Representatives from sPower outlined the proposal at the February 9 meeting of the San Juan School Board. Representatives from other taxing entities in San Juan County also attended the meeting.
The wind farm, with an estimated value of up to $125 million, is expected to generate more than $1 million in property taxes through the first years of the 20-year project.
As the value of the project declines, the property tax would decline by approximately five percent per year.
As an alternative, sPower seeks to equalize the payments, with approximately the same amount due every year.
Rob Adams, the Director of Operations for sPower, explained that the request would help the project and the county by creating a steady and known stream of payments.
Bradley Patterson, an attorney for sPower, said that a new state statute would allow for the adjustment.
However, provisions of the new statute have not been used in other areas of the state and, as a result, it has yet to be tested.
“The Utah State Tax Commission suggested a few years ago that the statute is not constitutional,” said San Juan County Administrator Kelly Pehrson.
All taxing entities where the project exists would need to approve the request, including countywide entities such as San Juan County, San Juan School District, San Juan Health Service District, and San Juan Water Conservancy District.
In addition, local taxing entities, including the City of Monticello and Monticello Cemetery District, would also need to approve the request.
A wide range of questions were asked about the request, including why the entities would approve the request since the project is already in place. Construction at the wind farm is expected to be complete in coming weeks.
Property values are based on the status of the property on January 1 each year. As a result, the full value of the finished project will not be determined until January 1, 2017. It may be until the 2017 valuation before taxing entities have complete information.
The sPower project comes on the heels of a recent $175 million drop in the assessed value of San Juan County properties.
The drop has dramatically decreased the tax base and is creating a challenge for local governments to maintain programs and services. For instance, San Juan County recently approved a deficit budget in which expenditures exceed revenues by approximately $742,000.
As a result, the wind project is expected to have a positive impact on property tax collections.