State Tax Commission deals blow on wind turbine tax cash

After years of litigation and appeals the State Tax Commission has ruled in favor of utilities regarding how wind turbines should be taxed.

The decision, the first of many likely to follow, could cost local units of governments with wind farms millions of dollars in past and future revenues.

Although the 158-page STC ruling was a case involving DTE and two Huron County townships, it could adversely impact a number of other counties, including Gratiot and Isabella.

To cut legal costs Gratiot and several other countries, along with about 80 townships, Intermediate Schools Districts, libraries, individuals and other impacted entities, formed the Michigan Renewable Energy Collaborative in 2012 to challenge tax appeals filed by DTE and Consumers Energy.

“We are part of the group that the Tax Commission’s ruling affects,” Gratiot County Board of Commissioners Chairman Chuck Murphy said. “We joined the suit before I was even on the board. But now it could add up to millions of lost dollars for the county, townships, schools and (Gratiot-Isabella) RESD.”

According to the STC ruling a nine-day hearing was held last September.and several witnesses were called by both sides.

However, the “Final Opinion and Judgement” wasn’t handed down until June 11, Murphy said.

“We have been working on trying to get more information and figuring out what is going to happen,” he said. “We have 28 days to appeal after the final judgement was issued.”

However, Murphy’s not sure it would be worth it.

“We’ve been spending thousands of dollars a month for years fighting this,” he noted.

The STC has changed the formula for taxing wind turbines twice, in 2011 and again in 2014, after initially approving guidelines in 2007 that “was deemed acceptable to everyone,” County Administrator Tracey Cordes stated in a memo sent to county commissioners in March.

She also noted that since 2012, utilities and private developers have filed 1,109 tax appeal cases with the Michigan Tax Tribunal, and currently 594, which have been consolidated by wind park into 17 separate cases, are pending

The case involving DTE and the two Huron County townships is the first tried by the STC, and the only one where a final judgement has been issued.

If the decision stands, Gratiot County could be on the hook to repay more than $3 million in overcharged taxes and reduce future expected revenue, including a reduction in five countywide millages – Commission on Aging, sheriff’s road patrol, parks and recreation, library and economic/agriculture.

The county has five wind parks with a total of 345 turbines in nine townships.

Seven of those, Bethany, Emerson, Hamilton, Lafayette, North Star, Pine River and Wheeler townships, along with Greater Gratiot Development Inc. and the Gratiot-Isabella RESD are members of the Michigan Renewable Energy Collaborative, as is Coe Township in Isabella County.

Gilmore, Nottawa, Wise and Isabella townships are non paying members of the collaborative.

Murphy characterized the STC actions as a “bait-and-switch,” with wind parks developed under one taxing formula and then changed as more came online.

“It all adds up to a lot of lost money for the county and schools,” he added.

The STC;s decision stated: “That the officer charged with maintaining the assessment rolls for the tax years at issue shall correct or cause the assessment rolls to be corrected to reflect the property’s true cash and taxable values as finally shown in the Final Opinion and Judgement within 20 days.”

It went on to say “that the officer charged with collecting or refunding affected taxes shall collect taxes and any applicable interest or issue a refund within 28 days of entry of the Final Opinion and Judgement.”

In addition, the decision stated that any refund would also include any tax administration fees, penalties and interest.

The annual interest rates set by the STC from 2010 through June 2021 range from a low of 1.09 percent to a high of 6.4 percent.

Now MREC and its members must decide whether or not to appeal the judgement.

They have two options, file a motion for reconsideration with the Michigan Tax Tribunal or take the case directly to the state Court of Appeals.