Photo courtesy of nexteraenergy.com
By Lauris Olson
(March 16 2011 – 10 a.m.) Wind farms in eastern Story County soon could begin producing an economic windfall for years to come for as many six local entities or as few as one, depending on the outcome of discussions the board of supervisors will begin in April.
Currently, $270,000 in first year property taxes from 100 wind towers is scheduled to be distributed among Story County, the Colo-Nesco School District, Lincoln, Sherman and Warren townships, and Des Moines Area Community College (DMACC). The first half of the taxes is due in September.
The wind farms are owned by NextEra Energy Resources, a subsidiary of Florida Power and Light. Story Wind Project contains 100 wind turbines. Garden Wind Project has 23.
Colo- Nesco School District will receive the largest amount in the first year, $127,098. Story County will receive $123,039. Lincoln, Sherman and Warren townships will divide $13,116 according to how many towers are located in each township, and DMACC will receive about 7,000.
However, under a plan Story County supervisor Rick Sanders wants the board to consider, the county would take at least some of the tax revenue from the other taxing authorities to fund major infrastructure projects and economic development.
The wind farms are expected to yield almost $30 million in taxes over the next 20 years. Story County property taxes should account for about $14 million of that.
As much as another $16 million could be shifted from the schools and townships into a county-controlled fund should the supervisors establish a Tax Incremental Financing District (TIF).
TIF plans are allowed under Chapter 403 of the Iowa Code, which addresses urban renewal. Cities or counties create special districts where all future increases in property tax revenues, usually due to increased property values, are used to pay for new development projects.
School districts, townships and other taxing authorities continue to receive property tax payments in the amount they were receiving when the district was created, but any growth in revenue goes to the city or county.
The proposed plan for Story County would redirect property tax revenues from the beginning, leaving no yearly base amount for the other entities.
Sanders invited public financing expert Robert Josten, a partner in the Des Moines law firm Dorsey & Whitney LLP to bring the board of supervisors up-to-date on TIF financing. Josten presented TIF information to a previous board in 2009.
On Tuesday, Josten told the board that they had “a unique situation” with the wind farms, a situation that he had recently helped six other Iowa counties structure.
“You can designate just those legally for the TIF district,” Josten explained, “But you can designate the entire county as an urban renewal district, to allow projects in multiple locations.”
Josten said that the six Iowa counties he had worked with had all used their wind farm revenues to finance major road improvement projects.
Sanders has indicated that he would like Story County to also include bridge rehabilitation, trails enhancement and special projects such as economic development.
The Ames Chamber of Commerce and the Ames Economic Development Commission have approached the county in the past asking for help with creating a large industrial park east of Interstate 35.
While some states prohibit the use of TIF money for private projects, Iowa law has no such restriction.
“Chapter 15 of the code defines economic development as a public purpose,’ said Josten. “So you can make loans, give grants and give incentives to private entities. Most lawyers and I have taken positions that if you want to give it or lend it to businesses, it is not illegal.”
Board of supervisors chairman Wayne Clinton has taken a more cautious approach in past discussions, noting that the wind farm revenues could be used to supplement the county’s operating budget in areas like mental health services.
Supervisor Paul Toot is more enthusiastic about TIF financing.
“We need to have a plan in place regardless,” said Toot. Whether we TIF [the wind farm revenue] or not, we need a plan in place the so money from wind farm doesn’t end up in the general budget
“We have all heard the comment, ‘That is just like throwing it in a black hole.”
The supervisors may also face resistance from the Colo-Nesco School District, which is expecting to receive $15 million in wind farm tax revenues over the next 20 years.
Should the board of supervisors decide to tie up all of the wind farm revenues, the school district could see nothing.
“Right now, the state will subsidize a school district when there is a TIF project,” said Josten. “The state is subsidizing school districts in the amount of $45 million. “
However, he warned the board that the subsidies might not continue as the legislature looks for ways to cut state spending.
The board does not have to put all of the wind farm revenues under a TIF program, Josten said. “They can choose to take only a percentage of the total, leaving the remaining money for the other local entities.”
The deadline to apply for a TIF district that includes the first year taxes is Dec. 1. Sanders and Toot will begin working immediately on list of people and groups who they believe should be brought into the discussion, with the next discussion targeted for early April.
“It is clear that with the revenue coming in, we need to have a plan to utilize those dollars,” said Clinton. “We need to at least spend the time to fully vet this to come up with the best plan.
“And if [the TIF] doesn’t go forward, at least we would have done our due diligence.”