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2010-08-11 digital edition

Sebastian area wind farm hungup on tax abatements

Text: T T
By Paul Whitworth

Willacy County could soon be home to two giant wind farms producing electricity for sale to homes and business.

E.ON Climate & Renewables is planning a 200 mw wind farm between Raymondville and San Perlita, while Duke Energy wants to build one east of Sebastian. Its plans are for a 250 mw wind farm.

E.ON is a German owned company, while Duke Energy is a Fortune 500 company with home offices in North Carolina.

Both companies have asked for the creation of "Reinvestment Zones" where these projects are located.

In July commissioners agreed to allow 10 year tax abatements on the estimated $250 million E.ON will spend to erect 100-300ft. towers at the project site. The deal with the county calls for 70 percent of the taxes to be abated.

In February a similar offer was made to Duke Energy. The company plans to build 108 turbine towers east of Sebastian.

Both companies have signed long term leases with farmers and the property taxes will be paid by the land owners as usual without abatement of taxes.

So far Duke Energy and the county have not been able to agree on the amount of the abatement from taxes that they company will receive. Duke wants 75 percent abatement for 10 years and the county is willing to grant 70 percent.

At the regular county meeting Monday the matter was discussed for an hour with no agreement.

Robert Pena of Duke Energy said the company is prepared to build early next year.

The project, according to Pena, will employ 150-to-175 construction workers for a year and then provide l0-to-15 fulltime jobs after that, in the Las Palmas Reinvestment Zone, one mile east of Expressway 77 on FM 1018.

But to make the project happen Duke Energy wants a 75 percent tax abatement on their infrastructure and improvements for 10 years. The value of their anticipated investment in the county is $312 million for 108 towers in Phase One, according to Milton R. Howard, vice preident, Wind Development.

To induce the county to grant the tax abatements Duke Energy has agreed to donate $275,000 to a County Boys & Girls Club, Pony League Baseball and a county park.

Duke executives say the tax abatements will be for revenue that the county does not have and that the project will provide payroll the county does not have.

In addition, farmers who lease their land can continue to farm cotton and grain and earn up to $10,000 annually for each wind mill on their land.

Howard said the empass between the county and the company is now at a critical juncture.

"We need this tax abatement because energy is cheap right now. Of all the projects we have going, this one is the most exciting. Wind conditions here are ideal, but we are at a go, or notgo point."

Howard told the Chronicle/ News that he has 19 different land owners lined up to lease 24,000 acres.

"We are an American company using American suppliers. We can make the county a better deal than any of the foreign suppliers and companies."

He said he wants to take an agreement with Willacy County to his board for approval in September, "but we can't close the financing without a committment to buy the power we will produce and we can't get that until we have the tax abatement we need from the county."

Howard claims that even with the tax abatement the company will pay the county $11.3 million over ten years.

Commissioners Eliberto "Beto" Guerra, Erasmo "Eddie" Chapa and acting juge Aurelio "Keter" Guerra were all for holding the tax abatement to 70 percent, rather than 75 percent.

Possibly because 70 percent is the deal they cut with E.ON Renewable Energy earlier this summer.

Howard told the Chronicle/ News that he is "somewhat discouraged” that the commissioners are holding back.

“They are trying to get the best deal possible, but we are offering the best deal we can.”

Pct. 3 Commissioner Alfredo "Fred" Serrato told Howard and Pena, "I have to say, you guys are very good horse traders," but I'm gonna have to leave it up to the judge (Keter Guerra).

"We can probably build 1,000 mega watts here, but we have to start with 250," said Howard and “we can't do that without your help.”

"We are not trying to be stubborn or block progress, we need the shot in the arm that this project will produce," said Keter Guerra., while suggesting that Duke Energy "can be heros in this poor South Texas county," by coming around to the county's terms.

"I can't agree to 70 percent. That makes the diference in where we do it, or not," responded Howard.

Chapa was adamant about not giving in to the company.

"That 5 percent. I am having problems with that. When you crunch the numbers, I am just not ready for that. I need more time to look at other options."

"What if we go with 72.5 percent abatement in Phase one and 72.5 percent abatement in Phase Two," asked Howard.

Chapa replied, "We could close the deal now if we could go with 70 percent for Phase One." His motion to "tentatively" agree to an abatement of 72.5 percent, with final negotiations to look at 75 percent abatements," passed unanimously.

The county and company are in pretty much the same positions they were when negotiations began in February, 2010.

2010-08-11 / Front Page

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