Wind Farms Are Local Revenue Raisers

Nebraska Notebook

For local governments, wind generation bring some property tax relief.

Published on: November 27, 2013

In the December Nebraska Farmer, you'll see that I dedicated the cover and two pages inside the issue with features stories on Nebraska's oppressive farmland property taxes. One of the features I wrote outlined the Nebraska Farm Bureau's three-year proposal to cut local property taxes. Make sure you read about that proposal.

I doubt the Nebraska Tax Modernization Committee, when it issues its final report to the full Unicameral later in December, will recommend any serious property tax relief. State senators making up that committee got their earful from disgruntled landowners during hearings this fall. Unfortunately, they appear not to have acted on those concerns.

In mid-November I attended the sixth annual Nebraska Wind Conference in Lincoln, where I learned interest in wind energy development is increasing in the state with several new wind farms either under construction or planned. That's welcome news, although Nebraska is far behind its neighboring states in capturing this renewable energy source for electrical generation.

I also learned that, in counties lucky enough to have wind farms, there's a positive link to property tax relief. Wind can help blow some of those excessive property taxes away.

A report, developed by an Omaha wind developer and an Omaha law firm and released just before the wind conference, spells out how wind farms can increase the local property tax base. The white paper was written by Bluestem Energy Solutions and Baird Holm.

"Investment in wind energy development directly and indirectly benefits the county, the State of Nebraska and its residents," according to the report.

Direct tax revenue comes in the form of the nameplate capacity tax, which is a tax on the wind facility personal property of the wind facility. The developer also pays real property tax on the facility property, which increases in value due to land improvements such as equipment and access roads. 

In a typical Nebraska rural county, a 200-megawatt wind farm would generate approximately $1,325,200 in property tax revenue annually, or more than $26,000,000 over 20 years, the report shows. In Nebraska's most rural counties, the new revenue would mean a nearly 40% increase in property tax revenue. Approximately three quarters of that revenue would directly benefit the local public schools, the report claims.

David Levy, an attorney for Baird Holm, says that as the county property tax revenue rises, the county depends less on state resources such as the state's complex public finance formula.

In the end, the additional tax base allows the a municipality, school district or county to maintain or lower current tax rates and alleviate the property tax burdens faced by farmers and community residents.

Through wind energy development, Levy says, Nebraska can increase its overall property tax revenue and address its mounting property tax problem, particularly in its rural areas.

It's something for landowners to put in the equation when joining forces to develop a wind farm.