Galloo Wind Farm PILOT approved

8-7 VOTE: About 200 pack County Office Building for meeting

The proposed payment-in-lieu-of-taxes agreement for Galloo Island Wind Farm passed the Jefferson County Board of Legislators on an 8-7 vote Tuesday night.

The final vote on the PILOT will come Thursday morning from the Jefferson County Industrial Development Agency board of directors. After that, the developer will be free to seek financing for the project with a guaranteed reduced amount for property taxes.

The PILOT is worth about $54 million for the county, town of Hounsfield and Sackets Harbor Central School District.

The close vote by the county board came after more than an hour of public comment on Galloo Island Wind Farm and some last-minute agreements for more community benefits from the project.

"We all took it very seriously," Chairman Kenneth D. Blankenbush told the other legislators at the close of Tuesday's meeting. "Sometimes we were attacked by the public, the media — and the blogs especially."

About 200 people showed up for the meeting, packing the board's chambers and sitting on the first floor of the historic courthouse and in the Department of Motor Vehicles next door. Those in overflow watched the proceedings on a live video feed.

Robert E. Ashodian, Henderson Harbor, asked legislators to wait until an economic impact study is completed.

"Why put at risk the reason for why people are drawn to this area?" he asked. "Why put at risk the basis for our current economy?"

Mr. Ashodian, a leader in the Coalition for the Preservation of the Golden Crescent and Thousand Islands Region, said tourism and waterfront landowners make up a large portion of the tax and business sectors.

Suzann J. Cornell, Chaumont, was one of several members of Voters for Wind who urged the board to approve the PILOT.

"I believe we can no longer ignore our future," she said. "We use more electricity and we need to find more environmentally friendly ways to produce it."

The county was the last of the three taxing jurisdictions to agree to allow the PILOT to vary from a standard PILOT, which is established by state law.

The Galloo Island PILOT will run 20 years instead of the standard 15. And normally, proceeds are based on proportional distribution of property taxes among the jurisdictions. In the proposed PILOT, Sackets Harbor Central School District would receive 50 percent, the county would receive 35 percent and the town of Hounsfield would receive 15 percent. That represents less than the school's proportionate share, and more than the town's.

The PILOT payments from developer Upstate NY Power Corp. would begin at $2.14 million, increasing by 2.5 percent each year, plus supplemental payments if higher electricity costs prevail. That's also different from a standard PILOT, where businesses pay a portion of what their full taxes would be.

"Your PILOT is extremely fair," said Kevin R. McAuliffe, the county's counsel on wind development negotiations from Hiscock & Barclay, Syracuse. "For the size of this project, it's at the top end of what's really out there. I don't think money was left on the table."

Despite those assurances, the board remained tightly divided on the vote.

Legislator Michael J. Docteur, R-Cape Vincent, opposed the PILOT because he wants to see towns receiving a higher percentage of the proceeds.

"The precedent-setting distribution rate in this PILOT won't complement well with the three projects coming in my district," he said. "The PILOT should allow local government to pay down property tax — all of it, if possible."

Legislator Barry M. Ormsby, R-Belleville, said the PILOT has been improved since the board originally considered it.

"I do feel the IDA has done the job we charged them with months ago," he said. "Today this is a tool of public policy we use to compete for businesses and jobs."

Legislator Carolyn D. Fitzpatrick, R-Watertown, said she had received 698 phone calls and e-mails on the vote. But residents in her district overwhelmingly opposed the PILOT, by a ratio of 4:1.

"I'm not against the wind PILOTs but I am in favor of the people who support me," she said.

The board also passed two resolutions that would protect the county in case the project shut down. The first calls for an agreement with JCIDA that the agency will not vacate the PILOT to the property for a year. That keeps the county from paying full property taxes on the wind farm to the town and school district if the developer pulls out.

The second resolution allows Mr. Blankenbush to authorize a decommissioning agreement with the developer and the town of Hounsfield. The decommissioning bond would increase as required by the county to match current costs.

At 8 a.m. Thursday at 800 Starbuck Ave., JCIDA board members will discuss the PILOT, a sale-leaseback agreement and a project development agreement. Passing it will authorize JCIDA staff to finalize the negotiations and agreement.

A sale-leaseback agreement would eliminate mortgage recording and sales tax for the $500 million investment on the island. That represents a savings of about $22.7 million, according to the developer's Oct. 6 application to JCIDA. But the amount in sales tax could be less because the state Department of Taxation and Finance has ruled for other wind farms that the entire turbine structure is exempt.

"The language is still to be massaged and there are questions still to be answered," JCIDA Chief Executive Officer Donald C. Alexander said.