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locally, apply to the total charges to the <br />customer, including charges for services <br />provided by accommodation <br />intermediaries. <br />FF -11. Taxation of Electric <br />Generation Personal Property <br />Issue: Investor-owned utilities (IOUs) have <br />a longstanding relationship with Minnesota <br />cities. IOUs site baseload power plants in <br />host communities, and in exchange pay <br />personal property tax on attached generation <br />machinery to the cities, counties and school <br />districts hosting the plants. These plants <br />bring jobs to our communities, but they also <br />create nuisances such as air pollution, <br />nuclear waste, noise, vibration, and coal <br />train traffic. They also create security risks <br />and take up land that could be used for <br />other, less disruptive commercial and <br />industrial development. Cities believe <br />personal property taxes paid by IOUs are a <br />fair compensation for the environmental and <br />economic costs of hosting baseload power <br />plants. <br />IOUs argue that personal property tax relief <br />is important to pass along to their <br />shareholders and ratepayers. However, only <br />a few IOU shareholders and ratepayers <br />actually live in the communities hosting <br />baseload power plants. Further, almost all <br />new power plants receive personal property <br />tax exemptions from the Legislature, while <br />host communities with existing, non-exempt <br />baseload plants will continue to have them <br />for decades to come. <br />Response: Personal property taxes on <br />attached electric generation machinery <br />are a fair way to spread the <br />environmental and economic costs of <br />electric generation power plants among <br />all IOU shareholders and ratepayers. The <br />League of Minnesota Cities supports the <br />continuation of personal property taxes <br />paid by IOUs to host communities for <br />existing and new facilities. As the <br />Department of Revenue analyzes methods <br />of utility taxation in its Study of Electric <br />Energy Producing Systems (Session Law <br />2014, Chapter 308), the League supports <br />the inclusion of these environmental and <br />economic costs in assessing the <br />appropriate property taxes paid to host <br />cities by electric generation facilities. <br />FF -12. Taxation of Municipal Bond <br />Interest <br />Issue: The federal and state laws that grant a <br />tax exemption to bondholders for municipal <br />bond interest lowers borrowing costs for <br />cities and reduces property tax levies. <br />Response: Congress and the state should <br />maintain the tax exemption for municipal <br />bond interest income. <br />FF -13. Pollution Control <br />Exemption <br />Issue: Minnesota grants electric utilities and <br />several other industries a property tax <br />exemption for personal and real property <br />that is primarily used for pollution control. <br />Minnesota adopted the property tax <br />exemption that now extends to electrical <br />generation systems, agricultural operations, <br />and wastewater treatment facilities in 1967, <br />before water and air pollution were heavily <br />regulated by the Environmental Protection <br />Agency and the Minnesota Pollution Control <br />Agency. The language and the purpose of <br />these statutes have evolved through the <br />years. When states first began adopting <br />these tax incentives in the 1960s, they hoped <br />to encourage utilities, industrial plants, and <br />others to install pollution control equipment. <br />Gradually, as regulation increased, states <br />adopted the exemptions to help companies <br />offset the cost of the equipment. <br />League of Minnesota Cities <br />2016 City Policies Page 100 <br />