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City sees drop in county tax as a result of wind farm valuation

BERLIN – The city’s share of the 2013 Coos County tax bill will drop by $129,230 because of the higher valuations assessed to the unincorporated places of Millsfield and Dixville.
Coos County is engaged in a legal battle over the N.H. Department of Revenue Administration’s appraisal of the Granite Reliable Power’s wind farm in the two unincorporated places. DRA appraised the wind farm last year at $228 million. Coos County officials argue the county was told back in 2007 when it negotiated a payment in lieu of taxes agreement with GRP that the appraisal would be $113 million.
The higher valuation for the wind park has resulted in the two unincorporated places picking up a higher percentage of the county’s overall tax burden. The result is many other communities have seen decreases because Dixville and Millsfield are paying more.
When the council approved the city’s fiscal 2014 budget in June, the city anticipated its share of the 2013 county tax burden would increase $20,000 to $1,685,902. But as a result of the N.H. Board of Tax and Land Appeal decision upholding the DRA valuation of the wind park, the city will actually pay $1,555,772 according to the DRA’s 2013 Coos County apportionment.
Millsfield’s share of the county tax, however, will increase by $844,807 – from $32,138 to $876,945. Millsfield will pay just over six percent of the county tax.
Dixville’s share of the county tax increases from just over half a percent to 1.8 percent or from $83,503 to $264,788.
Coos County officials have pledged to protect taxpayers in Millsfield and Dixville from a major tax increase this year by using the $495,000 PILOT payment and $334,365 in land use change tax revenues to cover their tax liability. Traditionally taxpayers in the county’s unincorporated places pay little or no property taxes because revenues cover expenses.
The wind farm tax dispute is now before the N.H. Supreme Court. But the county is working on legislation to address the issue long-term.
State Senator Jeff Woodburn (D-Dalton) said the issue is complicated because there are other PILOT agreements in the state for wind and biomass projects. He said it appears the solution for Millsfield and Dixville is for the legislature to pass a bill giving the county commissioners the authority to abate taxes in the unincorporated places. He said select boards have that authority for towns. The commissioners could then deal with taxes in Millsfield and Dixville through the abatement process.
Berlin City Manager Jim Wheeler suggested Berlin use some of the $129,230 surplus in the county tax line item to cover legal expenses. He said the city has already $25,000 over the $60,000 it budgeted for legal expenses. He said most of the legal fees have gone to defend the city in its tax dispute with Great Lakes Hydro over the valuation of the Canadian company’s hydro facilities in Berlin. He said that case is expected to go to trial next spring.
Councilor Paula Benski asked about using some of the surplus to reduce taxes.
Mayor Paul Grenier said he would rather use the money to cover legal fees and retain the rest because he believes the reduction is a one-time event and next year the city’s tax payment will increase.
“There’s going to be a legislative fix,” he said.
To avoid a whipsaw effect in the tax rate, Grenier said recommended reserving the money until the end of the fiscal year.
“I want to protect the taxpayers next year,” he said.
Grenier said Berlin is just one of many communities across the state battling with large utility owners over valuation of such assets. He said it’s a tough battle but one that “communities have to sit and fight”.