It’s hard to miss the 83 giant wind turbines that dot the landscape between Halkirk and Castor. For many driving by there may even be some envy about the cash cow that has landed in the laps of Paintearth county.
Certainly the economic and community benefits that have come with this project are welcome. A permanent office in the Village of Halkirk, regular cash payments to landowners with wind turbines and 16 permanent jobs is a significant boost for local businesses.
Everyone wins . . . but wait, the new and steady stream of tax revenue for the County of Paintearth . . . it hasn’t materialized yet . . . surely there’s a story behind that!
The simple answer, the County and its ratepayers won’t receive its first nickel of revenue from the wind farm until January 1, 2014.
When you and I are in the process of building a house and tax time rolls around, the assessment is based on the amount of work completed. When the home is finished, the assessment moves to 100 per cent of the market value and then locally-elected municipal councillors set the mill rate.
This is not the case when it comes to linear assessments (i.e. railways, pipelines, cell towers, power plants, wind farms, etc.).
They are assessed once a year on October 31. Construction of a project can be 100 per cent complete, but unless it is operational, the assessment value is zero and municipal taxes are forgone for a whole year.
So it should come as no surprise that companies have a great economic incentive not to bring projects on line until after October 31.
In the case of Capital Power, they took 14 months to construct the wind farm and started commercial operations on December 1, 2012. They will have used County roads and bridges for two years and three months (14 months of construction, 13 months of operations) before their first tax payment.
But there’s another twist. The Alberta Government declares that 75 per cent of the capital cost is obsolete in the first year. So, a project that is worth $350M, as in the case of the wind farm, is deemed to be worth $87.5M in the first year of taxation. In the second year (2015), another 20 per cent of the project is deemed obsolete, so the tax base for the project now becomes $70.0M.
There are no doubt a lot of small businesses that would enjoy such rich “amortization” rules to lower their tax bills!
But that isn’t the last kicker for Paintearth County ratepayers. Nobody locally knows what the Capital Power taxes will be in January 2014. That is solely at the discretion of the Assessment Services Branch of Municipal Affairs.
The provincial government has always been very keen on financially encouraging big corporations to do business in Alberta, especially in the energy sector.
But the question becomes when the consequences of that financial help falls onto local governments, is it fair? Fort McMurray has asked this question over and over again to no avail.
Fairness would mean the provincial government carries the financial burden for its decisions, not local municipalities. In the case of Capital Power’s wind farm, the County will have seen 27 months of increased road and bridge maintenance costs with no offsetting revenue stream.
The provincial government has three options. Keep the rules the same and download the consequences of their unilateral decisions onto local governments. Downsize the gaping loophole in the regulations around the one assessment date and the need to be fully operational. Or reimburse municipalities when a provincial government’s decision negatively impacts a local government’s budget.
The man who can effectively champion these much needed changes in linear assessment regulations is none other than local MLA and current Minister of Municipal Affairs, The Hon. Doug Griffiths. But he may need some encouragement!