Jefferson County taxpayers could be left paying town and school district taxes for a wind farm if the developer fails to pay the project taxes, warns Paul J. Warneck, Jefferson County director of real property services.
County officials are worried that taxpayers will have limited recourse if a wind farm leasing land for its turbines does not make its tax or payment-in-lieu-of-taxes payments. Only projects where the turbines would be on land owned by the developer, such as Galloo Island Wind Farm, would provide some security to the county.
"If we needed to sell the project, we could sell it with the rights of way and wires, which have value," Mr. Warneck said.
Such protection will not be part of a uniform tax-exempt policy (UTEP), but would be considered as part of individual project development agreements (PDA) with taxing jurisdictions and developers, said Donald C. Alexander, Jefferson County Industrial Development Agency's chief executive officer.
"If it does become more of a concern, it will be mapped out in the PDA," he said. "The policy is a fairly simple, overarching document."
The county's concern more likely would surface if another wind developer submitted an application for a PILOT.
Now, leases likely would be recorded as suffix parcels without requiring a subdivision. But with that, the county could put a tax lien only on the turbine itself, Mr. Warneck said.
Each town can choose to have the leased properties put on the tax roll differently, he said.
"There is huge exposure to the county on any of these large projects," he said.
Under PILOT agreements, the agency takes title to the property. If the wind farm operator ceases operation and doesn't pay the agency the PILOT, the agency returns title to the developer.
That pushes the taxes on the property back to full taxation.
"During the next cycle, the county has to make the school and the town whole if the company doesn't pay taxes," Mr. Warneck said.
With the protection under the Galloo Island project, the county is responsible for paying Hounsfield and Sackets Harbor Central School District their shares of the $2.14 million PILOT payments. Without that, the county would be responsible for those jurisdiction's shares of about $7.7 million, which is what the project would pay under full taxation, according to earlier investigations by the Times.
The smallest project in the county would have full taxation at about $1.9 million.
In addition, the county's representative on the agency board wants to see that safeguards included on the Galloo Island Wind Farm also are secured for future projects through the policy.
In February, the county Board of Legislators agreed to a payment-in-lieu-of-taxes agreement for Galloo Island Wind Farm that serves as the starting point for the policy. Two separate resolutions also afforded the county protection if the owner abandons the project.
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 makes the county a party to 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.
"Those issues are not found in PILOT agreements," Mr. Alexander said. "They are found in PDAs — project development agreements — that go into thousands of details that support PILOTs and everything else we do."
But county Legislator Kent D. Burto, R-Carthage, an agency board member, said, "It really should be part of the UTEP."
Mr. Alexander said he hadn't heard any complaints from the taxing jurisdictions on the Galloo Island PILOT. Mr. Burto said none of the other legislators has talked to him about additions to the policy.
JCIDA's governance committee will meet at 8 a.m. today in the agency's conference room, 800 Starbuck Ave., to discuss the uniform policy.
The agency's staff, taxing jurisdictions and developers have some discretion in working out the details, which are approved by boards at the taxing jurisdictions and the agency.
"We have a pretty good relationship with the taxing jurisdictions," Mr. Alexander said. "When something requires action, we ask them for it. Without that relationship, we couldn't operate."
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