They call this "wind energy conversion property," and it is considered separately from small wind turbines located on some area farms that are used to power on-site hog or turkey buildings. The current state code that outlines what the County can do is Section 427B.26.
Although each Iowa County is given powers to assign an "assessed value" and to all types of property in the County, the State has many modifiers to this assessed value in order to arrive at a "taxable valuation."
These modifications are in the form of residential rollbacks, homestead exemptions, industrial exemptions, ag rollbacks, enterprise zones (which Washington County isn't eligible for), and various utility replacement taxes. All of these modifiers are intended to balance and manage the incidence of property tax collections by local governments, and/or to create incentives for development. One big modification made by the Iowa Legislature in the early 1990s was to exempt business machinery and equipment from any property tax.
Most people are familiar with the residential (and ag) rollback, which this year means that the taxable value of a residential home is slightly less than half of the assessed value.
For FY 2009, Washington County's rural (unincorporated) taxable value was $467,559,476, which includes all property, including gas and electric utility property. The taxable value of the incorporated cities adds another $391,015,990 for a total County taxable value of $858,575,466. These figures include the value of TIF districts. This information is from the Iowa State Association of Counties' County Budget Summaries web site.
The state code (Section 427B.26) concerning special valuations for "wind energy conversion property" means that County government can choose to assign the State's special valuation method to a wind farm. This special valuation caps the taxable value at 30% of the total installed cost of the wind farm. Similar to the widely used industrial tax exemption, there is a seven year period of tiered valuation adjustments that go from 0% to the final 30%. No wind farm has been built in Iowa that was not covered by this special valuation ordinance by the host County.
Since the installed cost per wind turbine is around $2 million, the 30% final value could be up to $600,000. Trade Wind Energy is developing the Long Creek Wind Farm project to build over 325 1.5 megawatt turbines in rural Washington County. The 30% special taxable valuation could be up to $195 million. The current rural taxable valuation is $467 million. The proposed wind farm project could represent as much as 42% of the total existing valuation, and it doesn't require ongoing services from the County (or other local government bodies like schools).
The broad implications of this much added taxable value in Washington County are staggering. The best way to lower property taxes (or slow their increase) is to grow the tax base. The proposed Long Creek Wind Farm covers a broad east-to-west area through the north central part of the County. It covers significant portions of four school districts; Highland, Washington, Mid-Prairie, and Keota. The implications on education and our schools is one of the most exciting facets of the project.
Trade Wind representatives have also indicated that payments to property owners for leasing their land and wind rights would be about $1 million annually. That is significant in and of itself.
Trade Wind Energy is the only wind farm developer working in Washington County for the past two years and has wind development contracts with many property owners. It is important to note that Trade Wind is working to develop another project around Grinnell, Iowa in Poweshiek County.
There are a number of important points, such as road improvements required for installation of the turbines, that the County and Trade Wind need to work out over the next year. However, without some clear indication to Trade Wind Energy from the County that it will adopt the ordinance for Iowa Special Valuation for Wind Conversion Property in the next year, the Long Creek Wind Farm project could easily be shelved and never built. That would be a shame, because it really is the biggest project to ever be considered in Washington County.
For some additional information, check out these additional resources:
The Iowa Dept. of Revenue and Finance has some answers concerning common questions about wind farms in their Iowa Tax Research Library - Property Tax Opinions web site that is worth checking out.
The Iowa Energy Center at ISU has an annual wind speed map of Iowa that helps to understand one reason why Trade Wind Energy selected northern Washington County for a wind farm project. The wind blows pretty hard across that broad plain.
Additionally, there is a high capacity, electric transmission line that runs north and south along US 218 on the east side of Washington County. Convenient access to the electric transmission grid is of great importance to developing wind farms.
