Under current law, wind turbine projects with more than 25 megawatts (MW) in generating capacity may be taxed locally at a rate that exceeds the real estate rate, but does not exceed the Machinery and Tool (M&T) tax rate. As introduced, HB 1327 (Austin) would have modified this authority to allow a locality to exceed the real estate rate by up to $0.20 per $100 of assessed value.
The effect of this change on local revenues will depend on each County’s specific real estate and M&T rates. To date, no projects greater than 25 MW have been built in Virginia, although one has been approved to proceed in Botetourt County.
The bill is supported by APEX Clean Energy, the developer of the Botetourt County project. While the County approved a tax rate on wind turbines of no more than $0.20 more than the real estate rate, APEX sought the legislation to prevent future hikes in the rate allowable under existing law. This is because Botetourt County’s M&T rate is significantly higher than its current real estate rate.
To address concerns that this proposed change could limit the flexibility of Counties that might consider large wind projects in the future to establish appropriate tax rates for this type of property, the bill was modified at VACo’s request so that it only applies to projects “… for which an initial interconnection request form has been filed with an electric utility or a regional transmission organization on or before July 1, 2020.”
The amended bill has passed both the House and Senate and is now before the Governor for consideration.
VACo Contacts: Joe Lerch, AICP and Katie Boyle