CALIFORNIA decided to assess power plants for property tax purposes at the state level, but delayed implementing the decision until January 2003

CALIFORNIA decided to assess power plants for property tax purposes at the state level, but delayed implementing the decision until January 2003

December 01, 2001
CALIFORNIA decided to assess power plants for property tax purposes at the state level, but delayed implementing the decision until January 2003.

The delay gives the legislature time to decide how to allocate property taxes collected by the state among counties and cities. The municipalities want the revenue to go back to the same counties or cities that would have collected it had assessment remained at the local level.

The move to state assessment should mean higher property tax bills for many power plant owners. Local assessors are barred by Proposition 13 from claiming more than a 2% a year increase in property values unless the property is sold. This limit does not apply at the state level. Some power plants that are qualifying facilities under the Public Utility Regulatory Policies Act and power plants with nameplate capacities of less than 50 megawatts are exempted from the change and will continue to be assessed locally.

Some developers wonder what the shift will mean for special deals negotiated with local officials when power plants were under development.

LOUISIANA will have to defend in court its view that owners of new merchant power plants built in the state qualify for a 10-year tax holiday from parish and local property taxes.

A state legislator — Rep. Kip Holden (D.) — filed suit challenging an announcement by the state Board of Commerce and Industry last August that merchant power plants qualify potentially for the tax holiday. The tax holiday applies to all improvements that are part of a “manufacturing” process.

Holden won a similar suit against waste incinerators in 1998.

He has temporarily withdrawn the suit, at least as it applies to merchant plants, until after the state formally approves the first application from a merchant plant developer for the tax holiday. Until then, the suit is premature. He is pursuing the suit in the meantime against the state on the issue whether salt and other chemical processing plants “manufacture” a product.

Eleven companies have asked the court to intervene on the side of the state tax authorities.

Keith Martin