Bill Summary for Bill Number HB06-1275

Date: 03/23/2006

Final
BILL SUMMARY for HB06-1275

SENATE COMMITTEE ON FINANCE

Votes: View-->	Action Taken:
Motion to adopt L.002 (Attachment B). The motion Motion to refer HB 06-1275, as amended, to the Com	Pass Without Objection PASS

11:02 AM -- House Bill 06-1275

Senator Brophy, prime sponsor, explained the provisions of HB 06-1275 which requires the state property tax administrator to use the income approach in determining the actual value of wind energy property. The amended bill applies only to facilities beginning operation in 2006 or later.

The following people testified on the bill:

11:05 AM -- Mr. Ken Fehringer, Feetz Community, spoke in favor of the bill. He stated that a wind farm in his county has generated government revenue and that it is good for the environment. He discussed the benefits of the construction of more wind turbines in his county.

11:07 AM -- Mr. Brent Orr, representing farmer-owned wind projects, spoke in favor of the bill. He discussed the implications of the expiration of the federal production tax credit. He indicated it is difficult right now to get new wind turbines in the state because the demand for wind turbines is outpacing supply. He commented on the increased revenue for local governments due to more wind turbines. He also explained how property tax revenue is declining due to the current approach to determining the value of wind energy property and that the bill would cause steadily increasing revenue for local governments in the long term.

11:14 AM -- Mr. Jack McClavey, Logan County, spoke in favor of the bill. He explained that the bill would help farmers and the economy.

11:16 AM -- Mr. Travis Berry, Colorado Competitive Council, spoke in favor of the bill. He indicated that wind energy development is a positive benefit for communities and the economy as a whole.

11:17 AM -- Mr. Doug Carter, Invenergy, spoke in favor of the bill. He indicated that a former Colorado Supreme Court Justice believes that the bill is constitutional. He stated that wind turbines are currently being placed in states where it is most economical and that the demand for wind turbines is outpacing supply. Further, other states are more competitive in attracting wind turbines than Colorado. He hoped that the bill would help Colorado compete for wind turbines.

11:20 AM -- Mr. Landon Gates, Colorado Farm Bureau, spoke in support of the bill. He explained that the bill would create rural economic development opportunities and that wind turbines are beneficial for farmers because farmers can generate income from them and they do not take up much of their land for farming. He commented on the difficulty created by the scheduled 2007 expiration of the federal production tax credit for long-term planning. He also stated that certain areas of the state are at a competitive advantage for attracting wind turbines because they have better wind and thus it is not practical to simply allow local governments to compete for wind turbines.

Senator Teck indicated that he liked the intent of the bill but was concerned with having different assessment processes for the same type of property. He was concerned about the potential of a successful lawsuit against the practice which could cause significant revenue problems for local governments in the future.

11:25 AM -- Ms. JoAnn Groff, State Property Tax Administrator, did not take a position on the bill and indicated that her office would not determine whether the bill was constitutional or not. She indicated that the bill is assumed constitutional if it is passed by the General Assembly. She discussed constitutional issues regarding the valuation of property in state statute. She commented on a precedent that determined that a tax law was constitutional because the law treated taxpayers similarly in the amount they paid, even though the methodology for levying the tax was different.

Ms. Groff continued by discussing how the bill would cause wind energy properties beginning operation in 2007 and those before 2007 to have the same property tax bill amount over a 20 year period even though in any given year there would be different amounts paid by the old and new facilities. She indicated that facilities beginning operation in 2007 will likely pay more than existing facilities after the 20-year period. She indicated that there are only four existing facilities currently. She also explained that if an existing facility were to be replaced in the future it would still not be classified as a new wind facility under the bill.

Senator Brophy commented on the implications of the advancement of wind energy technology to the wind energy facility valuation process in the future.

11:36 AM

Senator Teck again discussed his concern over the nonuniformity of the valuation process for new and existing facilities that would be caused by the bill. The committee discussed the constitutionality of bill, the original fiscal note for the bill, and how its amendments have impacted the fiscal impact.

11:42 AM -- Mr. Doug Carter, Invenergy, came back to the table and discussed the constitutionality of the bill. He explained that the wind energy industry would most likely not file a lawsuit regarding the differing valuation methodology proposed by the bill.

Senator Teck guaranteed that there will be an appeal to the Board of Assessment of Appeals in the future when a company sees that it is being treated differently from another company. He also expressed concern about the precedent the bill would set for other types of property in the state.

Mr. Carter stated that it was important to look at the bill as a way to attract more wind energy facilities and help the state compete with other states.

11:47 AM

Senator Brophy closed by discussing the need to attract wind energy facilities to the state now.


BILL:	HB06-1275
TIME:	11:48:16 AM
MOVED:	Brophy
MOTION:	Motion to adopt L.002 (Attachment B). The motion passed without objection.
SECONDED:
		VOTE
	Brophy
	Shaffer
	Taylor
	Teck
	Tupa
	Veiga
	Sandoval
Not Final YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Pass Without Objection


BILL:	HB06-1275
TIME:	11:49:17 AM
MOVED:	Brophy
MOTION:	Motion to refer HB 06-1275, as amended, to the Committee of the Whole. The motion passed on a 6 - 1 vote.
SECONDED:
		VOTE
	Brophy	Yes
	Shaffer	Yes
	Taylor	Yes
	Teck	No
	Tupa	Yes
	Veiga	Yes
	Sandoval	Yes
Final YES: 6 NO: 1 EXC: 0 ABS: 0 FINAL ACTION: PASS

11:50 AM

The committee recessed.