Economic impact: Benefits vs. costs of wind turbines
The economic impact of wind farms on Seneca County can be seen as beneficial or not, depending on individual perspective.
Two proposed wind farm projects are in the works in Seneca County – Seneca Wind Farm and Republic Wind Farm. A third wind farm, Emerson Creek, is proposed for Huron and Erie counties along the eastern edge of Seneca County.
Some people look at it as a business coming into the community that would provide tax revenue to the county, schools and other taxing districts through payments in lieu of taxes — or PILOT payments — while others say wind farms should pay the same rate of taxes as other businesses.
Among individuals, people who own land where turbines would be placed would see a direct financial gain, while some other people living in the area say the quality of life issues they would have to deal with would not be worth the cost.
“It’s an extremely complicated issue,” said David Zak, president and CEO of Tiffin-Seneca Economic Partnership. “We are not taking a position. We are strictly looking at tax revenue.”
“A lot of people are saying it’s not good for the county,” he said.
Zak said TSEP provides services to any legal business that is working toward establishing itself in Seneca County.
To that end, Zak wrote a report requested by the Seneca County commissioners summarizing the economic impact wind farms would have on the county.
“There’s a lot of tax revenue and some jobs,” he said.
In a Statement on the Economic Development Benefits of Wind Projects provided recently to the county commissioners, Zak reviewed the key project numbers for the Seneca and Republic wind projects.
In numbers reported on the Republic Wind website, Apex Clean Energy expects its investment in Republic Wind to be $400 million, although Zak notes the investment figure is kept confidential in applications submitted to OPSB.
In its December 2018 filing with OPSB, Republic Wind said it’s planning 50 turbines, not to exceed 200 megawatts on a 24,000-acre project area. The company is making a 30-year commitment, and 10 long-term operations jobs are expected to be created.
The OPSB application, started by Apex in August 2010, was amended in December 2018.
If approved, the company is planning to begin construction in October.
According to numbers from sPower’s OPSB application and the Seneca Wind website, the investment in the Seneca Wind project is expected to be $280 million — $175 million in turbines, $60 million in construction and electrical materials, $30 million in labor and $15 million in project development costs.
The application filed with OPSB in July 2018 proposes 85 turbines (which later was changed to 77 turbines) to be placed within a 56,900-acre area, which are expected to 212 MW of electricity.
Seneca Wind reports it is making a 30-year commitment, and is expected to create eight to 10 long-term operations jobs.
In the report, Zak said sPower acquired the Seneca Wind project from Exelon in 2017, who had purchased it from John Deere previously.
Zak reported summaries from economic impact studies done on behalf of each project.
He said Republic Wind’s analysis was completed in December 2018 by EDR Environmental Services, of Syracuse, New York, using the National Renewable Energy Laboratory’s Jobs and Economic Development Impact Land-based Wind model.
As quoted from Zak’s written statement, the report concluded:
The socioeconomic effects of the Republic Wind Farm, when assessed in light of regional and local economic trends, will have a positive impact on the communities within the Study Area and across the State of Ohio. Lease payments, short- and long-term job creation, and PILOT revenues will benefit private landowners, businesses and taxing jurisdictions. The Facility is not expected to generate significant expenditures on behalf of these beneficiaries; therefore, it will have a positive impact on the social and economic conditions of these communities and across Ohio.
In subpoints, the report said:
Total Statewide Economic Benefit: The construction of the Republic Wind Farm is expected to produce $41.1 million in employment earnings and $112.2 million in total economic output.
Subsequently, each year the Facility is operational it is expected to generate approximately $2.3 million in earnings and $5.9 million in total economic output.
Statewide Employment Benefits: During the construction period, the Facility is expected to support demand for a total of 753 onsite, supply chain, and induced employment positions. It is expected to support a total of 41 positions during each year of its operation.
Land Lease Revenue: The development of the Facility will result in $[Redacted] in annual lease payments made to participating landowners. (Redacted means the company requested the numbers not be made public.)
Property Tax Revenues: Construction of the proposed Republic Wind Farm will increase local government revenues through payments in lieu of taxes (PILOTs). Though the agreements outlining these payments are not yet finalized, it is estimated that annual PILOT revenues could amount to approximately $1.2 million to $1.8 million to be distributed to local taxing jurisdictions.
