New state law gives city tax windfall

Mountain Home and Elmore County will be big winners thanks to last week's passage of House Bill 542.

The legislation provides an incentive to cities to permit a power plant to locate within or near a city by providing that the property taxes from such a plant are "apportioned based on the physical location of the plant." For Mountain Home that could mean an approximate $177,000 in additional tax revenues, with Elmore County picking up approximately $78,000 in additional revenue and the local school district seeing approximately $64,000 the first year.

Currently utility-owned generating plants are centrally assessed and the property values are then apportioned throughout the utility service area. The city, county and other local taxing entities "would get virtually nothing," explained former mayor Dave Jett.

The new legislation will have no fiscal impact on the state. It merely changes the apportionment or allocation of property taxes from an electrical generating plant among a multitude of taxing districts, with the taxing districts hosting the plant to receiving more property tax revenues. Taxing districts outside the host site, but with utility transmission lines, will receive less.

In July 2000, the Mountain Home Economic Development office was contacted by Mountain View Power, Inc. (MVP). The power development company was looking for a site to construct a gas fired turbine electricity generation facility. The company planned to respond to a request for proposal that was forthcoming from Idaho Power for a peaking plant. Initially, the company looked for sites in the county. But after a few months the company decided to pursue a site in the city's industrial park.

The company applied for a conditional use permit in March of 2001. After the appropriate public information sessions and public hearings, the city approved the CUP in July 2001.

The city was excited about a chance to have an increase in its tax base. The city partnered with other cities and organizations to work on a bill which would allow privately constructed power generation facilities to be treated as new construction instead of being centrally allocated. The bill passed and became law in 2002.

Early in 2003, MVP had another opportunity to respond to an RFP from Idaho Power Company. However, in order to qualify for the project, the CUP needed to be amended to increase the allowable capacity from 130 megawatts to 180 megawatts. The amendment was approved by the city and MVP submitted their proposal to Idaho Power.

By summer of 2003, the city learned that the proposal submitted by MVP was the front runner and the company was in final negotiations with Idaho Power. In the end, Idaho Power decided it would be in their best interest to own the company themselves. In September the announcement was made that MVP was awarded a contract to build a 160 megawatt facility for Idaho Power.

The elected officials and economic development office were proud to have helped facilitate the $50- to $60-million project. However they were also disappointed the plant would be owned by a publicly regulated utility and that would drastically reduce the property tax benefit to Mountain Home.

Jett, who was Mountain Home's mayor at the time, and economic development director Ron Swearingen went before the state tax commission to see if something could be done to correct the situation. Then they went to the Association of Idaho Cities and got them to sign on.

Representative George Eskridge sponsored House Bill 542 to amend the existing law so any newly installed or constructed equipment located within a city corporate limit or within five miles of a city limit shall be apportioned based on physical location. The House passed the bill with a vote of 55 to 7 with eight representatives absent and excused. In the Senate, the vote was 34-0, with one absent and excused.

Now only the governor's signature remains to make it law, retroactively to Jan. 1, 2004.

"This bill benefits the whole state," said Jett. "But it was Mountain Home that did the work to get the existing law amended."

Site preparation for the new facility in the Mountain Home industrial park is expected to begin next month with construction set to begin in July. The facility should be in full operation by summer 2005.