MidAmerican wind property tax update

This post contains a number of emails sent to the Iowa Department of Revenue in 2016, documenting a number of discrepancies regarding MidAmerican's wind property tax filings. This first email was also sent to the sent to the Calhoun and Pocahontas county assessors, Chris Vrba at the Pocahontas county Record Democrat, as well as a number of other folks. The other emails were forwarded to a number of folks as well.

   MEC reported to FERC that the Pomeroy wind project had a higher installed cost than the utility reported to the Pocahontas and Calhoun county assessors.

 

The Iowa code directs wind project owners to report installed costs to county assessors after the project is placed in service. The state department of revenue has also published memos to assessors direct them to verify that all hard and soft costs are accounted for. All the assessors I've checked so far are letting the wind project owners self report and are not ensuring all project costs are accounted for . In fact I've heard an assessor state in a public meeting that she was warned not to contest wind project valuations by the state DOR. I've asked the state DOR to clarify this back in 2014, and received a letter stating assessors should account for all costs. it's not happening yet.  

 

After the state DOR directed me to seek a remedy to wind property concerns through the local property tax review board, I notified the state DOR that didn't receive a fair ruling at the Calhoun county property tax review board.

 

 

I notified the state DOR that MEC was declaring some wind property in another tax program.

A wind Project in Carroll county reported an installed cost for the same type of wind turbines used by MEC at some of their wind projects at more than $ 1 million higher per turbine than MEC. I would expect some turbine cost savings when buying them in large numbers, but not $1 million per turbine. Assessors or auditors should examine the MEC turbine supply agreements with the turbine manufacturer. they're available at the Iowa Utilities Board if MEC won't provide them.   

So, what was the state DOR response ? no reply...crickets chirping.... but, they definitely received them


So, after hearing nothing back from the department of revenue, I reached out to the department of management, who oversee the state budget. The department of management reached out to the department of revenue.  I then received an angry call from the DOR property tax department, which I wrote about here.      
DOR called me rather than go on the record. My memory of that call ... first , it seemed like they thought I didn't know what I was talking about... then they must of decided I wasn't full of it and the conversation shifted , and they said they weren't going to devote resources to this issue,... and they defiantly wanted to know who at the Iowa utilities board provided some of the information we discussed. The caller was angry, but I guess the flak only gets heavy when you're over the target.
DoR is welcome to respond to the list of questions I sent them in 2017.

So does the utility have too much influence at the state level to look into this? I hope not.
When you visit the DOR website  you can find the following info.

 Property tax division - mission statement- and it looks like they want to know if the state isn't getting all the revenue it's due. 

After the the angry call I received for the state DOR, the state Department of management ceased responding to this issue as well. If you look at their mission, you'd think they would be somewhat concerned about the items I've found.

    So why are so many people pushing back against or ignoring this issue. Maybe this post sheds some light on that .

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MidAmerican wind property taxes update

There's some news again on the MidAmerican wind turbine re power plan. people in the area are rightly concerned that counties may not receive any additional property tax revenue as a result of this large improvement.

First, I think it's useful to recap some of the MEC wind property tax information I uploaded to the blog over the last several months, and see how it is related to the current re power issue. I'd recommend that interested readers first review my previous post for some additional insight.

I contacted my district state senator, Daryl Beall, in 2014 about my concerns with MidAmerican wind project valuations being too low . Senator Beall promptly scheduled a meeting with Julie Roisen at the department of revenue property tax division . Mr. Beall was unable to attend so a senate staff person and myself  attended the meeting together. We met with Ms.. Roisen  and a staff person. I got the distinct impression that the department of revenue thought I was wasting their time at this meeting. It was explained to me that wind property was locally assessed, and that DOR only issued advice on how to perform that task. If I was worried about wind property valuations, I was directed by DOR to use the local property tax review board, and DOR explained that process along with the state appeal process. They also provided me with a letter from their legal adviser, that seemed to once again direct county assessors to fully account for all wind project costs. It is posted on this blog.
Afterwards, I wrote a thank you letter which recapped my understanding of what was discussed at the meeting. DOR has never disagreed. I've since updated the undervaluation number in the email to $150 million , and MidAmerican now has more than 20 wind projects. I also sent additional  information to DOR in 2016,and hearing nothing back reached out to the Department of Management in 2017.  DOR called me soon after that, stating they were not going to devote resources to this issue, but mainly, it amounted to chewing me out for a half an hour. Here's the 2014 DOR email.   

I then followed DOR advice and asked the  Calhoun county property tax review board to look into my concerns the MidAmerican's wind property was undervalued . I met with the review board. Later, the Calhoun assessor sent a letter that denied my "protest" , but included information that basically said I was right. That information is here.

So to recap,
Every MidAmerican wind project I've checked so far shows lower valuations at the county level than MEC has stated at the federal level, in MEC press releases, and some information I was able to review at the Iowa utilities board.

MEC is placing property in the Iowa utility replacement tax that meets the definition of wind property when the wind code is reviewed IMO. DOR says that is not happening. I've got an email from a MidAmerican employee that says it is. Pocahontas county has 2 large wind projects. The one not owned by MEC declared similar property to the MEC replacement tax items as wind property.

The replacement tax issues leads to a much bigger concern. state officials and local officials had not noticed the replacement tax problem, and I've found an example of MEC wind property that was never added to replacement tax rolls as MEC has stated. Since Iowa utilities pay most of their state taxes through the replacement tax system... Well.... MEC replacement tax  filings need a proper audit IMO, probably several years worth.


So there is some precedent to resolving wind property valuations locally, That's what I was told to do. For the folks currently worried about the wind re power issue, I'd recommend they try to resolve this locally.  However, the Pocahontas record Democrat reports that after noting it may be some time before the state AG office looked into the wind re power issue, AG promptly replied, and encouraged  BV and Pocahontas county to request a formal opinion on this issue from. DOR.
State AG also mentioned using the existing local property tax review and appeal process. I haven't seen the AG letter. Hopefully I can get a copy.

I noted in the previous post that I was concerned about a potential state AG office conflict of interest. Now the AG has referred this matter to the department that so far is declining to look into potential lost revenue that I've listed on this blog, and who has already wrote an opinion unfavorable to counties on the re power issue.

The counties should try to solve this locally before ceding their authority to the state level, and risking an unfavorable ruling. Whatever the outcome, county assessors seem to think they can't assess wind property unless the wind project owners do it for them.. even though a lot of DOR memos seem to say otherwise. It concerns me  when all this is said and done, that MEC will still self report their wind valuations to county assessors, when I've listed a number of examples that seem to point out that MEC shouldn't be allowed to do that. A Webster county supervisor mentioned they sometimes retain 3rd party consultants to make sure industrial  property tax filings are accurate, seems like that would work for wind property. More precedent for resolving this locally IMO.  And if MEC is self reporting their replacement tax filings, that shouldn't be allowed either  


I'll be uploading the emails that I sent to DOR on this issue soon.

                             

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