House Committee Approves Tax Deal for Wind Farms

Thu February 20, 2003 - National Edition

PIERRE, S.D. (AP) Gov. Mike Rounds’ plan to modify taxes in an attempt to encourage the development of wind-power projects has been endorsed by a South Dakota House committee.

The State Affairs Committee voted unanimously Feb. 18 t to send the proposal to the full House for further debate.

Rounds suggested the tax changes after reaching a deal with FPL Energy, based in Juno, FL.

The company wants to build a $40-million wind farm in Hyde County and a twin project in North Dakota, but company officials have said they will not build in South Dakota unless property taxes are cut by 70 percent.

Rather than tax the industry in the same fashion as other kinds of utilities in South Dakota, the bill would tax wind-power firms just like other businesses that pay local property taxes.

HB1235 calls for property taxes to be paid only on the huge concrete foundations and the steel towers for wind turbines. The expensive turbines and blades at the top would not be taxed.

Most businesses pay property taxes only on land and buildings. They are generally not taxed for their equipment and machinery. For wind-power farms, the turbines and blades would be considered equipment or machinery.

Some utilities are centrally assessed for property taxes and pay on nearly everything they own.

Randy Frederick of the governor’s office said FPL and other companies that build wind-power projects would still pay sales taxes and contractors’ excise taxes on construction. Their annual property taxes would be the same as other businesses, he said.

”Really, we are not looking at any huge tax breaks to get development in South Dakota,’ Frederick said.

State officials hope more wind-power projects are built.

John Didonato of FPL said the company is the nation’s leading developer and builder of wind generators. The company would sell the 40 megawatts of electricity from Hyde County to Basin Electric Power Cooperative of Bismarck, N.D. East River Electric Power Cooperative of Madison would buy the power from Basin and distribute it to customers in South Dakota.

The project would create 100 construction jobs for a six-month period, Didonato said. The company would have three or four full-time employees to maintain and operate the wind farm, he said.

FPL has preliminary lease options with eight Hyde County landowners. The company plans to erect 27 wind turbines along a 4-mi. ridge about 10 mi. south of Highmore. Each structure would cost about $1.5 million.

Cyler Groseth, a Yankton car dealer, was the only person who testified against the bill in the latest hearing. He said the tax break would suit FPL and let the company qualify to get federal tax credits for energy it produces.

Rather than helping out-of-state corporations, the Legislature should devise a tax system that encourages the development of wind farms by South Dakotans, Groseth said.