COOS COUNTY – The state Supreme Court will hear oral arguments on Feb. 20 in the suit filed by the Coos County Commissioners over the Department of Revenue Administration 2012 valuation of Granite Reliable Power’s wind farm components in Millsfield and Dixville.
The commissioners are asking the court to rule the N.H. Board of Tax and Land Appeals erred last July when it upheld the DRA’s equalized valuations for the two unincorporated places based on a $228 million appraisal of the wind farm. The commissioners argue the equalized valuations should have been based on the $113 million wind farm appraisal used in the Payment in Lieu of Taxes (PILOT) agreement reached between the commissioners and Granite Reliable Power.
The city of Berlin has filed an amicus curiae (friend of the court) brief arguing the BTLA decision undermines other PILOT agreements and jeopardizes the future construction of renewable energy facilities in the state. The city has a PILOT agreement with Cate Street Capital for the Burgess BioPower biomass plant.
Coos County Commissioners brief
In their brief, prepared by Attorneys Jonathan Frizzell and Sandra Cabrera, the commissioners argue Gov. John Lynch signed a 2006 bill allowing municipalities to enter into PILOT agreements with renewable generation facilities as a way to encourage increased production of renewable power. The following year, the commissioners entered into discussions with Granite Reliable Power for a PILOT agreement for the company’s proposed 95-megawatt wind farm. The commissioners met with DRA officials in December 2007 to seek help in assessing the wind farm. Then County Administrator Sue Collins said she estimated the projected value of the wind farm at $150 million. According to minutes of the meeting, DRA appraiser Scott Dickman said he thought the value of the wind farm would be closer to $113 million.
As a direct result of the meeting, the brief said the commissioners entered into a PILOT agreement using $113 million as the value of the wind farm. The ten year agreement, which can be renewed for a second ten years, calls for GRP to pay $495,000 a year based on a payment of $5,000 per megawatt of capacity.
In 2012, the wind farm went into operation and DRA Appraiser Scott Dickman valued it at $228.9 million for the state’s Utility Property Tax. The DRA used that appraisal figure in setting the equalization valuations for Millsfield and Dixville. As a result property taxes for the 25 residents of Millsfield and the sole resident of Dixville have nearly doubled. In the past, residents of the unincorporated places have paid little or no property taxes because timber tax revenues have covered the few expenses in the unincorporated places. Based on the DRA appraisal, Millsfield’s share of the 2013 county tax, however, increased from $32,138 to $876,945. Dixville’s share of the county tax increased from $83,503 to $264,788. The commissioners point out they have no ability to collect higher payments from the wind farm because of the PILOT.
The commissioners argue DRA should not be allowed to increase the value of the wind farm and should be required to use the $113 million figure provided at the December 207 meeting. The brief said DRA officials did not advise the commissioners to obtain an independent appraisal. In addition, the brief said Collins spoke to DRA officials several times after the December meeting and was advised that DRA would “consider the PILOT value as evidence of market value”.
The commissioners argue the DRA appraisal of the wind farm is higher than the “true and market value” and the $113 million figure used by the county is closer. The suit notes the county was refused a copy of DRA’s appraisal report because it was deemed confidential. Furthermore, the county said DRA appraiser Scott Dickman was not permitted to testify about his appraisal methods. The commissioners also charge the BTLA hearing was unfair because the county was not allowed to call appraiser Brian Fogg as an expert witness because his appearance was not disclosed on a timely basis.
Berlin’s amicus curiae brief
City Attorney Chris Boldt said the city could be “unjustly disadvantaged” if DRA ignores the valuation ascribed to the Burgess BioPower biomass plant in the city’s PILOT with Cate Street Capital. Unlike the county commissioners, the city did have an independent appraisal of the facility. But if DRA sets a higher value for the plant, the city said property owners could face an additional tax burden.
The city argues the BTLA decision undermines the legislative intent to promote the growth and use of renewable energy within the state. The city said the decision harms municipalities that have already entered into PILOT agreements. But creating uncertainty over how PILOTs will be handled by the DRA, the city said the BTLA decision deters municipalities “from entering into PILOT agreements in the future because municipalities are placed in the untenable position of potentially increasing resident tax rates”. As a result, city said the decision jeopardizes the construction of renewable energy facilities, which have to arrange financing before breaking ground.
The city said PILOT agreements also help eliminate future litigation over tax assessments of renewable energy facilities. Such litigation can be lengthy and complex and the city notes expensive for both taxpayers and ratepayers.
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