Wind Farm Tax Revenue for O'Brien County

March 14, 2016
 
By
Loren G. Flaugh

Longest serving O’Brien County Supervisor Tom Farnsworth has conferred with numerous wind energy development firms since before 2003 when the supervisors passed the wind energy conversion property tax ordinance. Twelve years has passed since Invenergy’s Highland Wind Farm was initially proposed in 2004 until MEC commissioned its 70,000-acre wind farm.
Farnsworth said the impact from the wind farm property tax revenues will be felt for a long time. “The Highland Wind Farm property tax revenues will have a significant impact on O’Brien County government operations and local school districts. About 52-53% will go to the school districts and the rest will go for the county’s government administrative uses or township budgets, etc.,” Farnsworth said.
The wind energy conversion ordinance provides for a graduated property tax rate set at zero % for the first year and it increases by 5% each year ‘til the 7th year. For example, the 3rd year property tax rate is 10% and peaks at 30% at the 7th year. That 30% rate will continue for the life of the wind farm, possibly another 20 years.
With the Highland Wind Farm net acquisition cost of $820,195,459.00, and taxed at 10%, Dykstra calculated the 3rd year property tax payment due at $1,900,065. The 5th year 20% rate shows a property tax payment due of $3,800,130. One last calculation shows the 30% 7th year property tax revenue yields a staggering $5,700,194 payment.
From that $5,700,194, about $2,964,100 will go to the South O’Brien School District and the Hartley-Melvin-Sanborn School District where turbines are located and portioned out according to the number of turbines in each school district.
O’Brien County Auditor Barb Rohwer responded to several questions related to the visual impact of 214 wind turbines now in operation and to the stunning property tax revenues resulting from Iowa’s largest wind farm.
“I realize that for some folks out in the county, the turbines are not a popular thing. But, from the relief they are going to see in their own property tax dollars for schools and the County, this will be enormous. What this will do for other people’s taxes, to relieve their property taxes, it’s going to be quite an impact,” Rohwer contends.
“But, I don’t know whether these folks that are fighting against turbines being built here have thought this over very much. All of this, of course, applies to the rural areas. So, a large portion of this will be for the rural services levy. What we’ll be able to do to fix roads and bridges will be phenomenal.
I look at Palo Alto County and they are talking about whether or not they want a wind farm built there. They were thinking about bonding for road maintenance. Then they eventually did it because they just didn’t have the money. So, they’re borrowing money to pay to fix roads. Think what Palo Alto County could do, if they had this. This is really what they need to fix their infrastructure.
You can’t guarantee wind farm property tax revenues will mean property tax reduction, but the revenues will be property tax relief,” Rohwer concluded.
According to Rohwer, the county’s largest property tax paying entity is the Valero Renewable Fuels Co. ethanol facility at Hartley. Valued at $30,348,790.00, Valero’s current yearly property tax payment is $645,280. Basically, the county will realize 8 times more property tax revenue from the wind farm than from Valero’s ethanol plant.