Tax-exempt policy for wind farms hits new hurdle
Low electrical transmission capacity is not only making it difficult for wind power developers to figure out how to connect to the grid; it’s created another hurdle for development of a uniform tax-exempt policy.
The Jefferson County Industrial Development Agency was charged with creating the policy to guide all payment-in-lieu-of-taxes agreements for wind farms by the county Board of Legislators last year.
Other wind farms in the state make payments-in-lieu-of-taxes and host-community-agreement payments based on a flat rate. The payments typically increase based on outside forces such as the cost-of-living index.
Here, a committee has developed a basic charge based on a wind farm’s rated capacity. But increased production and additional sources of revenue will increase a project’s payments under a supplemental payments formula.
“We could tie the payments in with the cost of living, but the price of electricity has no bearing on that,” said Donald C. Alexander, chief executive officer of the JCIDA and Jefferson County Job Development Corp. “Tying it to the price of electricity makes more sense for the future.”
Mr. Alexander told the JCJDC board Thursday morning that hurdles continue to crop up in finalizing the formula.
For example, three of the local projects are planning to build short transmission lines to the electrical grid. But Galloo Island Wind Farm’s developer is planning an estimated 50.6-mile transmission line from the island, through parts of Jefferson and Oswego counties, to connect with a large line in Mexico.
Upstate NY Power Corp., the Galloo Island project developer, is not an official electric utility and the state, counties and municipalities may be able to tax the transmission line, Mr. Alexander said. If so, that needs to be accounted for in the JCIDA formula to avoid the corporation paying twice for the same assets.
JCJDC members had questions on the policy.
Board member Donald W. Rutherford asked whether JCIDA is getting developers on board with the policy before it asks taxing jurisdictions to sign on.
Mr. Alexander said JCIDA has been working with the developers, who have brought up other issues such as the Galloo Island transmission line.
Board member Thomas H. Carman said, “Hopefully we will see some reduction in taxes for our local businesses and homeowners with this additional source of revenue and the taxing jurisdictions will not just see it as newfound money to spend on other things.”
He asked what the potential was for investment and payments to the municipalities. Mr. Alexander said the investment from the four proposed projects could eclipse $1 billion, and taxing jurisdictions stand to reap millions.
Mr. Alexander said the developers are anxious to have the policy and other local planning complete.
Developers stand to receive a check from the federal Treasury Department for 30 percent of the cost of a wind farm up front, thanks to the stimulus bill. But that’s only if the wind farms begin construction in 2009 or 2010, according to the American Wind Energy Association.
“And the local taxing jurisdictions recognize that there is little likelihood of an event of as much development in their areas as in the these projects in the near future,” Mr. Alexander said.
Board member James W. Wright said, “There’s always the alternative of them paying taxes. Looking at the cash flow of these projects, that would not seem unreasonable. Then they could move ahead like any other development in the area.”
Wind committee Chairman David J. Converse told the board the committee hopes to have the policy done by the end of the summer.
In other business, the board approved the 2009-10 budget. Total expenses are projected to increase $6,408 from the 2008-09 budget, from $716,011 to $722,419. Revenue is expected to increase $8,000, from $716,840 to $724,840. Net income over the year, beginning Oct. 1, is projected at $2,420.
Changes include a 3 percent increase in salaries, a $21,000 drop in marketing expenses and $30,000 set aside in the marketing budget for a Canadian-focused initiative.
By Nancy Madsen
Times Staff Writer
10 July 2009
Tags: Wind power, Wind energy
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