Legal Issues Impacting Your Business
Agreements with companies can include property taxes or fees, local job creation and financial assistance to schools, community.
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| Photo Credit: www.windustry.com |
Written By Pam Kasey - Officials in West Virginia's windiest counties suddenly are finding themselves in a position to negotiate with wind developers for payments in lieu of taxes and other benefits.
How have they fared so far?
The example of the state's one operating wind facility, the 44-turbine Mountaineer Wind Energy Center in Tucker County, is not instructive -- at least not in a way that some had hoped.
With the expectation that an energy-generating facility would bring $400,000 or $500,000 a year in property taxes, the Tucker County Commission worked to help the developer get its permits, according to commission President Sam Eichelberger.
But in May 2001, about the time the project was being finalized, the state passed legislation reducing the property tax on utility-owned wind turbines to 5 percent of assessed value.
Based on that tax incentive, operator Backbone Mountain Windpower pays the county less than $100,000 a year in property taxes -- a number that declines each year with depreciation. About $70,000 goes to the county school system and about $30,000 to the county.
Although the facility has been operating since December 2002, Eichelberger is still trying, on the strength of a letter of commitment signed by the original developer, to get a flat annual payment of $150,000.
The company has suggested that $135,000 might be possible, he said. And that's where negotiations have been stalled since December.
Eichelberger noted the facility's "six or seven good jobs" and the fact that it's among the convention and visitors bureau's most requested sites in an area that includes regional attractions such as Blackwater Falls and Dolly Sods.
"What we've told other counties that are looking for wind projects, we've said the main thing you need to do is to get your agreements signed up front," he said. "Have a good hard hand-hold on what they're going to do."
Other Counties' Experiences
Perhaps guided in part by Tucker County, other counties have had better experiences.
Grant County, site of the proposed 150-turbine Mount Storm wind generation facility developed by NedPower and sold to Shell WindEnergy, is happy with its arrangement, according to economic development authority Executive Director Elwood Williams.
"Shell's going to be a good neighbor, I think," Williams said.
The company expects to pay an average of $560,000 a year in property taxes, according to Tim O'Leary, manager of external affairs for Shell WindEnergy parent company Shell Renewables.
It is also following through on the developer's commitment of financial assistance of about $80,000 a year to the schools, he said.
Pendleton County is happy, too, with its arrangement with Liberty Gap Wind Force, developer of a 50-turbine project.
"We feel that what we've come up with is definitely going to benefit the county financially," County Commission President Bob Grimm told the Public Service Commission at a hearing on the project on May 4.
Liberty Gap expects to create six to 12 jobs with salaries and benefits of about $50,000 each, company President Tom Matthews explained at the hearing, and it is guaranteeing a minimum annual property tax payment to the county of $200,000 each year for 20 years.
The company also has committed to a "community partnership grant" to the county starting at $110,000 per year and rising to $125,000, he said
In Greenbrier County, Beech Ridge Energy proposes to build a 124-turbine wind facility. The company's Web site says it will employ 20 at salaries of about $35,000 and will pay an average of $400,000 per year in property taxes for the next 20 years.
What Greenbrier County wanted and got from Beech Ridge was a signed agreement that it will dismantle and remove any turbines that are taken out of service, according to County Commissioner Lowell C. Rose.
"That was one of our main concerns. We didn't want anything rusting over the years and becoming an eyesore," Rose said. "I think they're going to be a good corporate citizen."
The National Experience
These financial benefits may be at the low end of the national scale, according to data provided online at Windustry.com. A Minneapolis-based nonprofit group, Windustry helps rural communities by providing information and technical support on wind generation.
On a per-megawatt basis, Tucker County is receiving about $1,600 per megawatt nameplate capacity. And that payment is declining. Greenbrier County will receive about $2,150/MW. Grant County will get $3,400/MW or more, and Pendleton County $3,150/MW or more, depending on the sizes of the final installations.
A sampling of figures for 2002 nationwide -- not necessarily directly comparable because of differing land lease costs and wind intensities -- ranged from $2,914/MW in Gray County, Kan., to more than $10,000/MW in locations in Texas.
Numbers like these may help counties negotiate in the future.
"Being the first kids on the block, we didn't have the opportunity to look at prior mistakes," Eichelberger said of Tucker County's experience. "The ball is in the other counties' courts now -- they can say, 'Let's get this negotiated to our liking.'"
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