In a similar report completed for Seneca Wind by Tetra Tech, of Pasadena, California, using NREL’s Jobs and Economic Development Impact Land-based Wind model, the conclusion in the OPSB application said, “The results of this analysis indicate that construction and operation of the Project would provide direct employment for residents in Seneca County and elsewhere in-state, as well as support economic activity elsewhere in the local and state economies.”
Overall, construction of the Project is estimated to support 795 total (Project Development and On-Site, Turbine and Supply Chain, and Induced) jobs in the State of Ohio, and approximately $46.7 million in labor income, with total economic output of approximately $132.6 million. In Seneca County, Project construction is estimated to support approximately 49 total jobs and approximately $2.4 million in labor income, with total economic output of approximately $7.6 million. Construction impacts would be onetime impacts that would occur only during construction.
Operation of the Project is estimated to support approximately 39 total (direct, indirect, and induced) jobs in the State of Ohio and approximately $2.4 million in labor income, with total economic output of approximately $7.8 million. In Seneca County, Project operation is estimated to support approximately 27 full-time jobs and approximately $1.2 million in labor income, with total economic output of approximately $4.6 million. These annual average impacts are expected to occur over the life of Project operation.
Seneca Wind anticipates that it will make payments in lieu of real and personal property taxes in accordance with the applicable statute (ORC 5727.75 and the Board of Seneca County Commissioners’ Office 2011), with the Project estimated to generate $1.91 million in PILOT payments during its first year of operation, and each year thereafter. Seneca Wind also estimates that lease payments to landowners will total more than $20 million over the life of the Project.”
Zak said the Seneca County auditor did an analysis in May 2018 with information provided from John Moran, then project manager for sPower, and Dalton Carr of Apex Clean Energy.
“The totals, even though the project information may have changed, line up with the estimates in the OSPB application,” Zak said in his report. “It is worth noting that according to the Ohio Department of Education via the Seneca County auditor, the PILOT payments below do not impact any of the schools’ funding formula.”
Also, Zak said he spoke with two economic development organizations which verified that anticipated revenue came in. (See the accompanying grid with taxing districts and estimated amounts.)
In conclusion, Zak said, “The two projects under consideration would potentially generate a significant amount of tax (PILOT) revenue — $108 million over 30 years — and they would create almost 20 new, full-time jobs paying almost $60,000 per year.”
He also noted that “caveats and qualifiers” are described throughout his report.
Zak said TSEP has been assisting with the facilitation of the wind projects since at least 2015.
“It has been involved with the Comprehensive Economic Development Strategy and used it as a strategic foundational document since the fall of 2015, along with many others, that targeted wind energy and assisted in the creation of the alternative energy zone in October of 2011,” he said.
The AEZ has attracted wind development and has resulted in the current two — and potentially more — projects, he said.
“It is our view that without the AEZ, those projects would not have come to Seneca County,” he said.
Local opponents to the wind projects point out hidden financial costs to be considered in addition to expected tax revenue.
“Although the two proposed wind projects in Seneca County could have brought substantially more revenue to the county if the commissioners had not let them have the large PILOT tax break, the projects are currently proposed to bring $1.8 million each per year to the county/school coffers,” said Jim Feasel, who said he has been working with Seneca Anti-Wind Union to get information out to the public. “But this money cannot be considered in isolation. The costs to the county and its residents per year must also be taken into account.”
Feasel’s mention of “the large PILOT tax break” refers to the alternative energy zone.
Opponents say the wind project would not be cost effective for the companies without the tax break.
County Commissioner Mike Kerschner has been vocal in his opposition to the wind farms and twice has made motions to rescind the AEZ. Both motions died for lack of a second.
Kerschner said the AEZ amounts to a 50-percent tax break for the companies. If the wind companies were taxed at normal rates, he said, they would pay about $4 million the first year, and then depreciation would reduce that amount in subsequent years. If the companies updated the equipment in the future, the tax rate would be affected.
“I would rather have the $4 million the first year,” he said. “I would like to have that money to invest for the county.”
He said the AEZ prevents the county from negotiating the best deal financially and in other areas such as fire and safety training, which he said is important if residents are going to be forced to deal with the potential health risks.
“I think it’s just bad for the county and bad for the citizens,” he said. “The bottom line is when you are a government official representing folks and there are all these uncertainties, it is your responsibility to protect those folks you represent. You are obligated to do what’s right for those you represent.”
“That lack of local control is why we want the AEZ rescinded,” said Greg Smith, of Seneca Anti-Wind Union.
Smith said PILOT payments are based on 2011 dollars and has no adjustment.
