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Umatilla and Morrow Counties in Oregon consider Wind farm tax exemption December 19, 2008

Filed under: Farm/Ranch,Legal/Courts,Oregon,Wind — nwrenewablenews @ 2:53 am
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86629aUmatilla and Morrow county residents will get their first look at possible property tax exemptions for wind farms at public meetings Friday. The property tax exemptions are called strategic investment programs, or SIP, and provide an incentive for large capital investments – in this case the Echo wind farm.

The Umatilla County meeting will be at 11 a.m. in the Stafford Hansell Government Center in Hermiston, while the Morrow County session will begin at 2 p.m. in at the Morrow County Courthouse Annex and CSEPP Building, at 205 N.E. Third St., in Irrigon.

The proposed SIP provides the advantage of a flat tax rate for the companies involved with the wind farm and a stable 15-year funding base for the two counties. Normally, wind farm taxes follow a steep depreciation curve, eventually dropping to 20 percent of its original value after 10 years.

Those involved admit the SIP is a complicated agreement between the counties and the investor, Oregon Windfarms.

“It’s another way to look at tax deferment, but in a more equitable way for the counties and developers,” said Paul Woodin, executive director of the Community Renewable Energy Association, which has been helping Umatilla County with its SIP.

For a project to qualify for a SIP, a project must put the first $20 million straight onto the tax rolls and pay a community service fee equal to 25 percent of the tax savings but not more than $500,000.

The community service fee provides funds for some of the local taxing districts.

“On a bigger project it caps out at a half million dollars, on a smaller project it tends to follow a percentage,” Woodin said. “That is on each year’s assessed value so if the value goes down the savings goes down.”

There’s one more piece of the SIP: The negotiated settlement. That’s where the county is able to gain some wiggle room for special projects, Woodin explained. For example, in Sherman county an SIP paid for a new library, he said

The SIP can be attractive for a wind company because costs are high in the early years. Some major expenses include construction of the turbines and transmission lines, as well as hooking into the electricity grid.

Using a SIP instead of a front-end-heavy tax depreciation scale can even out some of those tax costs, Woodin said.

“For the developers it’s attractive because … the most delicate time for a project is the early years,” Woodin said.

The Echo wind farm SIP is a bit unusual because the project straddles two counties – Umatilla and Morrow. It places 20 windmills in Morrow County and 19 in Umatilla County with a total generating capacity of 64 megawatts – enough to supply power to 16,000 homes.

Like the wind farm, the SIP must also straddle two counties. The $25 million will be split between the two counties, along with the community service fee.

In Umatilla County, those affected by the community service fee include the general county taxing district, a Umatilla city bond, the Port of Umatilla, Echo Fire District No. 3, the Echo school bond, the Echo local option taxing district, the Echo Cemetery District, the West Umatilla Vector Control, the Umatilla special library district, Blue Mountain Community College and the education service district.

Also, said Umatilla County Board of Commissioners’ executive assistant Connie Caplinger, the county will receive $400,000 over a five-year period in “local improvement payments.” Morrow County will likewise receive $400,000 over the same period, Caplinger said.

She said Friday’s public meeting is to establish the contract between the county, Oregon Windfarms and John Deere Renewable Energy (a financer of the project).

Another meeting with the entities included in the community service fee will take place at a later date.


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