By Mary Alice Murphy

[Editor's Note: Part 7 will cover the discussion on an industrial revenue bond ordinance. The meeting went for a bit more than five hours, with a very short break. Several articles will cover the presentations and the review of the regular agenda, in addition to county and commissioner reports.]

Grant County commissioners at their Oct. 12, 2021, work session discussed a proposed ordinance for a revised industrial revenue bond (IRB) ordinance, the funding from which will ultimately come from the Great Divide Wind Farm project in the southwest part of the county.

Luis Carrasco of Rodey Law Firm in Santa Fe serves as bond counsel for Grant County. He and George Willaford of Hilltop Securities discussed the IRB ordinance with the commissioners.

County Manager Tim Zamora said he and bond counsel are looking at December for the actual passage of the ordinance. "Implementing the bonds would take place toward the end of 2023. We are pushing it to December, because if anything at the legislative session could impact our IRB, then we would have to make changes to the ordinance."

Carrasco agreed. Willaford said he sent a summary of the preliminary analysis to Zamora. "We attempted to estimate the projected payment in lieu of tax. The estimate is based on $1,750 per megawatt of production capacity. The wind farm is expected to have a capacity of 252 megawatts. The estimated payments are in lieu of property taxes on the land set aside for the development of the wind farm. We estimate receipts to be about $441,000 annually. We need to confirm several questions and factors as far as the actual levy amounts, particularly for Silver Consolidated Schools and their debt service. Grant County would receive about 69.9 percent of the payment, which would be about $307,000 a year, with $133,862 divided equally to the school districts, with Cobre and Silver schools each receiving $66,931. This does not include gross receipts tax for county compensating taxes."

District 5 Commissioner Harry Browne said he had referred to House Bill 105 and tried to make his own estimate. "I found the language in the act frustratingly imprecise. I am curious how you came up with the 70/30 split. I came up with a 41/59 percent, with the 59 percent to the county."

Willaford replied: "What we did was based solely on non-residential levies. That was the assumption we made."

Browne said that would explain the difference. "Would we have to send 5 percent other tax to the state?"

Willaford said he based it on a not-to-exceed amount for overall cost of the project. "We calculated the full gross receipts tax county rate and what the solar deductions are."

Carrasco said effective July 1 this year, the law changed on the imposition of compensating tax. Going into an IRB would exempt the project from the compensating tax. A county in the northwestern part of the state obligated the company to hold the county harmless, which would require the company to pay the in lieu of taxes.

Browne asked if they could give a range of compensating taxes for GRT.

Carrasco said Willaford had come up with a figure, but it included the taxes.

Willaford said: "This took the assumption of the not-to-exceed inclusion in the resolution up to $500 million. For the 5 percent county GRT rate, it would come to $7.4 million for construction. It would probably be up to the applicant to present cost figures and what should be exempt."

Browne asked if the scenario in the northwestern part of the state had changed what the company was willing to pay.

Carrasco said it was wind/solar project similar to the Great Divide project, "but I don't think the payment was on the per megawatt basis. I do recall we worked out what the PILT would be and proposed in a different part of the lease agreement that the company agreed to hold the county whole by paying the extra amount."

Browne said, in a back of envelope calculation, "this could more than double the $441,000 that Great Divide already agreed to. I am assuming construction would be roughly a 10-year construction project at roughly $4 million with roughly another $440,000 a year, which seems like a huge chunk. I don't know what the impact would be on the company."

Carrasco said he was sure the company would want to have a conversation on the potential impacts.

Browne said he remembered that Carrasco had helped with the language for the HB 105 until it got out of his control. "Why does the formula add state debt service mills to the different mill rates imposed by the school districts, as part of what the school gets out of the formula?"

Carrasco said he remembered the conversation and it was specifically so that the split would be about what they had just heard, the 70/30 split between the county and the school district or districts.

Browne asked why the commissioners needed to pass the ordinance if there might be changes at the legislative session.

Zamora said: "Right now, we are not tracking any possible changes."

Carrasco said he wasn't aware of anything concrete that the legislators were considering. "In the past legislators had concerns, but this is a short session. I'm not sure, but there could be legislative changes."

"Is there any reason not to wait?" Browne asked.

Zamora said he knows the company would like to solidify the numbers. "There's probably no problem pushing it back a bit, but I think the company would like certainty. Mr. Carrasco and I had a conversation about sharing the money equally between the two school districts, but I think we could possibly do something by population, although we would prefer keeping it simple with equal shares. Otherwise, we would have to make adjustments every year."

Browne said it wouldn't be another equation. The treasurer could align it by property taxes. "HB 105 contemplates other additional payments. To me that's the difficult part. The language needs correcting."

District 3 Commissioner Alicia Edwards said she looked at IRBs and HB 105 and considered potential changes. "I'm presently in favor of paying per student."

District 1 Commissioner and Chair Chris Ponce said he prefers simple.

District 4 Commissioner Billy Billings said short of law changes, he, too, prefers simple."

Edwards said: "In my mind, the only fair way is by student. Why are you in favor of the same for each district?"

Ponce said he would go by what the county manager would recommend. Billings echoed that sentiment.

Browne noted that Silver Schools has 2,400 students, while Cobre has 1,400 students.

Edwards said that was why she was having a hard time wrapping her head around giving the districts equal payments.

Zamora said that after this work session he would get with the treasurer and the bond counsel about what hurdles there would be to pay by student. "I could draft two ordinances, one with equal and one by student population."

Edwards said it seemed to her to be better to wait on the ordinance, depending on the way the Legislature goes.

Zamora said he would also talk to the company on their concerns about not waiting and on the compensating taxes issue. "Internally, I will get with the treasurer and the bond counsel."

Browne said, by his math, "if we kept it equal, we would have to pay $33,000-$35,000 more to Silver to keep it fair by student. I don't want to put out that much more that the county could use for other projects."

Zamora said his preference is to keep the money for the county intact.

The next article will begin with the review of the regular meeting agenda and will likely include portions of what took place at the regular meeting.