Wind farm tax break approved 

The Andrews County Commissioners Court on Monday approved a tax abatement agreement with a company proposing to build a $336-million wind farm project in Andrews and Ector counties. The county was the first of seven participating governmental entities to approve a financial incentive plan for he company.

For a company proposing a large 160-megawatt wind farm project in Andrews and Ector counties, it’s one down and six to go.

The Andrews County Commissioners Court on Monday unanimously approved a tax abatement proposal from 2@ Wind, LLC, that provides financial incentive to locate here, county officials said. Monday’s tax abatement approval was the first between 2W Wind and seven participating governmental entities.

It came after executive session deliberations during last week’s commissioners court meeting, Andrews County Judge Richard Dolgener said. The court had previously designated land for the proposed $336-million wind project as a reinvestment zone in October.

That action opened the door for incentive negotiations between 2W Wind and three participating governmental entities in Andrews County. The proposed project would be located on land that also generates property taxes to the school district and hospital district here.

Tax abatement prospects loom large in companies’ decisions to locate wind farms, said [2W Wind] representative Mannti Cummins of Cummins, CPA. State legislation for for tax abatement opportunities has helped allow Texas to attract the most wind farm construction, officials have said.

Cummins and 2W Wind attorney Renn Nielson attended Monday’s court meeting. The court approved a 10-year tax abatement proposal that includes a payment in lieu of property taxes. Through the tax abatement agreement, the county would receive nearly $90,000 annually the first 10 years. After that period is done, the property would go on the county’s fair market value taxable roll.

Cummins estimated about a 30-year life for the wind farm project and turbines, meaning the county would receive full property tax amounts for 20 years. The $86,000 annual payment in in lieu of taxes [PILOT] the first 10 years is much more than the county is presently receiving for the land in yearly property tax amounts, Dolgener added.

Cummins said the company hopes to have tax abatement agreements with the six remaining entities in place by early March. The 10-year maximum tax abatement proposal will likely be presented with the majority of entities. However, the school district incentive proposals will be different, he added. Under state legislation known as Chapter 13, companies making significant capital investments can make recapture-free payments to property-rich school districts in lieu of taxes. The local school district’s value limit under Chapter 13 is $20 million. But the Odessa School District’s value limit is $80 million owing to a larger base.

About $220 million of the project’s value would be located in Andrews County, and the remaining $116 million in Ector County, Cummins estimated.

Though the county would stand to benefit in the long term with full property taxes after 10 years, there are also short-term benefits, Cummins added. That includes about $60 million for local contractors in building roads, dirt work, cables, and trenches, he noted.

The company proposing the project is required to send a 20 percent down payment for wind turbines in the near future, Cummins said. That equates to another $40 million the company is in regardless of whether the project comes into fruition, he added.

A larger demand in the competitive turbine market is partially responsible for the high down payment requirement. The wind turbines would actually arrive here during the first quarter of 2010, Cummins said.

Down the line, agreements to sell electricity would also be required. “There’s a lot left to do,” Cummins noted.

Sam Kaufman
sam@basinbroadband.com

January 24, 2008

Andrews County News