“If they were paying standard real estate taxes, Seneca Wind would pay $80 million instead of $57 million over 30 years.
“The politicians and the companies only talk about money,” Smith said. “But is it worth the costs? At the end of the day is there going to be a net gain or loss?”
Smith said there are other financial considerations also.
“I think there is very high risk of lack of tax levy support for schools and other taxpayer-funded programs if the wind projects are built,” he said. “If the projects are built, I fully expect people who are forced to sacrifice their property values and quality of lives will be extremely bitter when the schools come back to them for levy support in the future.
“If the revenue generated by the PILOT funding is so beneficial for the schools, people living with the turbines will tell the schools to go ask the wind companies for money versus asking the taxpayer for their further support,” Smith said. “I don’t think people are considering the unintended consequences of these projects that could result in a net loss versus a net gain for the schools.”
Feasel said the largest direct cost will be the impact on the bat population. He cited research done by Science Magazine that estimates the value of bats to Seneca County agriculture as a minimum of $2.75 million per year, but he said could be higher.
“Approximately 100 farmers will receive payments to host a turbine, some more than one, but the damage due to loss of bats will affect thousands of farmers,” he said. “Each extra application of insecticide by county farmers (to kill insects that the bats used to kill) will cost over $1 million and will still not control many of the crop-eating insect populations that bats would decrease.
“Between the increased insecticide requirements, and resulting loss of yields that would still result, the costs to the area because of the decrease in bat population could easily be more than the expected income from the projects,” Feasel said. “Those few farmers hosting turbines would still come out ahead. But lease payments to participating farmers without turbines are small and most would not come out ahead. They and the thousands of other non-participating farmers would suffer very substantial damages.
“Bats are a big deal and many wind projects in agricultural areas have been stopped or curtailed because of their importance.”
Farmer Gary Baldosser has a different view of the economics of wind turbines.
“This goes back to 2007, when we started looking at our losses when our property taxes were going up,” Baldosser said.
He explained that values are adjusted periodically in CAUV – current agricultural use value — calculations.
“In 2007-08, our taxes went from $7 an acre to $19 an acre,” he said. “Three years later, when the state updated the CAUV, they went from $19 to $47 an acre.”
He said the rate was for bare farm ground with no buildings or woods.
“It became extremely apparent to myself and my dad that we needed to do something not only for ourselves but for our landlords to generate some revenue that wasn’t specifically tied to production agriculture,” Baldosser said.
A short time later, he said, he led an agricultural trip to Eastern Europe.
“I stood on the border of Poland and saw a line of turbines dotting the landscape,” he said. “And I thought to myself, why can’t we do that?”
When he returned, Baldosser said he looked into the idea and hosted a meeting of landowners that represented about 10,000 acres in Adams Township where they learned about wind possibilities.
He and others continued investigating for a few years.
“It became very apparent what the benefit was to the community beyond the landowner,” he said. “There was tax revenue for schools and libraries. It was non-discretionary, non-tax-based revenue coming into the county. And nobody had to give up farm ground.”
Between 2008 and 2011, he said more and more people showed interest.
“As the conversation grew from that, we really gained a lot of steam and people were just always calling and wanting to get involved,” he said. “That’s why we have multiple projects being spotted here in Seneca County.”
In 2010, Baldosser said there were six different developers signing leases with landowners for wind projects.
“Truly, the discussion was serious right from the get go,” he said. “That’s the history of how we got to 18 months ago. And then 18 months ago, a group of individuals started to vocally oppose the wind projects.”
Commissioner Shayne Thomas, who supports leaving the AEZ in place, said the wind farms are an agreement between private parties.
“Our job is to stay out of the way of economic development,” Thomas said.
“There’s a significant number of acres that have been signed up in leases and paid for almost a decade,” he said. “Those leases are between a private individual and a private company. The county isn’t building them. The state isn’t building them. A private company is building them and a private individual has agreed to lease their land.”
Thomas said the wind projects will bring extra money to the county it wouldn’t otherwise receive.
“I look at how government funds have been cut from villages and schools,” he said. “There’s just no place else to get this money other than to generate it locally.”
If there were other economic development possibilities, Thomas said local officials would pursue them.
“It’s not like we’re not trying to identify those opportunities,” he said. “The fact is this is what’s available in the rural areas.”
Also, he said wind power is compatible with agriculture, the county’s largest industry.
“That’s why farmers and landowners sought this opportunity out,” he said. “They didn’t have to stop farming and helps diversify the farm income.”
Next: The two sides of property rights.