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Editorial: Acciona exemption hinges on question of an incentive
Op-Ed · March 04, 2009
Acciona Windpower is applying for tax exemptions for a $10.7 million, 30,000-square-foot addition to its West Branch assembly plant, but there is some disagreement in this city on whether the company should get it.
The question that should be considered: Was the exemption presented to Acciona as an incentive for locating here?
If the answer is yes, then the city should support the exemption and continue offering it to industries considering West Branch for a new home. If the answer is no, then Acciona and other current tenants ought to be the only companies to benefit from it as the city considers a way to phase it out.
Acciona started on its addition in the summer of 2008 and is finishing up the interior work this year. The addition will allow the company the room to build both 1.5- and 3-megawatt nacelles (motors) for its wind turbines.
A preliminary assessment puts the addition’s property value at $1.53 million. According to city figures, that would mean more than $257,000 in property taxes over five years — about $51,000 per year — to the city, West Branch Community Schools and Cedar County.
The exemption is only a percentage, starting at 75 percent the first year until it drops to 15 percent the fifth year. Based on 2008-09 levies, the five-year benefit to Acciona would be more than $115,000, or about $23,000 a year. The three government entities would pull in almost $142,000 over five years, or more than $28,000 per year.
Since landing in West Branch, Acciona has been aggressively pursuing partnerships with both private and public entities across North America to build wind farms and solar plants and to supply energy to companies connected to the electric grid. The West Branch plant is key to the Spain-based company keeping transportation costs under control in the United States. The company has even been selling its shares in non-energy producing companies, presumably to raise capital for expanding and developing its core products.
In these days of a struggling economy, the city, school and county are uncertain that revenues will remain stable. More likely, they will drop. In December, Gov. Chet Culver ordered schools across the state to cut 1.5 percent from their budgets, a cut that would cost West Branch nearly $50,000. So that extra $23,000 in property taxes would certainly help cover some shortfall for local government.
But the amount of property taxes that would be exempted, the fact that Acciona is able to expand its impact across North America and the financial troubles of local government are moot here.
If someone presented this tax exemption to Acciona as an incentive for locating here, then it would set a bad precedent for us to now back out of that offer. We must keep our word.
On the other hand, if it is not an incentive, or it is not an effective incentive, then why is it on the books? Why are we rewarding businesses above and beyond the profits they already reap for doing what it takes to survive and thrive? If it is not an incentive to locate or expand, there is no need to even temporarily and partially shield companies from sharing in the tax burden.
Find the answer to that key question, then the next step is clear.
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