Solar farm near Climax losing money because of property taxes

[Denny Crane]

http://www.mlive.com/news/kalamazoo/index.ssf/2011/05/solar_farm_near_climax_loosing.html

CHARLESTON TOWNSHIP — Producing 225,592 kilowatt hours of electricity in its first year of operation, a solar farm in eastern Kalamazoo County that went online in early 2010 has exceeded expectations.

Also exceeding expectations is the property tax, said Sam Field, a Kalamazoo attorney and one of the owners of Kalamazoo Solar.

The $27,689 tax bill for the Charleston Township property means that the owners are losing money, even when being paid a premium price of 45 cents a kilowatt hour by Consumers Energy, he said.

“That Michigan property tax burden works out to a cost of 12.3 cents per kilowatt hour,” Field said. “That amount is more than the retail value of the electricity.”

For comparison, Field researched the property tax for the Palisades Nuclear Plant in Covert Township along Lake Michigan. He found that the annual real and personal property taxes for Palisades are just over $12 million or .2 cents per kilowatt hour.

 

[BrianFromWA]

Does MI do property tax by the KW-hr? I'm seeing a big difference b/w "27,689" and "12,000,000". Or, you could say that a solar farm "exceeding expectations" and "being paid a premium" (did anyone else notice that they're charging 45 cents for something that retails for less than 12.3?) can't come close to the economies of scales of a plant pumping out 6 billion kw-hrs a year. And Palisades is the smallest nuclear plant in MI.

I'm glad they're trying to figure out solar power. I don't know why he's trying to compare himself to a reactor site paying orders of magnitude more tax than he is. And I don't know why he's complaining about property tax while getting 400% subsidies on his product and still able to have a property tax difference of 27k mean the difference b/w profit and loss.

 

[BrianFromWA]

He contends that all sources of producing energy should have the same per kilowatt hour tax rate.

Um, why? Shouldn't "Property Tax" be based on, I don't know, property and not wattage? In Kalamazoo county they pay $13.05 for every 1,000 the property is assessed for. If he can't generate and sell enough solar power at a high enough price to overcome the costs of land and property tax, doesn't that say something about his design?

We didn’t know whether our design was going to work or whether the location was a good location or so many things,” Field said.

 

[Denny Crane]

Ironic that a rather small sum in property taxes outweighs the other handouts.

 

[BrianFromWA]

the handouts are percentage-based. The "small sum in property taxes" outweighs the "Output", even assisted by handouts, of the enterprise.

 

[maxiep]

They're not losing money because of the property taxes. They're losing money because having a solar farm in MI is a really stupid idea.

 

[blazerboy30]

The $27,689 tax bill for the Charleston Township property means that the owners are losing money, even when being paid a premium price of 45 cents a kilowatt hour by Consumers Energy, he said.

Classic. What a disgrace.

 

[Denny Crane]

Classic. What a disgrace.

The secret to this scam is to do it at even larger scale.

 

[barfo]

Businesses lose money all the time, and in pretty much every single case, they blame taxes. Or certain conservatives do it for them. This is but one more example.

It's a funny example, though, because those who normally complain bitterly about taxes driving companies out of business are claiming the taxes aren't an issue here.

barfo

 

[Denny Crane]

Businesses lose money all the time, and in pretty much every single case, they blame taxes. Or certain conservatives do it for them. This is but one more example.

It's a funny example, though, because those who normally complain bitterly about taxes driving companies out of business are claiming the taxes aren't an issue here.

barfo

Let's see them make a profit while paying $12M in taxes instead of $27K. Or use the land for nuclear plants and get many times that $12M in taxes from it instead of just $27K.

Which way do you want it, barfo?

 

[barfo]

Let's see them make a profit while paying $12M in taxes instead of $27K. Or use the land for nuclear plants and get many times that $12M in taxes from it instead of just $27K.

Which way do you want it, barfo?

I don't think I understand your menu of options, or why I'd be making a choice from it.

I don't much care whether this particular organization pays a little or a lot of taxes, whether they go belly up or not, whether they are into nukes or cukes or Daisy Dukes. Only your reaction to it is relevant to me.

barfo

 

[Denny Crane]

I don't think I understand your menu of options, or why I'd be making a choice from it.

I don't much care whether this particular organization pays a little or a lot of taxes, whether they go belly up or not, whether they are into nukes or cukes or Daisy Dukes. Only your reaction to it is relevant to me.

barfo

My reaction is that this is the poster child for why "green energy" is a waste of money.

 

[barfo]

My reaction is that this is the poster child for why "green energy" is a waste of money.

Yes, I know.

barfo

 

[Denny Crane]

Well, you seem to love taxes and bigger government. Wouldn't using the land for more of those nuke plants generating $12M in taxes be better?

(or just about any profitable endeavor)

 

[jlprk]

They're not losing money because of the property taxes. They're losing money because having a solar farm in MI is a really stupid idea.

Right now GE would build him a real nice nuclear energy plant if he acted fast.

 

[barfo]

Well, you seem to love taxes and bigger government. Wouldn't using the land for more of those nuke plants generating $12M in taxes be better?

(or just about any profitable endeavor)

Are you providing the capital to build a nuke? Do you think such capital is available to anyone who wants to build a nuke on their land? Is the highest and best use of all land a nuclear power plant? Are you equally as critical of other money-losing businesses? Why do you hate small business (and by extension, capitalism and America)?

barfo

 

[Denny Crane]

Are you providing the capital to build a nuke? Do you think such capital is available to anyone who wants to build a nuke on their land? Is the highest and best use of all land a nuclear power plant? Are you equally as critical of other money-losing businesses? Why do you hate small business (and by extension, capitalism and America)?

barfo

No, I'm not providing the capital to build a nuclear power plant. The power companies can raise their own capital. And yes, I think it's available to them.

Is the highest and best use of all land a nuclear power plant? No, but we need more nuclear power plants, a few hundred would do. What is certain is the best use of any land is not solar panels.

I'm critical of government bailing out or otherwise providing corporate welfare for any business - this is true for GE or for green energy ventures. If they fail, then they fail and that's sufficient criticism of those businesses.

Your last question is silly. Why do you so-called liberals not get economics?

 

[BrianFromWA]

Businesses lose money all the time, and in pretty much every single case, they blame taxes. Or certain conservatives do it for them. This is but one more example.

It's a funny example, though, because those who normally complain bitterly about taxes driving companies out of business are claiming the taxes aren't an issue here.

barfo

I normally stay out of economic fights b/c I just don't know enough at the macro level to decide, though I have a gut feeling.

In this case, though, it's not b/c of corporate taxes (which is, iirc, what the complaints are usually about) but about the fact that their unproven (actually, poorly-engineered and -conceived) design isn't effective if you'd like to make money with it. They'd have to pay property taxes on the 1.5 acres anyway, whether it was a solar farm, a chicken farm, or a funny farm.

I don't know what 1.5 acres goes for in MI, or what "improvements" like solar panels all over the place would cause for valuation to go up, but it seems pretty straightforward that one of your business costs is going to be the property tax on your land. And it's not like Kalamazoo county is gouging them b/c they're solar power. THey're paying the same $16 (edited b/c I looked up the Kalamazoo site and it seems to have changed from the 13 I quoted earlier) per thousand of valuation that anyone else is, it seems. Maybe 1.5acres+improvements shouldn't be valued at $1.7M, but it doesn't seem that they're being treated unfairly. It seems as if they had a plan that they didn't quite think through, a design that they didn't quite think through, and an execution that they didn't quite think through. And then complain to the papers that they didn't make a profit, even with a huge amount of subsidy.