Wind farms would give taxpayers different options

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.”

tkarkos@sunjournal.com

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Comments

 's picture

Those who forgot the lessons

Those who forgot the lessons of history are destined to repeat the same mistakes. In the 1970's under the leadership of Jimmy, America sought an escape from dealing with other countries to secure fuels to operate our economy. Wind, solar and, here in Maine, Biofuel was supposedly the answer. Biofuels, or wood to electricity, popped up everywhere in Maine. It turned out to be too expensive and too hard on the grid to sustain their existence, and they were quickly abandoned. They were too small in generation capacity, just like windmills. Because Government created their appearance, Government paid them well for their disappearance and we, the ratepayers have foot this bill and will until 2015. Do not forget this is history and repeating it would be a mistake.

 's picture

Don't TIF First Wind

Of course First Wind is going to demand a TIF from Rumford and Roxbury. That's their development strategy, to seek out every advantage from taxpayers at every level in addition to the tax equity financing and depreciation advatntages they receive. Plus, now Obama will give them 30% of their construction cost up front and the Feds will guarantee their loan.

I dug out of my files a letter to the editor of the Lincoln News from 2 years ago that I share with you, as Rumford is very much like Lincoln. The difference is the size of the project of First Wind that will tower over the lakes with 40 turbines compared to 17 turbines on the mountains above Rumford and Roxbury. Otherwise, its all the same, so read on:

It is said that energy from wind turbines such as those proposed for the Lincoln Lakes Region is “Green” energy. Yes, it is “green”, but not in the sense of helping the environment. It is “green” as in the color of money.

First Wind wants the area towns to subsidize their development by kicking back 60% of the property taxes under the guise of a TIF. Why should area towns help underwrite construction costs when the $140 million project will earn First Wind more than double that amount in the next 20 years? Instead, we should say build it on your own without local subsidies and pay your fair share of property taxes just like everyone else. Oh, by the way, since we are allowing you to destroy natural resources of the area and sully the beauty and enjoyment of the Lincoln Lakes with industrial blight flung across the ridges, you should pay an impact fee.

Take a look at a quick projection of earnings for First Wind over 20 years: If the wind turbines actually produce the stated megawatts for 30% of the time, at current ISO-New England rates, they will earn $151 million from sale of electricity. At today’s Production Tax Credit from the Federal government (it is indexed to increase), they will earn $66 million. With the sales of Renewable Energy Credits at recent auction prices, they will earn $71 million. So, total earnings add up to $288 million over 20 years! That’s earning a lot of “green”!

Why shouldn’t a good portion of that money stay in the Lincoln Lakes area instead of going out of state? It is the responsibility of the town governments to demand full property tax payments plus a share of earnings through impacts fees on behalf of the residents rather than being stooges for First Wind. If First Wind doesn’t want to pay its own way, let them go elsewhere.

 's picture

windsprawl

Windsprawllers want the TIFs in every town or territory they go to. The split is debatable. In Lincoln the Town did not bother bartering a better deal from FirstWind. They took the sucker offer and did the town a great disservice. The wind co. will push hard for a TIF. Why couldn't all the Rumford businesses have a TIF and have the valuation increase sheltered too? They will have lawyers to explain it out and make it sound good. Then people wonder why the state is in the red. Maybe it has something to do with propping up the wrong businesses. Remember the nuclear waste dump they wanted to put under Bottle Lake? (That is connected to the West Grand chain, lakes with crystal clear water and international significance) The same supporters popped up making the same lame "property rights " arguments. The landowner sat back and let their puppets plea for the jobs and business it would all bring. That foolishness was shot down, thankfully. Funny how some live in Maine all their lives and really do not care one whit for the mtns., lakes and scenery which makes this such a great place to live . Protect the citizens with a strong ordinance. If that fails, barter a tough deal with the developers. Remember, it is YOUR money(tax dollars) they are throwing around.

 's picture

question everything

Thank you for clarifying the whole situation in objective terms. It would be nice if the newspaper could do the same because unfortunately, the people reading the paper version will not see your very clearly stated presentation.

 's picture

Or Simply

A simple way to look at this: Any tax relief for First Wind is a loss of potential tax revenue for Maine. All the blurry promises of economic development or environmental conservation monies are a mirage meant to look like a significant benefit. The only significant beneficiary of a TIF in this case is First Wind.

According to Puiia “But again, it would be very questionable if the project would fly without a TIF.” SO WHAT! If First Wind wants to build wind projects where there's actually wind (a questionable assumption), then they're pretty limited where they are going to build. So, they're probably not going to walk away if not given a TIF. Unless you've not picked up a newspaper in the last year, you've probably noticed that communities aren't exactly lining up to invite wind developers into their communities, so, again, their prospects are limited.

