School District: Desert Rock OK

Independent Staff

FARMINGTON, NM — The Central Consolidated School District (CCSD) in San Juan County unanimously approved, by a vote of 5-0, the payment in lieu of taxes (PILOT) proposed by the Desert Rock Energy Project last night.

The PILOT is part of a larger tax payment proposal that includes CCSD, San Juan County and San Juan College. In April 2006, San Juan College unanimously supported the plan. Presently, the San Juan County Commissioners must provide the final approval of the plan.

Overall, the PILOT provides for payments exceeding $16 million to the County taxing authorities during construction of Desert Rock and payments of $151 million during 27 years of plant operations.

In response to a request by the CCSD, the plan also provides an upfront payment of $8 million to fund new facilities, equipment, or services that may be required to address increased school enrollment during the construction of the project. With the plan, Desert Rock would be one of the Countys largest tax payers.

"We are proud of our effort to help local schools in the Four Corners area provide much-needed revenue for better programs and new schools," said Dirk Straussfeld, Executive Vice President of Sithe Global. "With the existing approval of the San Juan College Board of Directors, we have taken a second major step toward making this great opportunity for the community a reality."

The PILOT offers many advantages to San Juan County and the taxing entities. The PILOT provides revenue certainty for the County, College, and School District since it will fix the level of annual tax payments from Desert Rock independent of the level of Navajo Nation ownership in the Desert Rock Project.

Any ownership by the Navajo Nation, by law, would otherwise reduce tax payments to these entities proportional to the investment amount. The PILOT proposes up front tax payments to CCSD to address the need for new facilities, equipment, and/or services to support additional students that the Project may bring to the area. The PILOT allows the School District to obtain monies without risking potential state ordered reallocation of school taxes to other school districts and it may reduce the tax burden of those who pay property taxes. In addition, PILOT monies provide the School District a source of funding with no use limitations that that may otherwise apply to existing property tax revenues and state funding. In all, the proposed PILOT offers fairness to enable the county to deliver services during a possible influx of students when the Desert Rock Energy Project is constructed and provides for reliable tax revenue that might otherwise be reduced or redirected.

The Desert Rock Energy Project is a $3 Billion, 1500 megawatt power plant that is being constructed by the Dine Power Authority, a Navajo Nation enterprise, and Desert Rock Energy Company, LLC.

The project will use the most technologically advanced pollution controls and air cooling to limit water use. In May of 2006, the Project was approved by the Navajo Nation Tribal with an overwhelming vote of 66-7.

It has received a draft air permit that the U.S. Environmental Protection Agency has called the most stringent ever.

The project is currently pursuing its final air permit and Environmental Impact Statement (EIS) which are both expected to be released soon. Construction is expected to begin in December of 2007.