LOWVILLE – Legal action was taken by the Copenhagen Wind Farm, LLC against the Jefferson County real property director, the town of Rutland and Champion and their property assessors, and the Copenhagen School District after the company received school tax bills for property that should have been exempt, according to the terms of the project’s PILOT agreement.
The “verified petition and complaint” was filed with the state Supreme Court on Oct. 31, seeking that the properties be ordered removed from the tax rolls and made exempt.
The 80 megawatt wind farm owned by EDF Renewables is almost entirely in the town of Denmark in Lewis County.
The exceptions, and topics of the legal action, are properties in the towns of Rutland and Champion, Jefferson County, hosting “feeder lines” that transfer the power harnessed by the farm’s turbines and pump it into the grid via a substation in Burrville.
At their November board meeting, the IDA’s lawyer Kevin M. McArdle told the board the wind farm filed the suit as a “place holder” when the issue couldn’t be resolved before the statute of limitations would have run out for the complaint on the day it was filed.
In 2016 when the payment in lieu of taxes was negotiated for the Jefferson County properties, the only document signed by all parties was an “outline of understanding,” referenced in the legal complaint, stating that Copenhagen Central School District waived payment from two parcels for the first 15 years of the project and Copenhagen wind would pay full tax value to the towns and county based on an assessed value of 70 percent of the construction costs on the properties.
Those involved in the current issue do not seem to be disputing the outline, its contents or that they all had agreed upon it, however, the role of that document was perceived differently which impacted the actions taken.
According to the complaint document, after the outline was signed the Lewis County IDA “finalized negotiation and ultimately executed straight-lease transaction documents, including a PILOT Agreement.”
Jefferson County Attorney David J. Paulsen said he believed the “outline of understanding,” which is not a standard legal format, was the basis for the PILOT agreement and not a formal agreement unto itself.
Procedural differences, he said, were the main source of the disconnect between the two counties in this situation.
“It just comes down to miscommunication,” Mr. Paulsen said.
In Lewis County, the IDA negotiates and signs on behalf of all of the taxing jurisdictions, including the county, towns and schools.
In Jefferson County, however, each taxing entity signs the final agreement documents themselves.
“General Municipal Law says that when an IDA is acting outside of its jurisdiction like in this case, because the Lewis County IDA was taking action on property in Jefferson County outside of its jurisdiction, the taxing jurisdictions have to agree in writing prior to the project,” Mr. Paulsen said.
He said the county and the towns were waiting for a final PILOT document to sign, which never came.
Mr. McArdle told the IDA board, however, that the signed PILOT document was sent to all four entities, which Mr. Paulsen disputed.
Jefferson County shouldn’t have given the properties tax parcel numbers and put them on the utility rolls, making them taxable, because the properties were conveyed to the IDA making them automatically tax exempt, “so they made a big mistake there,” Mr. McArdle said,
The wind farm and IDA lawyers contacted the towns’ assessors as well as the Jefferson County Real Property Director Roxanne M. Burns, and submitted an application to remove the properties from the tax rolls, however, the application has not yet been approved.
Ms. Burns said the wind company didn’t provide the feeder line construction costs that are to be basis of the assessed value for both properties.
That information is needed to process the application and to enforce the PILOT agreement, she said. However, she handed it all over to Mr. Paulsen “once there was a threat of a lawsuit from the wind company’s attorney.”
While Mr. Paulsen said he doesn’t believe the matter will go to court for resolution, he also said Copenhagen Wind has to supply the information needed to move forward.
Even if the PILOT agreement gets back on track and the properties are removed from the tax rolls, the Copenhagen School District will have a $93,000 hole in its budget because the properties were part of the 2019 tax levy upon which the school’s 2019-2020 budget was calculated.
It is an ironic twist being that it was the school’s Superintendant Scott N. Connell’s offer to waive transmission payments for the power line PILOT that kept the wind project from tanking in 2016.
It’s unclear who, if anyone, will make the school district’s budget whole once this issue is resolved.
“We’ll just keep moving forward. It’s in the hands of the lawyers now,” Mr. Connell said.