Maple Ridge wind farm, owned by Spanish firm Iberdrola, is still a long way from its 20th year of operation, which will arrive in 2026.
However, its payment-in-lieu-of-taxes agreement expires in 2021. And Avangrid, owned by Iberdrola, has initiated discussions with the county and the towns harboring towers to create a new PILOT that will take over in 2021 and, presumably, carry through another 15 years – to 2036.
Iberdrola, owner of Avangrid in the U.S. which owns the Maple Ridge Wind Farm and is proposing the Mad River facility in Redfield and Worth, has received more than $8 billion in energy subsidies since it began doing business in the United States.
Part of those subsidies comes in the form of federal benefits, part from state subsidies and part from the taxpayers down the road. There is growing awareness among many taxing units that there is very little benefit to them from granting huge commercial wind project developers this third level of subsidy.
Both Jefferson and Oswego counties, for example, have adopted policies that require full taxation even with a PILOT agreement. Legislators recognized the meager benefits the local municipalities receive from commercial wind.
The philosophy behind PILOT agreements is that communities can give up some tax revenue in return for long-term benefits. A manufacturer who requests some tax abatement to move to a community, or expand there, provides benefits including jobs, trade with existing businesses and other positive economic impacts.
The presumption has long been that these tax abatements have a specified cut-off date, after which full taxes will be paid.
Along come the most heavily subsidized developers in the country, and they take for granted that they will be granted PILOTs. And, apparently, they also presume they will get new agreements at the end of their first deal, based on Avangrid’s approach to Lewis County.
There are many reasons, beyond the fundamental reason that PILOTs for wind operations just continue to add to subsidies we’re already paying them, why original PILOTs should never be extended.
■ The legitimate purpose for a tax abatement is to allow a company to get a foothold in a new location, or expand to provide greater local economic benefits. That foothold is long established at the end of 15 years. Extending PILOTs absent any new investment or hiring should never happen.
■ They should be tied to jobs created or saved. Not one proposed or existing commercial wind operation in Northern New York is a creator of jobs of the scope that would be required for the local investment made by tax abatements. Maple Ridge has about 20 employees. Because of the unique, never-to-be-repeated deal Iberdrola struck, this will have cost state taxpayers $121.5 million over 15 years. That gives each job an incentive cost of $6,075,000. That figure is patently absurd.
■ No company has a presumptive right to tax abatement. Yet wind farm developers appear to claim just that. Anne Reynolds, executive director of the Alliance for Clean Energy New York, told the Times last year, “Nearly every operating wind project in NYS has a PILOT, as do most power plants of any type. Many other types of significantly sized development projects in NY have PILOTs too.” The reality is, there is no functional wind operation in the state that doesn’t have a PILOT. And, as noted, the vast majority of PILOT agreements in the state have a local economic component of some significance.
Former Times reporter Steve Virkler wrote in a story announcing the request for a new PILOT: “Local officials for many years have been planning for life after the Empire Zone-fueled PILOT, with the county earmarking much of its wind farm funds for specific projects like the new county courthouse and the planned Jefferson Community College extension campus and Lowville school creating a tax stabilization fund to help avoid significant tax increases when wind revenues decrease.”
On the surface, this sounds like good financial planning. But look closer: It doesn’t even consider that at the end of the initial tax abatement agreement, Maple Ridge should go to FULL taxation. Even under Iberdrola’s sweetheart deal, that should mean the tax revenues won’t go down and should, theoretically, increase.
No taxing entity will see anything other than a sharp decrease if a new PILOT is granted. So the county has nothing to lose by telling Iberdrola/Avangrid, “Thanks but no thanks. Your tax abatement is over.”
Lewis County officials seem to have swallowed the wind industry’s Kool-Aid, believing that a local economic benefit derives from payments in lieu of taxes. Think about THAT: Receiving less than would typically be charged is not an economic benefit.
Especially when the property is fully developed and operational, with 15 years of local subsidy under its belt.
County attorney Joan E. McNichol said earlier that the early renegotiation talks were prompted by Avangrid officials. Of course they were. No one else stands to benefit from their request – although the people of Lewis County stand to lose.
Because the original PILOT was squeezed under a deadline to receive Empire Zone benefits, through which, eventually, all property taxes were paid by the state, Lewis County grew accustomed to what was, in effect, full taxation from a PILOT. That program is long since dead, however, and that deal will never surface again.
Which means reality is about to sharply slap the county and its schools and municipalities. The payments from Maple Ridge will decline, and the payments from proposed future projects – Number Three, Deer River and Copenhagen – will not come close to matching the revenue from the county’s first wind project.
The county should quickly tell Avangrid that its first PILOT will be its last, and that Lewis County won’t continue to subsidize its healthy profits.