By Rob Montana – Staff Writer
It’s not often a business plan is designed to pay full taxes and send most of a corporation’s money to the community it does business in.
That is, however, what Empire State Wind Energy LLC intends to do.
Keith Pitman, president and chief executive officer of the newly-formed Oneida-based corporation, said he is leading Rochester billionaire B. Thomas Golisano’s vision for wind development in New York. The engineer joined Golisano’s mission to bring more benefit to communities preparing for projects by commercial wind developers.
“We’re looking to do business in New York state offering a sort of alternative to traditional wind power developers,” Pitman said. “We’re looking to eliminate the foreign and out-of-state investment people to make it a truly New York state-based project.
“Tom’s willing to risk the money, and the entire proceeds will go right back into the community the project is in through a variety of mechanisms,” he added. “Our position is not to maximize our pocketbooks.”
That means Empire State Wind Energy will not ask for Payments in Lieu of Taxes, Pitman said, and also offer the communities the opportunity to own the projects once they are up and running.
“We want the full benefit to go to the host community,” he said. “This is an opportunity for them to better themselves.”
The corporation has no set projects it is doing, but has begun preliminary discussion and feasibility work for several municipalities. Things are still very much in a talking stage at this point, Pitman said.
“We have not actually moved forward into an active development phase yet,” he said. “I suspect sometime in the fall we will have several projects in the pipeline.”
Golisano had shown interest in being involved in a project in the Town of Hartsville, which already has been in talks with Airtricity for a wind farm in the Steuben County community. A project already slated for an area won’t preclude Empire State from considering a project there, Pitman said.
“What we’re hoping is people recognize the fundamental difference between our project and a conventional one,” he said. “For instance, some of the projects have not gotten to the point of signing a PILOT agreement.
“When they see the economics of what we’re proposing versus the traditional company, we’re hopeful that will alert people to the types of deals they should be out there looking for,” Pitman added. “Companies expect to have several hundred million dollar projects, but are only able to offer a few hundred thousand to the communities. We’re hoping our project will offer a better way to go, because we don’t have to worry about the rate of return to satisfy investors.”
Most communities will see about 5 percent of the money invested in a project come back to the local coffers, he said. For example, if a commercial developer invests $100 million in a project, a 10-percent rate of return would be $10 million, Pitman said.
“That would put about a half-million into a community with a commercial project; if we clear $10 million, we give $10 million to the community,” he said. “Some communities say a half-million is a lot, but ask the developers how much they expect to walk out of it with.
“People do not invest $100 million with the expectation they will make a 4- to 5-percent return,” Pitman added. “If that were the case, why wouldn’t they just go across the street and put the money in the bank?”
He said the corporation would have to pay its expenses first, but all profit would be turned over to the communities. In addition to paying taxes, money could be infused into the host municipality a variety of ways, Pitman said, such as through a power co-op.
“There also would be an agreement in place for an option – if they felt it was in their best interest – where communities could take ownership of the projects,” he said. “Obviously there would be a price tag associated with that, something in the fair market value.”
People questioning Golisano’s desire to put up his money upfront – without a guarantee of getting it back – should look at his contribution to Western New York through his charitable donations and purchase of the Buffalo Sabres, which also came with no guarantee of getting his money back, Pitman said.
“This is a start-up company, and Tom is one of the principals. Obviously, he’s the guy who’s making it possible,” Pitman said. “There’s no guarantee we’ll ever have a nickel of income, and if we don’t develop a project everything is a total loss. Until we do, we have no source of income.
“We’re in the mode of spending money to develop projects right now, and Tom is definitely the main driver behind that,” he added. “He’s willing to make that risk to better upstate New York. Why would he do that? I think people who follow hockey around here can understand that very well.”