Jefferson County’s counsel on negotiations with wind farm developers told the Board of Legislators that a payment-in-lieu-of-taxes agreement through the Industrial Development Agency would be preferable to a host-community agreement for the disbursement of any funds from the developers.
“Host-community payments don’t have any statutory basis,” attorney Kevin R. McAuliffe said during a presentation to legislators Tuesday. “Aren’t we better off going with an agreement that is enforceable and has meaningful economic expectations?”
Mr. McAuliffe, Syracuse, was retained in November after helping Lewis County with its PILOT negotiations with wind power developers. First, he reminded legislators that no wind farms would develop without granting tax breaks to the developers.
To create a standard policy, Mr. McAuliffe said, bringing together the county, towns and school districts involved in wind power projects would yield the fairest consideration for each.
“My recommendation is somehow to start the dialogue with everyone at the table,” he said. “Without everyone in agreement, development won’t occur.”
The community would have to consider its needs and cost in any project, as well as what it wants back from the developer and how that would be distributed.
“I would wait for the distribution of money until last,” he said.
Mr. McAuliffe explained to legislators and about 20 members of the public that a PILOT agreement through the Industrial Development Agency would be the best solution. He said that, unlike PILOT agreements, host community agreements are vulnerable to being broken since they have no basis in law.
“A host-community agreement could be challenged in the future and then the community has lost that money,” Mr. McAuliffe said.
PPM Energy, which is proposing the Horse Creek Wind Farm in the towns of Clayton and Orleans, has offered separate PILOT and host community agreements. Clayton and Orleans would share the host community agreement.
And Mr. McAuliffe ruled out another PILOT option – putting wind farms on the tax-exempt roll. Under the law for that option, the property would become fully taxable again in 15 years. Mr. McAuliffe said that inflates the wealth index for a school district, harming its ability to get state aid.
Instead, he promoted negotiating one PILOT agreement through the Industrial Development Agency for all the involved taxing jurisdictions. Understanding that there is a limited amount of money available, the best approach is “with everyone at the table,” he said.
Mr. McAuliffe also encouraged legislators not to allow “suffix” parcels. They are pieces of property on a tax map that are not tied to any legal documents. If developers use them for leasing property from local landowners but do not pay property taxes, the legal landowner would be responsible for the taxes on the turbine and the small piece of property where it sits.
That would put the landowner and the county in peril. The county is responsible for paying whatever expected taxes are not collected by defaults in towns and school districts. “The county could find itself in a difficult position,” Mr. McAuliffe said.
Instead, he said landowners should subdivide parcels, in effect selling the parcels to themselves, but have the tax bill sent to the wind farm company. That would give the county a legal trail for tax liens, and the county would foreclose only on the turbine, not the local landowner.
By Nancy Madsen
Times Staff Writer
6 February 2008
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