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Wind developer asks Freedom for abatement, revaluation  

Credit:  By Ethan Andrews, Republican Journal, waldo.villagesoup.com 31 January 2011 ~~

Freedom – Two years after the wind turbines on Beaver Ridge in Freedom started turning, the often-controversial development is raising objections again – this time from the developer.

Beaver Ridge Wind – a subsidiary of Quincy, Mass.,-based Patriot Renewables and owner of the three-turbine wind power facility in Freedom – has asked for an abatement and revaluation of the wind farm after town officials increased the value of the development by 10 percent in 2010.

According to Freedom Selectwoman Carol Richardson, the wind farm was assessed at $9.7 million in 2009 based on numbers provided by BRW. Richardson said the town used the company’s figures because there was not enough time for the town to make an independent assessment at the time, though she said she favored doing so.

In 2010, the town raised the assessment to $10.8 million based on a range of figures provided by the state from the building costs company Marshall & Swift, Richardson said. BRW paid the full tax amount, but in a letter addressed to selectmen, BRW representative Todd Presson expressed confusion about the hike and requested an abatement.

“The property value of wind turbines decreases as they age, so this is not what we were expecting,” he wrote, requesting a conversation with selectmen about reducing the valuation.

In a subsequent letter, BRW submitted a rough breakdown of building costs, including lines for equipment, construction, financing and “other development costs.” The bottom line was $9.4 million. If the abatement were granted, Presson wrote, BRW would donate the difference between the amount paid in taxes on the original assessment and the amount due after abatement – roughly $16,000 – to the town.

“As we discussed, we are sympathetic to the town’s anticipated budget shortfalls and economic challenges in these tough times…” he wrote.

Missing from the figures provided by BRW was any verifying documentation regarding the cost of the turbines, which Presson said the company is prohibited from disclosing due to a confidentiality agreement with the manufacturer.

“You don’t assess anybody on what [they say] something costs them to build,” said Richardson. “Sometimes you get out of it cheaper, sometimes we’re cheaper than you are, but you have to have a formula.”

Richardson said the numbers from Marshall & Swift for comparable turbines ranged between $2.5 million and $5.5 million apiece. She split the difference, coming up with a total of $12 million for the three-turbine development.

Freedom currently values properties at 90 percent of the state assessment, bringing the assessment for the Beaver Ridge Development to $10.8 million.

According to Mike Rogers of the Maine Revenue Service, who provided the Marshal & Swift figures to Freedom selectmen, the numbers are meant strictly as guidelines. The valuation of any property ultimately falls on the shoulders of selectmen, he said.

“I did give them some info to use as guidelines, but we did not prescribe any values,” he said. “There’s not enough information, I mean, there’s a lot of information online, except for the cost of the most costly parts of them, and that’s the turbines. And they [the developers] keep that very close to the vest.”

Cost is one of three ways to assess an industrial development, Rogers said. Income and market value are the other two. In the case of industrial wind turbine developments – which generate income only when the wind blows, differ in location and equipment specifications and as a relatively new industry aren’t often for sale – cost is often the only option available to assessors, Rogers said.

Using the income approach, Rogers said, an assessor would reasonably want four to five years of data to average highs and lows. The Beaver Ridge turbines have been operating for two years, earning $1.5 million in 2009 and $1.7 million in 2010, according to disclosures submitted to the Federal Energy Regulatory Commission.

The market value approach, on the other hand, is almost useless with wind farms, Rogers said, because there just aren’t many on the market.

“You may be able to find one in Michigan, one out West and one in Canada, but they’re all unique,” he said.

When Beaver Ridge Wind, then a subsidiary of Competitive Energy Services of Portland, first proposed the wind development to the town, representatives estimated construction costs from $10 to $12 million. The higher number came with the initial proposal, but as the project was debated among townspeople and officials from the company, the number that consistently came up was $10 million.

The company promised residents the added value on the books would lower residential tax rates by 27 percent. And for the past two years, the town has benefited, Richardson said, but not in the way that many might have imagined.

“It did happen, although people didn’t see it,” she said. “Our mil rate went down but it didn’t go down because the spending went up, and it’s not the turbines’ fault.”

In 2009, Richardson estimated the turbines contributed to a 22 percent drop in the mil rate, but much of the drop was eaten up by spending increases, and final figures put the mil rate at $15.5 (per $1,000 of property value), down from $17 the previous year.

Later that year, the town took another hit when, at the town’s request, Rogers reviewed Freedom’s books and found errors that showed the mil rate had been set too low, leaving a budget gap.

Whatever financial benefits Freedom residents may have received from the turbines during the past two years will likely disappear when the Maine Department of Education’s Essential Programs and Services formula takes the added value into account.

According to Department of Education spokesman David Connerty-Marin, the EPS formula is currently based on local valuations from 2008. When Freedom’s increased value registers next year (2009 was the first full year of operation for the turbine development), the town will be forced to foot a larger portion of the budget for the 11-town school district to which Freedom belongs, Regional School Unit 3.

In the meantime, Freedom town officials have asked Monroe Selectwoman Jackie Robbins, who does assessments for several towns in Waldo County, to give an independent appraisal of the value of the turbines.

Source:  By Ethan Andrews, Republican Journal, waldo.villagesoup.com 31 January 2011

This article is the work of the source indicated. Any opinions expressed in it are not necessarily those of National Wind Watch.

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