BY SAM RANDAZZO • JAN 10, 2018
I saw your article on the APEX tax exemption request in the Norwalk Reflector. For what it may be worth, I have attached the prepared statement I submitted to the Huron County Commissioners during the “public” portion of the meeting on Jan. 4, 2018.
Based on the comments made by the commissioners at the meeting, it seems like they need to do much more investigation before they will have a useful and reliable understanding the implications of granting Apex (Clean Energy)’s request.
For example, the commissioners indicated that the state (and more specifically the Ohio Power Siting Board) would make sure that any Apex wind farm would not negatively affect the environment. Most of the local property owners who have been active in Ohio Power Siting Board proceedings know that the Ohio Power Siting Board is either unwilling or unable to protect the public interest.
For example, as I explained in the attached prepared statement, the Ohio Power Siting Board lacks technical expertise to evaluate proposed wind farms and has typically used a method of evaluating wind turbine noise output that is unacceptable for use in rural areas. The Ohio Power Siting Board also has ignored minimum safe distance warnings of wind turbine manufacturers wit regard to ice throw and fire risks.
The statements made by the Huron County commissioners at the Jan. 4, 2018 meeting also suggest that further investigation is needed to identify impacts on schools.
Schools receive some funding through local taxes and this local funding is potentially supplemented by state funding in accordance with a formula that has changed over time. There is a ceiling on the amount of funding that is available from the state. (Schools may also receive funds from the federal government and Ohio lottery profits.) See http://education.ohio.gov/Topics/Finance-and-Funding/Overview-of-School-Funding and https://www.tax.ohio.gov/portals/0/research/Property_Taxation_School_Funding_2012C.pdf. (The second link is to a 2010 paper, so its details may not reflect current details).
You don’t get a payment in lieu of taxes (PILOT) unless or until there is an exemption from taxes that would otherwise apply to the property (personal property or real property) in question. Authorizing a PILOT structure also involves authorization of tax exemptions.
Any exemption reduces the local portion of school funding.
The portion of funding available from the state may or may not change as a result of the locally-approved property tax exemption. Generally, the portion of PILOT revenue that may be available to schools would not be considered for purposes of measuring the funding that is available under the current formula used by the state. Again, this formula may change.
But, the only way schools would make out better under a PILOT structure is if the portion of the PILOT revenue that, in every year, is allocated to each school district is greater than the dollar amount of reduction in local tax revenue that occurs because of the tax exemption minus the portion of the reduction that may be offset by any incremental increase in funding available from the state pool.
In any event, you have to run the numbers for each school district and for the entire life of the PILOT to determine if schools (in the aggregate or individually) get more or less funding when a PILOT is put in place and the result may be different for individual taxing districts and schools.
The PILOT structure also allows the county to take a portion of the PILOT revenue into the county general fund. The Huron County commissioners indicated that the Apex proposal numbers assume that the county takes $1,000 per megawatt (“MW”) of a total payment of $9,000 per MW. It is my understanding that a county may elect to take as much as $3,000 per MW. The total PILOT cannot be more than $9,000 per MW. So, the portion of the PILOT payment that is peeled off by the county for its general fund reduces that amount of PILOT revenue that is available for distribution to others (including schools).
So, any good analysis of tax exemption consequences of the PILOT structure requires a quantitative investigation/analysis for each taxing district and school district.
I don’t think it would be prudent for Huron County to assume that schools or any other local entity (parks, libraries and so on) will be in a better off (more funding) under a PILOT structure.
I hope this information is useful.
EDITOR’S NOTE: Sam Randazzo is with McNees Wallace & Nurick LLC in Columbus.