June 15, 2008

One, Two, or None — Power Plants Choose

By Janet Jacobs, Corsicana Daily Sun, Texas

Jun. 15--Three days before filing a permit application with the state to build a power plant in Navarro County, LS Power filed a nearly exact application for a power plant in Fannin County.

"It's not like we're pitting one against the other at all," said Michael Vogt, project manager. "It depends on site, cost, water, things that are unique to each individual site. It could be one. It could be both. It could be neither."

In Navarro County, the proposed project is called Pin Oak Creek Power, but in Fannin, it's known as Pattillo Power. The technical specifications are nearly identical.

Navarro County and Fannin County have a lot in common. Both are relatively near big cities, and are considered rural and poor, and both are interested in adding the $1 billion power plant to their tax rolls.

Companies that build big, expensive factories inevitably ask for a tax break. In Navarro, the policy is to offer the big companies a 50-percent tax discount for the first 10 years, with the understanding that the local government will benefit in the long run.

"If they were to receive a 50-percent tax abatement, that would still mean an increase in our tax rolls," said Lee McCleary, economic development director for Navarro County.

Fannin County is letting LS Power write its own ticket, which, if approved, would mean nearly zero taxes on the plant for 10 years.

The 100-percent abatement policy isn't official yet. It hasn't been submitted, nor voted on by the Fannin county commissioners. However, since LS Power's attorneys are writing the county's policy, it's an easy guess as to what they'll request, said Bill Jones, executive director for the Bonham Area Chamber of Commerce.

"They're going to ask for the limits," Jones said.

Jones added that he can't speak for the county commissioners on whether or not they would agree to a 10-year, 100-percent abatement.

"We want to see what (LS Power) are proposing," he said. "We put the ball in their court."

Tool of the trade

Supporters of the plants argue that abatements are worthwhile because half the property taxes from a $1 billion plant is better than nothing.

"They're purchasing their own land, they're building their own infrastructure at their own cost, they're going to improve or upsize the city water line at their own cost, so the only thing we're offering them is a tax abatement," McCleary said.

In Fannin County, the thought of losing 100 percent of the taxes on a $1 billion plant for a decade is still worthwhile for the secondary benefits and the long-term goals, Jones said.

It would mean a lot for Fannin County to get this plant, he said. Like Navarro, the county has been struggling economically for decades as its young people move off to Dallas or other big cities.

The county will see the extra growth from the long construction project, then from the full-time employees at the plant, and from companies that spring up to support such a large power plant. Because school taxes aren't abated, the Savoy Independent School District will get a tremendous boost to help pay off its debt, cutting more than 15 years off its long-term payments, Jones said.

"Most people hear the word abatement and think we're giving something away," Jones said. "We're not going to get anything if we don't give part of it away."

Keeping up with the neighbors

Interestingly, the neighboring counties to both Navarro and Fannin already have power plants, albeit smaller than the LS Power projects.

Ellis County has Suez Power, originally Tractebel, a $200 million plant that generates 343 megawatts of power. McCleary worked for Ellis County at the time and remembers the incentives offered.

"The county offered them 75 percent for seven years, and worked out an agreement to sell water to them," he said. Now, Ennis uses the plant as a recruiting tool, offering high-tech companies a reliable, uninterrupted source of electricity, according to the city's Web site.

Grayson County was approached by Panda, which wanted to build a $300 million plant to generate 500 megawatts of power. The Sherman Economic Development Corporation used a special sales tax to give the company 135 acres of land, $2 million in cash, and a 15-year tax refund that starts at 66 percent and decreases to 33 percent in the 15th year, according to John Boswell, president of the Sherman Economic Development Corporation.

"There's money coming into the coffers on year one, so it's an easier sell to the taxpayers," Boswell said. "It's a good deal."

Grayson prefers to offer cash, land, or utility improvements to lure industry, but it's not above playing the abatement game if the contract is large enough, Boswell admitted. When Tyson proposed building a chicken processing plant in Grayson that would employ 1,600 people, they were given a 10-year, 100-percent tax abatement on the project.

"That one made sense for us," Boswell said.

Not in my backyard

The proposed Navarro County power plants have faced some opposition from local residents, who fear the impact on regional air pollution and water usage.

It's a road that Fannin County has already traveled. About 18 months ago, TXU tried to bring a coal-fired power plant to Fannin County, stirring up local wrath from both environmentalists and residents who live near the proposed site, said Fannin County Judge George "Butch" Henderson.

"It didn't go over," Henderson said.

Pattillo, the proposed gas-fired plant, would be significantly cleaner, and it hasn't generated much controversy, Henderson said.

"It's still early enough that I've not had any phone calls, one way or another," he said. "I personally think it's because very few people even know they're out there thinking about it."

The Fannin group that successfully fought the coal-burning plant was called Citizens Organizing for Resources and Environment (CORE).

In Navarro, the primary opposition group is called Citizens Opposing Power Plants (COPPs), led by Vicky Prater and Eddie Pevehouse.

Prater is against the idea of tax abatements for Navarro County power plants as a matter of principle -- and because she believes that without an abatement the plants won't come.

"I'm opposing the abatements because we already pay 40 percent more for our electricity than any other state surrounding the state of Texas," Prater said, adding: "No, I don't think the power plants will come to Navarro County if we don't give them the abatements, and we're going to do everything humanly possible to reason with the county on this issue."


Janet Jacobs may be reached via e-mail at [email protected]


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