County, wind farm company agree to permit, but not financial details
By Deb Hadachek Telescope editor
Timing is everything.
And for Republic and Washington counties, the timing of a proposed wind farm maybe a little too late to gain the windfall of tax revenues that some other counties have received from wind development.
Republic County Commissioners approved a conditional use agreement Monday that could give NextEra a lifetime tax exemption in exchange for an annual payment and other benefits to road development and maintenance if a project is built in the county.
But commissioners and NextEra officials said that agreement is only a “window” to continue to negotiate a payment in lieu of property taxes (PILOT) if a wind farm is built. The parties did not reach an agreement on an amount that NextEra might pay. “We want to give ourselves some time to discuss and research a little more,” Republic County Attorney Marlea James said Monday.
NextEra officials said they expected similar agreements to be considered by commissioners in Washington and Nemaha counties on Monday.
If no agreement on a PILOT is reached, any project built in Republic County will be subject to a new law regarding wind farm taxation that goes into effect January 1. Under the change, wind farm construction will receive a 10 year tax abatement, and then be assessed property taxes like other utilities at a rate set by the state Property Valuation Department.
The glitch, James said, is that instead of depreciating wind turbines evenly over a 30 year schedule, the new depreciation schedule allows companies to rapidly depreciate turbines over the first seven years of use. That means by the time the turbines come on the tax rolls in year 11, they will only be valued at about 20 percent of their original cost, James said.
“I don’t think the (Legislature) thought about what they were doing to counties when they made this change,” James said.
According to information gathered by Republic County Economic Development Director Luke Mahin from other counties where wind farms have been built in the last 15 years, the payments in lieu of taxes to some counties have ranged between $2,000 and $4,000 per megawatt. NextEra officials said a farm at least 200 megawatt in size is considered for the Republic-Washington county project.
Commissioners said Monday that they like the idea of NextEra making direct payments to the county instead of taking a chance on state-assessed property values on a wind farm 10 years from now. They directed Mahin to make contact with state legislators to clarify the Legislature’s reasons for the changed depreciation schedule.
“I want to reiterate that this is a long process, and please communicate that to your constituents,” Sam Massey, director of Kansas development for NextEra told commissioners Monday. “There’s a lot of excitement up front, but then there is a lot of dead time.”
Massey said earlier that it usually takes three to 10 years to develop a wind farm, and NextEra just started on the Republic Washington project about six months ago. The company has erected 10 meteorological towers in the two counties to measure the wind capacity, and the company will gather data for 12 months, Massey said.
Whether the project becomes a reality ultimately rests with whether NextEra can find a buyer for the power a farm would generate.
Mahin said along with the usual customers like Westar energy, other private companies like Microsoft and Google now seek to buy wind energy to power large data centers. “The wind industry has become more competitive,” he said. “Companies are getting competitive in selling energy at a lower price.”