Officials: No tax holiday sought as part of power plant deal
Potential deal to keep station open was announced Saturday
FARMINGTON — An official of the company seeking to purchase and operate the San Juan Generating Station said today any concerns about the firm seeking a potential "tax holiday" as part of the deal are misplaced.
"We have no intention of decreasing current levels of property tax revenues that support Central Consolidated School District and San Juan College," Lawrence Heller, Acme Equities LLC managing member, said in a statement provided to The Daily Times today through attorney Germaine Chappelle, who is representing Farmington and San Juan County in their efforts to keep the power plant operating past 2022.
The facility's current majority owner, the Public Service Company of New Mexico, has announced its intention to abandon it by that date.
In an email response to The Daily Times this afternoon, Farmington City Manager Rob Mayes said the two parties are flatly ruling out the possibility of a tax holiday being sought.
"As previously stated these are non-binding discussion items that are routinely part of development transactions," he said. "We have received clarification, as indicated by Mr. Heller's quote, that they have no intention of requesting a property tax holiday and further the City likewise would not accept any such request."
The statements were issued today after The Daily Times on Wednesday reported on a provision in the deal's nonbinding letter of intent between Acme Equities and the city of Farmington that might provide for such a tax holiday. The city owns a minority interest in the plant but plans to acquire the remaining shares from the other four owners, then sell it to Acme.
Mayes told The Daily Times in a text message Wednesday that the terms set forth in the attachment to the letter of intent would 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," he said.
The six-page letter of intent between the two parties includes a four-page appendix. On page 2 of the latter document, under the heading "Conditions Precedent to Closing," the text lays out several conditions precedent "that are customary for transactions of this type." That list includes a provision that the buyer shall have been granted a tax holiday for an unspecified period so that the buyer is exempt from all property, ad valorem, sales and other taxes or assessments imposed by San Juan County, the city of Farmington or various other parties.
Heller's statement appears to be an attempt by the company to tamp down any concern about a potential tax holiday being sought by the company. If the company were to negotiate such a provision, it would mean the Central Consolidated School District, among others, would not receive property tax revenues from one of its main funding sources. District officials declined to comment on the agreement or the potential of a tax holiday on Wednesday when the provision was reported.
Farmington Mayor Nate Duckett also downplayed the potential of a tax holiday being sought in a statement he issued through Chappelle.
"Transitioning ownership of (the station) to Acme Equities LLC is a win, win, win for our community by keeping jobs in our community, keeping property tax revenues at current levels, in an environmentally responsible and cost-effective manner," he said.
Mayes also issued a statement through Chappelle today in which he outlined the efforts of various parties over the past couple of days to negotiate a deal, which was announced Saturday. He indicated more work needs to be done before the deal is finalized.
"In order to facilitate this opportunity, we are working with our legislative delegation to propose a minor amendment to the Energy Transition Act contemplated by SB 489," he said. "We look forward to expeditiously finalizing negotiations of a formal purchase agreement."
Duckett, Heller and Mayes all hailed the impact of the potential deal on helping Farmington and San Juan County avoid a severe economic downturn that could result from the feared closure of the plant.
"Currently there is nothing more important that any of us can do for the future and benefit of our community than saving these jobs," Duckett said in his statement.
Heller echoed that sentiment in his statement.
"Our first priority is to preserve good paying jobs at current levels of employment with a promising future," he said.
Mayes has said that the potential agreement with a new owner would allow the power plant and the associated San Juan Mine to operate well beyond 2022, a development that would save 1,600 jobs and an economic calamity.
Mike Easterling can be reached at 505-564-4610.