http://www.heraldandnews.com/articles/2005/01/19/news/top_stories/top1.txt

Cob backers make new tax offer

Wednesday, January 19, 2005

By ANGELA TORRETTA

A company seeking exemption from property taxes for a proposed power plant near Bonanza offered Tuesday to triple the amount of money it would pay in lieu of taxes - for the first year at least.

A representative of Chicago-based Peoples Energy told the Klamath County Board of Commissioners it would pay about $3.2 million in lieu of property taxes during the first year.

The figure represents half the estimated tax liability for the plant, and is more than three times the company's previous offer of $1 million.

Opponents of the Cob Energy Facility said that sounds like a good start, but think the county should hold out for more money.

The company is seeking a change in the Klamath Falls Enterprise Zone boundary to include the power plant site, making it eligible for property tax relief.

Cob spokesman Paul Turner on Tuesday acknowledged the company's previous offer of a $1 million annual payment for 15 years - in exchange for exemption from property tax liability estimated at $71.3 million - was inadequate.

The new deal Turner offered would have the company paying 50 percent of the annual taxes.

That would be about $3 million in the first year, declining over time as the property depreciated, Turner said.

In addition, Peoples Energy would give $300,000 a year to Klamath County Economic Development to put in a revolving loan fund for new local businesses.

Cob opponent Clif McMillan said the new offer is an improvement, and he is pleased plant officials have been responsive to the concerns of the community.

But he would like to see the plant give 100 percent of the taxes the county would waive should the enterprise zone be implemented.

"What will happen if we get down to turning the thumb screws?" he said. "...There's plenty of room for negotiation."

Commissioner Bill Brown asked Turner if Peoples Energy is open to negotiation, or if the latest offer is an "all-or-nothing proposal."

Turner replied, "It's all or nothing."

Members of the board of commissioners noted that one advantage of a payment in lieu of taxes would be the board's freedom to use the money according to its own discretion.

Property taxes, by contrast, must be distributed to taxing districts according to the tax base established for each district.

Furthermore, Cob representatives have pointed out that about 40 percent of property taxes would go to schools, and state school support would be reduced by the same amount to offset the extra revenue.

In his presentation Tuesday, Turner apologized for Peoples Energy, and the way the company handled the siting process last summer.

"There's been quite a bit of misunderstanding, to nobody's fault but our company," he said.

KCEDA Director Trey Senn agreed the process has been controversial, but said the project is better because of the public input, and said he supported it when officials were only offering $1 million.

Turner said he wasn't requesting a decision immediately, and commissioners agreed to discuss the plant again in two weeks in a public hearing format.

Whether the county agrees to the new proposal or not, there are several things that could still prevent the plant from being built.

First, even if the county approves changes to the enterprise zone, the city also has to agree. City councilors postponed a decision in September, pending the decision of a state siting panel.

Second, Lyn Brock of Save Our Rural Oregon said after the meeting Tuesday that the irrigation-rights group still plans to appeal the state's decision to grant a permit to the plant to the Oregon Supreme Court.

Third, there are details of the siting process that have to be completed still, such as a seismic survey of the property to measure the risk of earthquake damage to the proposed plant.

The proposed natural gas-fired plant would generate about 1,150-megawatts of electricity, and would be located three miles southeast of Bonanza and 21 miles east of downtown Klamath Falls.

The enterprise zone boundary change would take in a narrow corridor of land along Highways 140 and 70 through Olene, Dairy and Bonanza, and southeast of Bonanza to the site.

A public hearing on the proposed enterprise zone is set for 10 a.m., Tuesday, Feb. 1.

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