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Schools opt out of tax exempt status of wind farms

The Westfield and Ripley school districts, as well as some municipalities such as the town of Portland, have chosen to opt out of the tax exempt status wind energy developers are eligible to receive.

“Wind farms fall under some tax exemption which taxing jurisdictions can reject (opt out of),” Peter Gross of Babcock and Brown explained. “This requires that we get a PILOT (payment in lieu of taxes) agreement with the county, otherwise our assets would be assessed at their full value, resulting in a tax payment that would kill the project economics.

“The PILOT agreements provide for lower payments instead of taxes. Those payments are then split between the town, county, and school districts in the project area. That is the route that we intend on pursuing and that most others have pursued as well.”

The Westfield and Ripley Boards of Education recently passed resolutions providing that “no exemption provided under 487 of the New York State real property tax law shall be applicable within this jurisdiction.”

“As far as we know, most districts and municipalities are opting out to ensure we receive tax revenue from these properties as we always have even if they become wind farms,” said Ripley School Board President Robert Bentley.

According to Gross, with the PILOT arrangement, the landowner does not have any tax responsibility due to the wind farm assets.

“We were aware that all taxing jurisdiction had or would be opting-out,” Gross continued. “We are not aware of any action we can take to keep the tax exemption so we intend on pursuing the PILOT route. I have already been in very preliminary discussion with the Chautauqua county industrial development agency (IDA) about the PILOT agreement and they support this process for us and other wind developers in the county (those being Horizon, Noble, and First Wind/UPC).”

Babcock and Brown has previously stated at public meetings that they would pursue the PILOT agreement.

By Shirley West

Observer

21 July 2008