Conflicting Tax Bills Affect Wind Projects

From February 2012 – Confusion reigned as this theme this week is coming up with a suitable tax scenario covering the renewal energy sector in Michigan. The Michigan Policy Network is reporting that there may be a feud developing with Senate Bill No. 391 and other tax impacting bills.

No. 391 was introduced by State Senate Republicans Michael Green, Roger Kahn, Thomas Casperson, and James Marleau in 2011. Senate Bill No 391 seeks to classify wind farms as real property for property tax purposes. The bill would classify wind farms the same as land and buildings, rather than business equipment – enabling wind developments eligible for certain tax breaks and exemptions. The problem is that this tax break would generate a substantial loss of revenue for local governments. It’s estimated that the passage of Senate Bill 328 would result in a projected loss of $7.8 million over twenty years from a single wind farm project located in Mason County.

Meanwhile, the State House has come up with a plan entitled Alternative Commercial Energy Systems (ACES) within House Bills 5278 and 5279 to help restore the funding to local communities lost by the declaration of wind farms as real property. ACES was introduced By Republican Representative Kurt Damrow (R-Port Austin Twp). If lawmakers in Lansing approve the ACES tax, wind farms would make ACES payments. The payments either would be a base fee that’s established for each system based on the rated megawatt hours each unit will produce, or $4 per megawatt-hour generated for sale.

As things stand the real winner looks to be the wind farm owners. The Michigan Townships Association reported that as the House Tax Policy Committee took testimony this week on Damrow’s ACES bill it was met with comments by local officials from across the state that they felt betrayed by the state because the significant reduction in assessed values will mean far fewer tax revenues going to the communities that must deal with the negative impacts associated with the turbines.