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New Winds Blowing

December 30, 2016

I had an opportunity to spend a couple evenings in Jamestown last week at the landowner meetings for Tradewind Energy. Tradewind is based in Lenexa, KS and have become a national leader in wind energy development. Project manager Nick Coil lead landowners through the reasons why Tradewind is interested in putting a wind farm in the southwest section of the county (with a portion in Mitchell County).

 

Coil explained that the timing is right for this project. In the last six years, production costs for wind farms is down 61% and they do not expect those costs to go up soon. Federal policies, in particular the Production Tax Credit, also add to the benefits of building now.

 

Tradewind is planning to develop a 200-300 Megawatt farm with 100-125 turbines. This project will supply energy to 44,000-66,000 households per year. The earliest construction date is 2019. Many things must take place in order for this project to go from current development stage to construction stage. Tradewind must pay for a series of studies with the South West Power Pool (SWPP) to determine if their energy load can be tolerated. Capacity on the line is expected to open up tremendously with the addition of the ITC line recently completed and energized in Cloud and Ottawa counties.

 

Should we reach construction phase, we can expect many positive economic impacts. Area farmers will see a total of $75 million in total landowner payments over the 40-year life of the facility. Between 400 and 500 construction workers will be working in Cloud and Mitchell counties during construction. They will be eating here, sleeping here, and shopping here.

 

This project is different than the Meridian Way Wind Project, in that our state no longer allows lifetime property tax abatements for windfarms after 2016. Unlike the Meridian Way Wind Farm and the NextEra project currently taking place in Republic and Marshall Counties, the Tradewind Energy Project will be on property tax rolls after 10 years of utility tax abatements. I called the Kansas Department of Revenue to see what this would mean for local property taxes. They recommended that I estimate the total construction cost of one tower at $2 million. Commercial and Industrial Machinery and Equipment then have straight-line depreciation applied to the retail cost when new. The appraised value cannot be less than 20% of the RCWN as long as the asset is being used for commercial and industrial purposes. This puts the taxable value of each tower at $400,000. Calculating only the county mil levy, that results in $28,840 per tower. If Cloud County received 100 of the 125 towers, we could expect $2,884,000 each year in property taxes if the mil levy remained the same. While this is only an estimate, it is enough to get excited about.

 

I am pleased we are working with a company like Tradewind. They have an 80% success rate in this region for getting wind projects completed. At first glance their contracts are fair to the landowner and present tremendous opportunity to diversify farm income. With the elimination of the lifetime property tax abatement, Cloud County and our schools and college will ultimately benefit for years to come.

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