Potential tax holiday among negotiation terms for power plant sale. Here's what that means.
FARMINGTON — Farmington’s non-binding letter of intent to sell the San Juan Generating Station to Acme Equities LLC outlines negotiating terms for the sale — including a potential tax holiday.
The Daily Times acquired a copy of the letter of intent through an Inspection of Public Records Act request.
Farmington intends to acquire the remaining shares of the power plant from the four other owners and then sell the generating station to Acme.
City Manager Rob Mayes said in a text message that the terms set forth in the attachment to the letter of intent serve as a basis to facilitate negotiations.
“The attached appendix of nonbinding terms is an outline of various specific and many cases boiler plate topics for negotiations,” Mayes said.
If Acme negotiates a tax holiday, it would mean Central Consolidated School District would not receive property tax revenues from one of its main funding sources. CCSD declined to comment on the agreement or the potential of a tax holiday.
Camilla Feibelman, director of Sierra Club’s Rio Grande Chapter, said in an email that the term undercuts the argument that the plant should be kept open to prevent loss of tax revenue.
In addition to property tax, a potential tax holiday could exempt Acme from ad valorem, sales and other taxes or assessments.
The objective stated in the letter of intent is to transfer San Juan Generating Station assets and liabilities to Acme. Acme would then use the existing workforce to keep the power plant open.
Another term listed for negotiations in the conditions precedent to closing is purchase power agreements.
While the city has not finalized these negotiations, one term would require Acme to have entered into purchase power agreements. That means, depending on negotiations, Acme will need a set number of utilities to buy the power when the contract closes.
“So, I would look at this as showing that what City of Farmington has accomplished thus far is to find a party who is willing to say ‘if we can figure out how to make sufficient money on it to cover our costs and risks, we'll take the plant,’” Feibelman said in the email.
Hannah Grover covers government for The Daily Times. She can be reached at 505-564-4652 or via email at firstname.lastname@example.org.