Cohocton Wind Watch: Wind farm revenue may take major hit
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Sunday, September 27, 2009

Wind farm revenue may take major hit

LOWVILLE — While hopeful that the Maple Ridge Wind Farm will retain Empire Zone benefits, local leaders are preparing for the worst-case scenario: a $6.3 million drop in combined wind-farm revenue for area governments.

While Lewis County projected $2.16 million from the wind farm in this year's budget, the proposed 2010 budget likely will include only about $600,000, the amount the county would receive if Empire Zone benefits are revoked, County Manager David H. Pendergast said. That's nearly a $1.6 million reduction.

"I have no other options at this time," Mr. Pendergast said. "It's the only prudent thing to do."

Based on a 15-year payment-in-lieu-of-taxes plan, the wind farm in December made $8.6 million in payments to local taxing jurisdictions. Without Empire Zone benefits, taxing jurisdictions would receive a fall-back amount of about $2.3 million this year, according to county projections.

Wind-farm payments are divided among the county, the towns of Martinsburg, Harrisburg, Lowville and Watson, and the Lowville, South Lewis and Copenhagen central school districts through a revenue-sharing agreement based on 2004 and 2005 tax rates.

Since most of the wind farm's 195 turbines are in the county's Empire Zone, about $7 million of last year's payment was covered by the state tax-incentive program.

However, Empire State Development Corp. in May chose to "decertify" numerous businesses, including Flat Rock Wind Power LLC, the name under which Maple Ridge Wind Farm was incorporated. Iberdrola Renewables, the Spanish company that operates Maple Ridge, is appealing that decision.

Companies were tapped for decertification either because they didn't match dollar-for-dollar wages and capital investments with the tax breaks they received or they were deemed "shirt-changers," companies reincorporated as different entities that claimed they created jobs when they actually just transferred employees from one entity to the other.

"We believe they were unjustifiably swept under shirt-changing," County Attorney Richard J. Graham said.

While Flat Rock Wind Power doesn't seem to fit that shirt-changer definition, officials said it was apparently lumped into the category based on the company's response to a question in its 2006 financial report to Empire State Development, Mr. Graham said.

The company, in its appeal, cannot challenge the shirt-changer designation, but must instead show there are "extraordinary circumstances" that would warrant continued Empire Zone designation, he said. Those circumstances could include the wind farm's nearly $500 million capital investment, its impact on local municipal budgets, the reliance on the Empire Zone program for its development and the number of jobs created, Mr. Graham said. While the wind farm can claim only a handful of employees on its Empire State Development reports, it also has 60 to 100 people working here through contracts with other companies such as turbine manufacturer Vestas, he said.

The Maple Ridge Wind Farm project was made possible only after the state Legislature and governor approved legislation allowing wind farms to enter PILOT agreements, and officials from Empire State Development and the state Department of Taxation and Finance signed off on it, Mr. Graham said.

"All of them were saying, 'We want this program to come to New York state and be supported by the Empire Zone program,'" he said.

The state's plan to decertify companies retroactive to the 2008 tax year is particularly troubling, Mr. Graham said.

"Payments have been made," he said. "Companies have relied on it. Across the state, that's a huge problem."

"We're hopeful that the state will make the right decision," Mr. Pendergast said. "And, in this case, the right decision is to recertify Maple Ridge Phase I."

A schedule for handling the Empire Zone decertification appeals won't be set until a final list of companies is compiled, possibly sometime next week, Empire State Development spokeswoman Katie Krawczyk said via e-mail.

As of Friday, 546 companies — including 375 alleged shirt-changers — have been decertified, and 363 of them have filed appeals.

Like the county, Lowville school officials said they included only the lesser fall-back amount of $1 million in their 2009-10 budget. The district had received about $3.8 million from the wind-farm PILOT.

Martinsburg Town Supervisor Terry J. Thisse said he is developing two proposed budgets: one anticipating another $1.1 million wind payment and the other using the $270,000 fall-back figure.

While the town's windfall has fostered increased spending on items such as equipment, recreational development and support for local fire departments, reserve funds could be used to avoid heavy spending cuts or tax increases for a few years, Mr. Thisse said.

However, town officials have been forced to scrap — at least temporarily — plans to build a new $2.4 million town office and garage, since it would not be feasible without Empire Zone funding, he said.

"It's frustrating," Mr. Thisse said. "We worked so hard to get to where we were."

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