Thursday, November 12, 2009

One ugly model

At a public hearing on the Galloo Island Wind Farm payment in lieu of taxes deal, no one from the town of Hounsfield raised a voice in support of or in opposition to a plan that will bring $2.14 million annually to the county, town, Sackets Harbor Central School and Jefferson County IDA. You have to wonder why.

The deal, after all, will give the wind farm an 85 percent break on taxes that would be due without the PILOT. On an assessment of $400 million (the project will cost at least $500 million to build), from a total property tax bill of $14.52 million, the school district alone would receive $8.9 million dollars a year, at the current tax rate of $22.28 per thousand. The district's budget for this school year is $7,900,835. Hmmm. Is someone giving away the farm?

Likewise, the county would receive $4.59 million and the town $1.02 million if full taxes were paid. Even if the assessment were cut in half, to $200 million, the school district would get almost $4.5 million, far more than its current levy; the county would get $2.25 million; and the town $500,000.

Then, of course, if you're starting to ponder the full cost of corporate welfare, you can add this into your philosophical equation: by being certified by the IDA, which will take title to the wind farm for the duration of the PILOT in order to grant these benefits, the developers will avoid paying almost $23 million in sales and mortgage taxes. Almost half of that would have gone to the town and county.

And don't forget the 2.5 cents per kilowatt hour the federal government will subsidize the project, in the form of federal production tax credits and an accelerated depreciation schedule from the IRS that will allow a 40 percent depreciation in the first year, and full depreciation over five years.

Add it all up, and you can see just how much this "private sector" developer will rely on federal, state and local taxpayers to permit him to make profits. Especially galling is the extent to which local officials, especially the IDA, are doling out hard-won tax dollars to bring, at best, a handful of jobs to the region, and a short-lived flurry of construction money. And with the employees of this project likely living on an island six miles out in Lake Ontario, it's not as though they're going to be pouring their wages back into Sackets Harbor or Dexter or Watertown.

Most PILOT agreements give a graduated tax break that never exceeds 75 percent and which drops over time to zero. This agreement keeps the 85 percent break throughout its lifetime. And there is no host community component to this; at least if Hounsfield were getting a landfill, it would receive compensation unique to the siting. As it is, the town is going to be the red-headed stepchild of this agreement. And Jefferson County won't be far ahead of the town.

If this is the model for future wind farms in Jefferson County, we're in big, big trouble. If the marketplace plus controlled federal subsidies can't sustain wind development, it should not be the obligation of local and state taxpayers to foot the bill for the developers' profit margins. Next time there's a public hearing on a wind farm PILOT agreement, it wouldn't hurt if those of you who think this model is broken and should be tossed out would show up and speak your mind.

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