The Springwater Preservation Committee

Springwater Preservation Committee

Windfarm Windfall?

A letter from Bob Radell

With respect to the proposed Bishop Wind Farm many residents seem to assume that this development would result in a financial windfall of new revenue to the Town of Springwater. PPM Atlantic has stated that by State law the project is exempt from real property taxes, but it is their usual practice to enter into a payment in lieu of tax agreement (PILOT) and to pay up to $5,000 per megawatt, or in the case of this project $115,000 per year. They have not told people that the same law allows any Town, County and School District to pass a resolution to NOT allow the exemption in their area, nor have they made clear whether the payment is fixed or based on the amount of power actually generated, which could be as little as 25% of total rated capacity.

CONSIDER

1. At present the developer has not provided a proposed written PILOT agreement or copies of agreements used in other places. Thus, there are many unanswered questions and no one has yet seen the fine print. The developer can currently say anything it wants. They can come back at a future date and offer a lower amount, an agreement with any number of loopholes, or even offer nothing at all because, under current conditions, the project does not require any approval by the Town. A building permit is required but cannot be denied if the project meets State Building Code.

2. If the Town were to pass a resolution opting out of the exemption, it would at least guarantee the developer would have to negotiate an agreement.

3. The School District recently passed a resolution to opt out of the exemption. In Springwater the annual real property tax is divided approx. 50% to the School, 25% to Town and 25% to County. It is reasonable to assume the School District would require at least 50% of any PILOT payment. In the best case where $115,000 is received and divided in proportion to the tax rates, the Town share would be $28,750 (not $115,000 or $70,000). As a fixed payment its real value will decline each year due to inflation. Assuming inflation at a low rate of 3.5% per year, in 15 years the actual value of the payment will be about $13,600.

4. The developer stated that wind farms are an excellent way to preserve open space. That is certainly true because it will obviously discourage new development. It is also clear that property values and eventually assessment will decline especially for those closest to the project. In towns where wind farms have been developed it has been acknowledged that town expenses have increased as a result. I know of no way to accurately predict or quantify these costs, but it is clear these costs could easily exceed the Town’s share of the PILOT payment in the near future.

IS THIS A FINANCIAL WINDFALL?

P.S. Total development costs of the project or probable assessment are uncertain. However, estimates of development cost are in the area of $20 million. For comparative purposes, if assessed at $14 million, which is well below true market value, using last years tax rate, if full taxes were paid the Town and Fire District alone would have received $114,100 in taxes. As tax rates increase payment would increase.

NOW THAT WOULD BE AT LEAST A SMALL WINDFALL

Bob Radell, Springwater, NY

Return to the Home Page