otterness, Exelon spokeswoman. "We settled all appeals with the township."
Otterness said the settlement allowed Exelon to receive $230,000 back. She said that is minimal compared to the $3 million in taxes that Exelon paid to the county over the contested time span.
"We still paid a significant amount to the township," she said. "To the schools, roads, library, among other recipients. We do care about the communities we are in and we are accountable to them."
Kenneth Wimmer, Delaware Township assessor, said when he was assessing windmills for Exelon in 2013 he had no firm guidelines to refer to as the State Tax Commission's tables were not supported by factual evidence.
As an assessor, Wimmer is allowed to set the township's own taxable values as long as they can be supported. Wimmer researched wind turbine taxable values and found evidence from the Michigan Public Service Commission that he based his assessments on.
"When I was trying to figure out how to tax the windmills in Delaware, which was just Exelon at that time, the only information I could find on the Internet was the Michigan Public Service Commission process," Wimmer said.
Wimmer said he is the only assessor in the state who used that process to assess the turbines.
The 37 wind turbines in Delaware Township have been taxed at about $27,000 a year, said Trudy Nicol, Sanilac County treasurer.
Since Wimmer's original assessment, an updated assessment tool has been created and uniformly used by energy companies. As a result, Delaware Township continued to have higher assessment values while other townships that used the new taxable value assessment tool were on the lower end, Wimmer said.
"We collected too much money from Exelon, so that's why (the funds) are going back," Wimmer said.
The money lost
Since Exelon's appeal was first filed in May 2013, according to the Michigan Tax Tribunal, many of the local entities were expecting they would have to pay back some of their revenue.
The entity in the settlement with the largest payback was Sanilac County. They paid back $56,229.03 from their operating budget.
Nicol said although the county did not set aside money in anticipation of a refund, she was aware the ordered reimbursement was coming. She said the county will have to dip into its contingency budget to cover the deficit.
However, she still believes the turbines are worth it.
The county captured nearly $1.3 million in tax revenue in 2012 from the Exelon and DTE Energy wind projects. In 2013 that revenue rose to nearly $1.8 million; $1.7 million in 2014; and $1.5 million in 2015.
"I do see the extra revenue that comes from (the wind turbines) and the benefits for that to all of our county entities, our libraries and our voted millages," Nicol said. "We all want fair taxation and this is something new in our area, so we're all new at the taxation of these structures. We support the decisions of the boards of review, the Michigan Tax Tribunal."
Delaware Township returned $53,036.09 to Exelon from the $520,142 it received from both wind projects. Treasurer Judith Heiden said the township will be fine. The township had invested the new revenue for later use, so the refund will not affect day-to-day operations.
"It wasn't a big blow," Heiden said. "Just a disappointment. It's the schools I felt sorry for."
Sanilac County Intermediate School District, which had to return about $21,000, will see the money come out of three different funds: the general fund, special education fund, and career and technical education budgets, said Superintendent Duane Lange.
But Lange and Joseph Murphy, Huron ISD Superintendent, both said they were prepared to return the funds.
"We knew that there were some appeals that had been made over the property taxes, so we had the money put in escrow," Murphy said. "The payback was a small percentage of the overall. They have increased our revenues which have allowed us to do great things for kids in our county."
Sanilac ISD captured $386,000 from the wind turbine tax revenues during the years in question, so the $21,000 hit was not that dramatic, Lange said.
"It's not going to change of the services or programs that we offer," Lange said.
Deckerville Community Schools is required to pay back $6,772 following the settlement. During the 2013-14 time span, the school district received $238,788 from both wind projects.
Deckerville Superintendent Tricia Pawlowski said the funds will be taken from the school's bond. She said all projects that were funded using the money have already been completed and the money has been spent. She said since the money paid back to Exelon was taken from the bond's debt fund, the debt will have to be levied next September to make up for it.
Otterness said moving forward, Exelon hopes to work with the county and townships to properly assess the tax values of the wind turbines.
Contact Anya Rath at (810) 434-2172 or email@example.com. Follow her on Twitter @anya_rath. Contact Nicole Hayden at (810) 989-6279 or firstname.lastname@example.org. Follow her on Twitter @nicoleandpig.
How much each entity is paying back to Exelon
Delaware Township: $53,036.09
Sanilac County, operating budget: $56,229.03
Huron County Intermediate School District: $27,528
Sanilac County Intermediate School District: $21,102.40
Harbor Beach Community Schools: $4,598.75
Ubly Community Schools: $3,643.70
Deckerville Community Schools: $6,772.26
Deckerville library: $2,402.82
Harbor Beach library: $2,962.10
Sanilac County Road Commission: $27,779.99
Sanilac County Drug Task Force: $6,944.92
Sanilac County parks, county medical control fund, medical care facility, 911 emergency fund and senior citizens millage: $2,778.29
Sanilac County Veterans: $1,736.39
S.A.V.E. millage (Sanilac Area Violence Elimination): $1,092.96