Negele: New law protects wind farm communities from drastic drops in property tax revenue

Authored in response to a situation in Benton County, State Rep. Sharon Negele’s (R-Attica) bill protecting local taxpayers and communities with wind farms from unexpected and drastic drops in property tax revenue is now law.

Currently, the county is responsible for assessing the property under a wind turbine, but the wind turbines are valued by the owner and reported annually to the Department of Local Government Finance. A formula is used to determine a depreciation schedule of the property for federal tax deduction purposes. When a wind farm is purchased, the federal depreciation schedule is updated to include new federal incentives, which can cause a drastic reduction in value resulting in a much lower assessed value.

Unfortunately, Negele said Benton County was hit hard because a local wind farm changed ownership and its assessed value unexpectedly dropped by about 95 percent despite no changes to the land or power generation. Negele said she crafted House Enrolled Act 1401 to create stability in the assessment of business personal property tax on wind turbines when there is an ownership change. 

“When a wind farm locates to a rural community, it can significantly reduce the property tax burden on nearby residents. Locals then count on the revenue to build on and improve county services,” Negele said. “Unfortunately, Benton County was thrown a curveball when a wind farm changed ownership, and its valuation dropped from $169 million to $8 million in just a year. The goal of this law is to bring stability and transparency to this valuation process and prevent situations like what happened in our area from happening again.”

Negele said a significant change in property tax assessments for wind turbines can dramatically impact the amount of property tax revenue a county receives, which can negatively affect local government functions and services.

Under the new law, when a wind farm ownership changes, the previous year’s property valuation is used for one year and the DLGF must receive a timely notice of the sale. After that, owners are required to use DLGF’s depreciation schedule. The law also requires valuation information be reported to the legislature so that a legislative study committee can further examine the issue. 

To follow legislation signed into law by the governor, visit in.gov/gov/newsroom/2023-bill-watch/.