PILOT Program Debated
MOUNDSVILLE – Marshall County Commissioner Don Mason said both the CertainTeed Gypsum wallboard plant and the former TeleTech call center came to fruition because of Payment in Lieu of Tax agreements.
The Monongalia County Commission also entered a PILOT program to help build the Longview Power plant near Morgantown.
As Mason and fellow commissioners Brian Schambach and Bob Miller consider entering a PILOT agreement with Moundsville Power LLC to help that company build a $615 million natural gas power plant on a 37.5-acre tract along the Ohio River that the Environmental Protection Agency classifies as a Superfund site, Miller continues questioning whether such a move would be wise.
The terms of the agreement the county is considering call for the commission to take official ownership of the proposed plant for $1, while the company would lease the facility from the county.
“I do favor the plant as originally proposed as a private development. I do not favor county ownership,” Miller said. “Government agencies don’t pay property tax – and that’s the gimmick that led to this unfair tax scheme for select businesses.”
Deputy Secretary of the West Virginia Department of Revenue Mark Muchow said the PILOT provision has been in the State Code since 1933.
However, John Deskins, director of the Bureau of Business and Economic Research at West Virginia University, said such programs can create a “slippery slope” in making it difficult for governments to effectively collect taxes.
“Suppose we offer a tax incentive to attract ‘Company X.’ Then, ‘Company Y,’ which was already located in the state, may say they should receive the same incentive as well,” Deskins said of the potential problems of a PILOT agreement. “Ultimately, this type of tax competition makes it difficult for states or localities to tax businesses.”
Miller emphasizes his opposition to the proposed PILOT, while Mason and Schambach said they would support it if the county can be indemnified from potential liability in the event something would go wrong at the plant.
Commissioners would receive about $31 million in lease payments over 30 years from the proposed 549-megawatt plant via the PILOT plan.
This is about $13 million less than County Assessor Christopher Kessler estimates they would collect if the plant paid normal property taxes.
Miller said this is unacceptable, while Mason and Schambach said the land is generating virtually nothing for the county in its current state.
Muchow said the revenue department does not track how many PILOT agreements there are in West Virginia because most of them are done at the local level, but he estimated a “microscopic percentage” of property in the state is under a PILOT program.
Though Deskins said a PILOT could potentially lead to the negative outcome of reduced tax collections, he said this is not always the case.
“If these programs are effective in bringing businesses into the state, then they are a good thing. It is much better for the state to receive a lower or deferred tax payment than no payment at all from vacant property,” he said.
Moundsville Power Managing Partner Andrew Dorn has said the $615 million price tag for the proposed natural gas electricity generator would be met with private financing. He said his plant would be a “combined-cycle” facility that would use natural gas to run one of its turbines, while using the exhaust heat from this process to drive an additional steam turbine.
Dorn also recently sent in the proposed plant’s site application – along with a $200,000 non-refundable fee – for consideration by the Public Service Commission of West Virginia.