HB0380 95TH GENERAL ASSEMBLY

LRB095 04800 BDD 24860 b

95TH GENERAL ASSEMBLY
State of Illinois
2007 and 2008
HB0380

Introduced 1/26/2007, by Rep. Frank J. Mautino

SYNOPSIS AS INTRODUCED:

35 ILCS 200/Art. 11 Div. 5 heading new
35 ILCS 200/11-180 new
35 ILCS 200/11-185 new
35 ILCS 200/11-190 new
35 ILCS 200/11-195 new
35 ILCS 200/11-200 new
35 ILCS 200/11-203 new
35 ILCS 200/11-205 new
35 ILCS 200/11-210 new
35 ILCS 200/11-215 new

Amends the Property Tax Code. Sets forth procedures for the valuation of property used for wind energy conversion systems based on kilowatt-hours of electricity produced. Effective immediately.

FISCAL NOTE ACT MAY APPLY

HOUSING AFFORDABILITY IMPACT NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning revenue.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Property Tax Code is amended by adding Division 5 to Article 11 as follows:

(35 ILCS 200/Art. 11 Div. 5 heading new)

DIVISION 5. WIND ENERGY PRODUCTION

(35 ILCS 200/11-180 new)

Sec. 11-180. Legislative findings. The General Assembly finds and declares that:

(1) it is desirable to develop both renewable and alternative energy resources to obtain environmental quality and public health benefit;

(2) the benefits of electricity from renewable and alternative energy resources accrue to the public at large, thus consumers and electric utilities and alternative retail electric suppliers share an interest in developing and using a significant level of these environmentally preferable resources in the State's electricity supply portfolio;

(3) encouraging energy efficiency will improve the environmental quality and public health in the State of Illinois;

(4) wind energy is one alternative energy source that can be used to provide electricity to utility consumers;

(5) some regions in the State are ideal locations for wind energy system development;

(6) a consistent property valuation method must be used statewide to ensure uniform, equitable assessments and to create an equal distribution of the tax burden among taxpayers, especially in taxing districts located in more than one county; and

(7) the cost or market valuation methods for wind energy systems result in valuations that are neither uniform nor just and equal because of wide variations in the production of energy from wind turbines, which are a result of the uncertainty of the availability of wind for energy production.

(35 ILCS 200/11-185 new)

Sec. 11-185. Definitions. For purposes of this Division 5:

"Wind energy conversion device" means any device including, but not limited to, a wind charger, windmill, or wind turbine that converts wind energy to a form of usable energy.

"Wind energy conversion system" is all wind energy conversion devices owned by a person who has executed a lease, contract, or other written agreement or who has purchased or acquired property so that one or more wind energy conversion devices can be erected, built, or otherwise installed on that property. These devices do not need to be on contiguous parcels of property to be considered a part of a total wind energy conversion system.

(35 ILCS 200/11-190 new)

Sec. 11-190. Applicability. The provisions of this Division 5 do not apply to wind energy conversion systems that are owned by an individual strictly for personal use or to any person that is otherwise exempt from taxation under the Property Tax Code. For the purposes of this Section, "personal use" means the use of any wind energy conversion system with a nameplate capacity of less than 2 megawatts.

(35 ILCS 200/11-195 new)

Sec. 11-195. Platting requirements. Upon the completion of construction, the owner of a wind energy conversion system, at his or her own expense, shall cause the wind turbine facilities to be platted by an Illinois registered land surveyor. The plat must include access routes, together with a metes and bounds description of the area surrounding each wind turbine. The system owner must record the plat and deliver a copy of it to the property owner and to the chief county assessment officer within 60 days after the completion of the construction. Upon receiving a copy of the plat, the chief county assessment officer must issue a separate parcel identification number or numbers for the wind energy conversion system to apportion the value to each taxing district in which the system is physically located.

(35 ILCS 200/11-200 new)

Sec. 11-200. Wind energy conversion system size and capacity. The Department must determine the total size of the device. Unless the systems are interconnected with different distribution systems, the nameplate capacity of one wind energy conversion device must be combined with the nameplate capacity of any other wind energy conversion device that is under common ownership. In the case of a dispute, the Department must draw all reasonable inferences in favor of combining the devices into one system. In making a determination, the Department may decide that 2 wind energy conversion devices or systems are under common ownership when the underlying ownership structure contains similar persons or entities, even if the ownership shares differ. Wind energy conversion devices or systems are not under common ownership solely because the same person or entity provided equity financing for the systems.

