Kingfisher Wind, LLC v. Wehmuller

2022 OK 83

In 2015, Kingfisher Wind, L.L.C. (“Kingfisher Wind”) began construction of a wind farm that was split between Kingfisher and Canadian Counties in Oklahoma (“Counties”). This case concerns the discrepancy in the value placed on the property by Kingfisher Wind and the Canadian County Tax Assessors. Kingfisher Wind valued their property at almost $300,000,000 less than the combined valuation of the Counties.

One of the main reasons for the large discrepancy in value was the use of Production Tax Credits (“PTCs”) in the property valuation process by the Counties’ Tax Assessors. PTCs are a federal tax equity financing concept used to encourage the development of renewable energy or carbon-neutral projects by giving a tax credit for each kilowatt hour of electricity generated over some time. The Counties and their Tax Assessors included Kingfisher Wind’s PTCs in their valuations because they believed PTCs were tangible personal property that brought an economic value integral to determining the total fair cash value of the property. Kingfisher Wind sought to exclude PTCs from the property’s value because it believed PTCs were intangible personal property and, thus, not subject to taxation.

The Supreme Court of Oklahoma acknowledged that PTCs directly impact a property’s fair market value but ultimately decided that PTCs are intangible personal property and exempt from taxation under the Oklahoma Constitution pursuant to an amendment excluding intangible personal property from taxation. The Oklahoma Legislature was quiet as to what intangible personal property was. Still, tangible personal property was defined as something that could be seen, weighed, measured, felt, touched, or is perceptible to the senses and references rights in tangible, physical things. The Supreme Court reversed this definition of tangible personal property and concluded that intangible personal property encompasses property rights that are effectively materially non-existent. They added that intangible personal property, such as stock certificates, bonds, notes, and, in this case, PTCs, have little intrinsic value and can only be claimed or enforced by legal action.

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