Small Commercial Wind Energy Property Tax Assessment

Summary

Note: This incentive will be replaced by a new property tax incentive for renewable energy on July 1, 2010.

In May 2003, South Dakota enacted legislation defining a revised property tax assessment method for commercial wind energy facilities. Originally, this method applied to all commercial wind energy facilities regardless of their size. However, legislation enacted in March 2008 (HB 1320) exempted commercial wind facilities of five megawatts (MW) in capacity or larger from all property taxes in favor of an alternative taxing structure. Thus, the special property tax assessment listed here now applies only to commercial wind facilities with an aggregate capacity of less than 5 MW. The two special rules that now apply to such facilities are as follows:

• The property value assessment does not include the wind turbine or blades. (These are considered personal property.) The assessed property value only takes the base, foundation, tower and substations into account.
• Wind energy companies are not subject to discretionary property tax formulas.

All commercial wind facilities covered under this law, regardless of ownership, are assessed at the local level. Prior to the 2003 legislation, some facilities were centrally assessed for tax purposes at the state level.