County finalizes Cob plant tax deal
December 14, 2005

By ANGELA TORRETTA

After three years of turmoil and controversy, Klamath County officials have struck a tax deal they hope will secure the construction of a gas-fired power plant in the Bonanza area.

Klamath County Commissioners sealed a tax-break deal Tuesday with a representative for the Cob power plant that will exempt the plant from county taxes for 15 years.

In exchange, Cob will pay the county $2.5 or $1.5 million annually, depending on the size of the plant built.

Most of the deal was decided on in April, and only minor changes were made Tuesday.

“It's been a long process for all of us involved,” Cob spokesman Paul Turner told the commissioners and an audience of about 20 people. “I appreciate everyone's patience.”

Proponents of the tax breaks and Cob officials have said without the tax breaks, the plant wouldn't be built.

But many farmers, as well as Commissioner Bill Brown, opposed having a huge 1,160-megawatt power in the county. After the plant got approval in 2004, opponents fought fiercely to have the plant pay its full share of taxes.

Brown took a last opportunity at the close of the meeting to voice his continued opposition to both the power plant and tax breaks for the plant.

“I'm still not in favor of this agreement,” he said.

He also denied that he is anti-development, a label he said he's been slapped with since he took office at the beginning of this year.

If a full-size plant is built, the developers will save about $35 million over 15 years by the tax deal brokered Tuesday.

At the meeting, several people complained the revised tax agreement wasn't released until after business hours Friday, giving them only the weekend and Monday to look at the document.

Brown acknowledged it was a short turnaround time, but there was no discussion of delaying a decision.

Members of the Klamath County Chamber of Commerce and the Klamath County Economic Development Association spoke in favor of the deal, as they have throughout the process.

Despite a finalized deal with the county, the future of the Cob power plant remains uncertain. Turner has repeatedly said that whether or not the construction is completed depends on the energy market.

Demand for power has been sluggish for the past several years, and the proposed power plant may be pared down to half the size and added on to if the market perks up.

The plant's developer, Peoples Energy of Chicago, is still considering selling the rights to the tax deal and power plant to another company if the opportunity arises.

Besides paying an annual sum, Peoples Energy has also agreed to pay $500,000 for damages done to county roads during construction, and half of the property taxes during that time.

The final agreement will bring in $98,300 less to the county than a tentative deal made in May. In a deal brokered by commissioner John Elliott, that amount instead will go to the Bonanza Fire Department to pay in part for the increased equipment and personnel costs the fire department will need to protect the plant.

Elliott and Brown both approved the deal, calling it fair, but it drew the ire of Commissioner Al Switzer and Gail Whitsett, wife of state Sen. Doug Whitsett.

“It seems like a very small amount of money Cob should be willing to pay and not take away from what the county already agreed on,” Gail Whitsett said.

Elliott said he had received calls from Bonanza Fire Chief Lana Lee and Turner saying the two were at loggerheads over financing. Elliott suggested using some of the money already allotted to the county to make up the difference.

“We can give a little to protect other residents of the fire district,” he said.

The tax deal still has to meet the approval of the Klamath Falls City Council and Oregon state officials.