Misinformation on Property Taxes

A flyer handed out at the recent meeting in Lion’s Head had the statement: “The McGuinty government has limited the tax payment to less than $500 per year on each $3 million wind turbine.” Really? Then how come my tax bill is over $3000 per turbine in Northern Bruce Peninsula? Where did they come up with the $500 number?

Like all property taxes, the revenues are split between education, the local municipality, and the school board, each of which provide services to residents. The flyer also claims that municipalities “stand to lose revenues as land values drop”.

An economist would say that the value of an asset is the present value of its future expected cash flows. Farmers know this truth in another way. When crop values are high, and look like they will stay high, land rents, and property values go up. A property with revenue from a wind turbine would therefore be expected to increase, as the revenue from a wind turbine adds to farm income in a material way. The wind is just a supplemental crop. If payments are substantial, and available to all property owners in the footprint of the wind farm, as has been proposed in the Northern Bruce Peninsula, then all property values where income is received would increase, all else being equal.

Of course with real estate, all else is never equal. Real estate values are driven by interest rates, crop values, location, credit availability, and demographics. In fact, most realtors would say that the biggest driver of real estate values is income – if people earn more, they will spend more on real estate. The variability in factors driving real estate values makes it difficult to confirm through research whether a wind development drives real estate values up, down, or not at all. But a definitive statement that property values will go down is simply wrong. And common sense would say that if income for the landowners goes up, so too would their property value.

An earlier discussion on property taxes on wind is found here.

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