(35 ILCS 200/11-203 new)

Sec. 11-203. Certification of electricity generated. For each wind energy conversion system the Department, on or before May 1 of each year, must certify to each chief county assessment officer for any county in which the system is located the amount of kilowatt-hours of electricity generated per turbine in the prior calendar year and the value of the system per kilowatt-hour, as calculated under Section 11-210.

(35 ILCS 200/11-205 new)

Sec. 11-205. Method of valuation for wind energy conversion systems.

(a) It is the policy of this State that, beginning on and after January 1, 2007, a wind energy conversion system that is used as an electric power source must be valued on the per kilowatt-hour of electricity produced each calendar year. If, however, a wind energy conversion system ceases to operate for any reason, the minimum assessed value of the system is 10% of the cost of replacing the system with a new wind energy conversion system.

(b) On or before February 1 of each year, the owner of a wind energy conversion system shall file a report with the Department setting forth, for each system:

(1) the nameplate capacity;

(2) the total kilowatt-hours of electricity produced per turbine during the previous calendar year;

(3) the amount of any federal income tax credit awarded for electricity produced in the previous calendar year under Section 45 of the Internal Revenue Code of 1986 for electricity produced by the system; and

(4) any other information that is deemed necessary by the Department to enable it to comply with its responsibilities under this Section.

The report under this subsection (b) must also include a copy of any wind energy system's current power purchase agreement with the purchaser of power that is generated at the system. The Department must treat each such agreement as confidential and proprietary information.

The Department must prescribe the form of the report. If an owner of a wind energy conversion system subject to taxation under this Division 5 does not file the report by the due date, then the Department must determine the kilowatt-hours of electricity produced based on the full nameplate capacity certified by the Department.

(35 ILCS 200/11-210 new)

Sec. 11-210. Valuation.

(a) The Department shall value a wind energy conversion system by using an income-capitalization approach. To determine the fair-cash value of the system, the net operating income is divided by the wind-energy capitalization rate.

(b) For the purposes of this Section:

"Net operating income" means an amount equal to

(1) the prevailing power purchase agreement rate per kilowatt-hour multiplied by the number of kilowatt-hours of electricity generated by the system in the previous calendar year; plus

(2) the amount of any federal income tax credit awarded for electricity produced in the previous calendar year under Section 45 of the Internal Revenue Code of 1986 for electricity produced by the system; less

(3) the prevailing annual wind-energy expense per kilowatt-hour multiplied by the number of kilowatt-hours of electricity generated by the system in the previous calendar year.

"Prevailing power purchase agreement rate per kilowatt-hour" means the average power purchase agreement rate for all of the wind energy conversion systems in the State during the previous calendar year divided by the number of kilowatt-hours of electricity generated by all of the wind energy conversion systems in the State in the previous calendar year.

"Prevailing wind-energy expense per kilowatt-hour" means the average amount of expenses incurred from the operation of all of the wind energy conversion systems in the State during the previous calendar year divided by the number of kilowatt-hours of electricity generated by all of the wind energy conversion systems in the State in the previous calendar year.

"Wind-energy capitalization rate" means a rate equal to the sum of: (i) the capitalization rate for nondepreciating assets that is used by the Department in farmland evaluation; (ii) the recapture rate, which is one divided by the typical life expectancy of the system; and (iii) the average effective tax rate in the State.

(c) The annual kilowatt-hours of electricity for the first assessment year is determined by multiplying: (i) the nameplate capacity per kilowatt-hour; (ii) the industry standard rate of efficiency; and (iii) 8,760, which is the number of hours in 365 days.

(35 ILCS 200/11-215 new)

Sec. 11-215. Assessments of wind energy conversion systems.

(a) A wind energy conversion system must be assessed at 33 1/3% of the fair cash value determined under Section 11-210. The chief county assessment officer shall apportion the value to each wind energy conversion parcel in which the wind energy system is physically located.

(b) A wind energy conversion system is not subject to equalization by the Department, the county, or the board of review.

Section 99. Effective date. This Act takes effect upon becoming law.