Gary Bauer of NW Natural testifies that the 12″ pipeline was “never considered economic” . Bauer said when first negotiating with the County the project did not “meet the test” to make it feasible and they had to work with regulators, the PUC and customer groups to find a way to make the project pencil out for Coos County.
After asserting the project was never feasible he then argues before a House Revenue Committee in 2007, the project is “…essentially fulfilling a public purpose that would justify exemption from the tax.” In essence, the pipeline was a $51M gamble sold to the public with the promise of 2,900 jobs for the county.
Listen to the audio here Oregon House Revenue Committee April 30, 2007 18:36
[audio:http://mgx.com/blogs/wp-content/uploads/2010/11/Nikki-Salem.mp3|titles=Oregon House Revenue Committtee April 30, 2007]
The committee was hearing arguments in favor of House Bill 3046 to enact special legislation to exempt NW Natural from ad valorem tax on its use of the pipeline.
74th OREGON LEGISLATIVE ASSEMBLY–2007 Regular Session
NOTE: Matter within { + braces and plus signs + } in an
amended section is new. Matter within { – braces and minus
signs – } is existing law to be omitted. New sections are within
{ + braces and plus signs + } .
LC 2153
A-Engrossed
House Bill 3046
Ordered by the House May 16
Including House Amendments dated May 16
Sponsored by COMMITTEE ON REVENUE
SUMMARY
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor’s
brief statement of the essential features of the measure.
Creates exemption for natural gas pipeline extension projects
receiving moneys from Oregon Unified International Trade Fund.
Applies to tax years beginning on or after July 1, 2007.
Takes effect on 91st day following adjournment sine die.
A BILL FOR AN ACT
Relating to property tax exemption for natural gas pipeline
extension projects; and prescribing an effective date.
Be It Enacted by the People of the State of Oregon:
SECTION 1. { + (1) Property used for a natural gas pipeline
extension project is exempt from ad valorem property taxation if:
(a) The project receives or has received moneys from the Oregon
Unified International Trade Fund to pay any portion of the
project;
(b) The length of the pipeline, including additions or
improvements, does not exceed 115 miles; and
(c) The owner of the property is a local government, as defined
in ORS 174.116.
(2) The exemption under this section applies to all property
used for the project, real and personal, tangible and intangible.
(3) Notwithstanding ORS 307.110 or 308.505 to 308.665 or any
other provision of state law, property that is exempt under this
section is not disqualified from exemption if a person other than
the owner:
(a) Holds a lease, sublease or other interest in the exempt
property; or
(b) Holds, manages or uses any portion of the project. + }
SECTION 2. { + Section 1 of this 2007 Act applies to property
tax years beginning on or after July 1, 2007. + }
SECTION 3. { + This 2007 Act takes effect on the 91st day
after the date on which the regular session of the Seventy-fourth
Legislative Assembly adjourns sine die. + }
———-
A representative from Oregon Department of Revenue explains this is a de minimis tax based upon revenue earned not cost or value of the physical pipeline but NW Natural doesn’t want to pay for the use of the pipeline anyway. (As a regulated utility, normally it would be added to your bill). Both Whitty and Bauer claim that throughout the long process of working on this $51M project it never occurred to them property taxes might be an issue. Since taxes are usually passed on to the ratepayer, this oversight must have been left out of any commitments made with the PUC, hence the panic for this legislation.
The consequence of the bill is that no matter how much profit NW Natural may make in the future off the use of the public pipeline, they will always be exempt from taxes. Whitty complains to the committee that Coos County has lost half of its general fund… actions like this contribute to the shortfall and keep Coos County in poverty.
Excellent point about the citizens paying for it not having direct benefit from it. They can’t hook up to natural gas.
Here we have $51M of public money, Oregon money but I doubt the ‘pipe’ was purchased in Oregon or many of the materials for that matter. So just like the ORC processing plant, if the ore is being mined or the pipe isn’t being used it is really worthless to the people subsidizing it.
Maybe we should sell the pipeline
One fact – from one of the few in this county who has created jobs in the past – or present; industry would never consider locating here without gas. But having gas here guarantees nothing. And the empty promises from the county commissioners must stop some day. The people here deserve better.
Having said that, I belive that it is terrible that many of the Coos County citizens who are paying off the pipeline bonds do not even have an option to convert to gas. Communities that come to mind, Bandon, Lakeside, Powers, etc. And people must understand that it’s not just the property OWNERS who are paying off the bonds. There are many renters in Coos County. That tax bill is flowed down to the renter by the property owner.
And last, you probably have not noticed that they (the professional politicians and friend of NW Natuiral the local paper), stopped counting the number of NW Natuiral gas customers in Coos County long ago when the number stopped at 800. That’s 800 out of a possible businesses and residences of more than 30,000 potential customers.
Suchadeal! As they say along Westchester Avenue in The Bronx.
Merry Christmas, Happy Chanukkah, or Happy Kwanza will never include a tax payment from NW Natural.