Building of large wind farms could provide Nebraskans with major property tax relief, advocates say

Source: By Paul Hammel / World-Herald Bureau • Posted: Wednesday, November 13, 2013

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REBECCA S. GRATZ/THE WORLD-HERALD

LINCOLN — The answer to high property taxes in Nebraska, at least in some rural areas, might be blowing in the wind.

That’s the conclusion of a new report by wind power developers that projected that the construction of a large wind farm in the state’s 15 most-rural and least-populated counties could allow a local property tax cut of up to 39 percent.

But even in counties that have higher-priced farmland and more population, the study projected that property taxes could be cut up to 10 percent if a 200-megawatt wind farm were built.

“Wind energy provides a great — and I’d say a once-in-a-lifetime — opportunity for especially our rural counties to try and address one of its most significant issues,” David Levy said, referring to property taxes.

Levy is an Omaha attorney who represents several wind farm developers. His law firm, Baird Holm, partnered with wind developer Bluestem Energy Solutions of Omaha on the study.

The study put some numbers behind the long-running arguments that wind farms would not only bring clean energy to Nebraska, but many other benefits, including millions in lease payments to farmers, some construction jobs and a new source of tax revenue for counties. The study comes as the Nebraska Legislature is conducting a special study of the state’s tax system.

The senators behind the study have fielded a chorus of complaints about high property taxes. Rural residents, in particular, have said dramatic price increases in farm and ranch property have left them with unreasonably high property tax bills.

A key state senator involved in wind energy matters said the study confirms what he’s always believed: that rural areas can get “huge” benefits from wind farms in economic development and property tax relief.

“Whatever we can do to incent wind farms will only benefit rural communities and their property tax burden,” said State Sen. Steve Lathrop of Omaha.

Many ideas the special Tax Modernization Committee are considering to cut property taxes involve shifting the property tax load onto other taxpayers or increasing or expanding sales taxes, such as taxing more consumer services like haircuts and labor for auto repairs.

But Adam Herink of Bluestem Energy said building wind farms provides another alternative — by growing the tax base — that can lower taxes for everyone.

Levy, the wind energy attorney, said rural areas don’t typically attract big industries or companies, but they do have the attributes, like steady wind and open spaces, that attract wind farms.

Take Holt County in north-central Nebraska as an example. The state just gave the green light for construction of a 400-megawatt wind farm, called Grande Prairie, northeast of O’Neill that will provide power to the Omaha Public Power District, among others.

The study estimated the O’Neill project will pay $1.2 million a year in property taxes on tower sites and outbuildings and an additional $1.4 million a year in nameplate capacity taxes, an excise tax adopted to replace personal property taxes on the actual turbines and towers that also goes to the county.

That would represent about 9 percent of the total property taxes paid in Holt County.

“That would be some really, really nice property tax relief,” said Amy Shane, superintendent of the O’Neill Public Schools

Adequate wind has never been a problem in Nebraska. About 92 percent of the state’s land has adequate wind to generate electricity, according to the National Renewable Energy Laboratory, which ranks Nebraska No. 4 in overall wind potential.

But the state ranks only 23rd in wind generation. Nebraska’s 459 megawatts of installed wind power capacity is less than one-tenth of the wind-farm capacity in Iowa (5,133 megawatts) and lower than all its neighboring states.

This past year, wind advocates won passage of a law — Legislative Bill 104, sponsored by Lathrop — that expanded tax incentives to large wind farms that export energy to other states.

But it is unclear if the project targeted by the new incentives, a $300 million wind farm called Rattlesnake Creek near Allen, will get off the ground. Project officials deferred questions until Wednesday, when they will discuss the future of the project at an annual conference of wind-energy advocates in Lincoln.

But LB 104 incentives will aid the Grande Prairie project in Holt County, according to Levy.

Some wind power advocates have said that although Nebraska has sweetened its tax incentives, it needs to do more to keep up with other states, such as Kansas and Oklahoma, that have passed even sweeter incentives.

Lathrop said he wants to hear more from wind developers first

“If there’s something we can do and it makes sense to further incent wind, I’d likely be in favor of it,” he said.