If they do walk away, then Rumford has lost very little, if anything. An industry that can't pay its own way without publicly funded gifts isn't much of an industry. Considering the long laundry list of negative impacts and the very short list of permanent jobs that accompany these projects, they're arguably more of a liability than an asset. Do Maine a favor and say "no" to TIFs for wind developers.

 's picture

How many turbines is Rumford really getting?

Here is another little problem that keeps cropping up with first Wind projects.

They tell you that they are going to put in 12 turbines and then later you learn that the 12 turbines was “Phase One”. “Phase Two” is another 6-10 or 12 turbines. It’s happening in Oakfield.

First Wind tells you that they are going to use one type of turbine and later you learn that they changed their mind and are now going to use a taller (louder) turbine. It’s happening in Oakfield.

What can you do about it if you vote down this ordinance? Absolutely nothing!

 's picture

Corrections to the article.

A couple of corrections to the article.
$60,000,000 is the total project, but only 12 of the turbines will be in Rumford (see below).
“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.” Somewhat of a tax break? Rumford will giving them a 60 to 70% tax break (see below)!

“A TIF would bring yearly savings to taxpayers “if we're not asking our citizens for money for economic development,” Puiia said.” When times are tough, Rumford doesn’t ask its citizens for “extra” money for economic development. Anybody know how much was in this year’s budget for economic development? Probably none. So there is no tax savings if the project is TIF’d.

“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.” The $564,000 is the figure for Somerset County, not Rumford! (see below)

“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.” The amount decreases incrementally each year because the wind company gets to depreciate the turbines 2-3% each year as personal property!

Original Post

First Wind keeps talking about the $60,000.000 investment in Rumford, but 7 of those turbines will be in Roxbury. Correct me if I’m wrong, but that means only about 37,000,000 will be invested in Rumford. If they actually intended to pay the current tax rate of 24 mills on their investment, they would pay the town about $888,000. per year. Sounds pretty good, right? Wouldn’t people’s tax bills go down in Rumford? The answer is yes, but only by a very tiny amount. What people forget is that a town’s school and county appropriation is driven by the town’s total value. Rumford’s value right now is about $734,000,000 and if you drive that up by $37,000,000 (which is only about 5%), then your county tax and school tax increases eat up any tax relief. Of course the other towns in the school district don’t mind a bit, because any increase in Rumford’s share of the school and county budgets means a small decrease in their county and school taxes.
Even in small towns where the turbine project doubles the town’s value, the tax relief was only about $120. per $100,000. of valuation. The figures I just quoted were done by the State of Maine’s Municipal Revenue Division. Let’s face it, if you think the turbine project will reduce your taxes in Rumford, you’ve got another think coming!
But First Wind has absolutely no intention of paying their fair share. If the ordinance is voted down, and they get their way, they are going to ask for a TIF. So instead of paying the town $888,000 per year, they are only going to pay the town $266,000 and put the other $622,000 back in their pocket. And to add insult to injury, First Wind gets to depreciate the turbines by 2-3% per year by claiming them as personal property. Sweet deal for First Wind, huh! (Not so hot for Rumford.)
That $266,000 the town receives cannot be used for tax relief, either. It can only be used for “economic development” within the TIF district. No swimming pools and no ball parks for the kids either. Most towns reconstruct a few miles of roads at $250,000 per mile, hire an economic development director, and spend a fair amount on yearly lawyer fees to administer the TIF. Lincoln is going to buy a building, tear it down and put up a parking lot…cost, $1,000,000 The state has to approve everything, too.
Some towns use a portion of the TIF funds to promote tourism. That’s kind of a joke isn’t it? They just covered their hills with turbines, so how are they going to promote tourism?
The TIF would be worth it if the project created enough good paying jobs, but the average is one good paying permanent job for every 6 to10 turbines. And as First Wind gets more projects across Maine, I see them centralizing repair work and keeping a skeleton crew in places like Rumford.
Vote to protect your neighbors, wind turbines are just not worth it.

 's picture

Will First Wind deliver benefits to your community?

This is all very interesting, but it does not exactly address the question: "Will First Wind deliver benefits to your community?" Historically speaking, the answer is:
"No".

"Who are these guys, Cape Wind, EMI, UPC, First Wind, IVPC?"

http://bjdurk.newsvine.com/_news/2010/02/23/3941508-who-are-these-guys-c...

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