The addition of windmills into a school district’s boundaries will generally expand the school district’s overall property tax base. However, there are key things to know
- The taxable valuation of windmills is $0.0 in the first year, and then phased in at 5.0% of its total
valuation each subsequent year until it is capped at 30.0% of the total valuation in year 7 and beyond.
- A school district’s general fund levy accounts, on average, for 77% (based on FY 2020) of the total school district’s levy. The addition taxable valuation from windmills does not increase general fund revenues for the school district, rather it allows the general fund tax levy rate to be lower to generate the required amount of revenue for the school district. (Note that the same concept applies to a school districts management levy as well).
- If the windmill projects are TIF’d, the general fund tax rate reduction noted in the above bullet does not apply, as the TIF project keeps the revenue generated from their portion of the taxable valuation amount. As a result, the district must increase its general fund levy tax rate to generate the required funding level.
- For PPEL and Voter PPEL, the increased valuation from the windmills does generate additional revenue for school districts regardless of whether it’s TIF’d or not.
- For Debt Services Levy, the increased valuation from the windmills will provide the district with the ability to lower the levy rate to obtain the level of funding needed to fund the G.O. Bonds.
In conclusion, while the addition of windmills into a school district’s boundaries may be beneficial, the full benefit won’t be received until the 30.0% cap is reached and the windmill projections are not TIF’d.