The Tompkins County Industrial Development Agency is considering tax breaks for a proposed power-generating wind farm in Enfield.
Black Oak Wind Partners is seeking a payment in lieu of taxes agreement with the IDA for a complex of seven wind turbines to be built near Black Oak Road in Enfield on 1,000 leased acres of land.
The proposed agreement before the IDA board would have Black Oak pay $8,300 a year per each megawatt of electricity expected to be generated, which at the planned 11.9 megawatt capacity would come to $98,770 a year.
Without any tax abatements, Black Oak Wind partners would pay an estimated $274,652 a year collectively to Tompkins County, the Town of Enfield, the Ithaca City School District and the Odessa-Montour Central School District, in which one of the wind turbines would stand.
Black Oak estimates the project cost at nearly $40 million. It awaits final approval of an environmental impact statement by the Town of Enfield.
The payment was determined by a negotiating team formed in 2012 after Black Oak asked for a PILOT. Members included representatives from each taxing jurisdiction and the company. The amount was based on agreements on other wind farms in New York.
The term would be 15 years, compared to seven years of the typical abatements package offered by the IDA.
As with other developments seeking tax abatements, the idea is to stimulate development by reducing the upfront tax costs and making them more predictable at the start. A developer gets a tax break for a set period of time, but without the break, taxing jurisdictions may not get any increase in tax base.
“It makes the project financially viable,” project coordinator Marguerite Wells said. “If it were fully taxable we couldn’t build the project.”
But, Wells added, Black Oak has long intended to enter into a payment agreement.
“We see it as a really important way for the wind farm to contribute financially to the community,” Wells said.
A tax law in New York gives a 15-year exemption to tax increases resulting from renewable energy generation, including wind power. But three of the four taxing jurisdictions – the Odessa-Montour school district being the exception – exercised their option to opt out of that exemption. Without a PILOT, Black Oak could face the full tax cost in the localities that opt out.
Black Oak Wind Partners has about 120 investors from a private offering arranged by its board members, almost all of them from Tompkins County, and plans more opportunities to invest in the project, including a public offering, Wells said. One source of investment Black Oak hopes to tap is to sell eligibility for federal renewable-energy tax credits.
The PILOT proposal would have the amount of tax benefit decreased periodically and tied to inflation.
Without the PILOT, Black Oak would pay an estimated $2.6 million in local property taxes over the 15-year period versus $1.4 million under the proposed agreement. The estimates are based on assumptions regarding each localities’ future tax rates and inflation, said Heather Filiberto, vice president and director of economic development services for Tompkins County Area Development, which provides administration for the IDA.