RUMFORD — Should Boston-based wind developer First Wind LLC overcome the hurdles of whatever new town law evolves to regulate such development here, residents may or may not realize property tax relief.
It depends on several variables, especially if the developer asks for a tax shelter or tax increment financing, Town Manager Carlo Puiia said Tuesday afternoon.
First Wind has tentatively proposed a $65 million project to build 12 wind turbines on Black Mountain and North and South Twin mountains, and another five turbines in Roxbury.
But that doesn't automatically mean lower taxes.
“Well, not necessarily, and this is the case that people have to understand is that nobody is going to get so much as free electricity or so much off their rates,” Puiia said.
“If there was a TIF, there's no direct immediate relief.”
That means, based on Puiia's explanation, that when First Wind says it's bringing in a $65 million project, and that the town's tax base will increase, that's not necessarily true if it asks for a tax break.
“That's what is maybe confusing to the citizens that hear we're going to add $65 million to the valuation,” Puiia said. “However, we're not going to collect taxes based on that figure, because a TIF is considered inclusive of your valuation.
“People may be expecting that they will see a reduction on their tax bill next year if the project were to be built in time for taxes to be committed, but that would not be the case with a TIF,” he said.
That doesn't mean TIF money wouldn't benefit Rumford.
Such tax breaks can be used to attract and encourage capital investment within a community, or to provide new job training and opportunities, or to improve and broaden the tax base, or to provide environmental improvements.
“So, it has to be specified in the plan what you're going to do with TIF money,” Puiia said and that must be approved by voters.
At the River Valley Growth Council meeting on Oct. 6, a First Wind official indicated the company would likely seek a TIF, estimating a first-year payment of $564,000, Puiia said. That amount increases incrementally each successive year.
With a TIF, he said a town's valuation is removed so that it shelters a town from its school and county assessments, while protecting the town's percentage of state revenue sharing.
“Pretty much, it's a tax shelter,” Puiia said. “Because they're making an investment of capital into your community, you're giving them somewhat of a tax break.”
While Rumford residents continue to grapple with whether they want wind power in town, such development could be a boon.
“Here we are, we faced the largest decrease last year in valuation ($126 million), and we saw a significant rise in our property taxes,” Puiia said.
“Do we turn away from a potential investment? It is a very difficult issue to struggle with. Both sides have points to be made, and I think that's why the board of selectpersons placed (the proposed ordinance) on the ballot. They want the citizens to decide.”
A TIF would bring yearly savings to taxpayers “if we're not asking our citizens for money for economic development,” Puiia said.
“Then, ultimately, if you're trying to bring in new growth or other growth, you're not taxing for economic development money. Plus, if you took the $564,000, you could create an economic development department or you create a district that could attract potentially more jobs.”
“So,” he said, “it's certainly an arguable point, and that's why I said the citizens aren't going to get free power and they wouldn't see an immediate benefit on their taxes, because the TIF payment is not intended for tax relief.”
Without a TIF and at Rumford's current tax rate and if the project is valued at $65 million, it would add $1,462,500 to the tax base, which would change the tax rate and provide a savings.
“If it was fully taxable, yeah, we'd pay more in school assessment, and more in county taxes, and it would reduce our revenue sharing, but that's less that the state has to give us,” Puiia said.
“And who gives the state the money? The taxpayers. So, ultimately, do we benefit by the state having to give us less revenue sharing? Yes, in the long run in that respect.
“So, I guess the point of the TIF is that you know your costs are predictable and you focus it on a certain project or development efforts,” Puiia said.
“But again, it would be very questionable if the project would fly without a TIF.”