Wind farm questions only hurdle in JCIDA tax policy

Just a few issues stand in the way of a uniform tax-exempt policy being finalized by the Jefferson County Industrial Development Agency.

JCIDA's committee formulating the policy met Wednesday morning and discussed the issues: what to do with a proposed transmission line from the planned Galloo Island Wind Farm and how to guarantee an increase in payments over the 15-year life of a payment-in-lieu-of-taxes agreement.

"The committee needs to determine whether the transmission distribution should be folded into the PILOT or a different PILOT should be created for the transmission line," JCIDA CEO Donald C. Alexander said.

The uniform policy will result in PILOTs that follow a standard formula for each of the wind power projects that are developed in the county.

Galloo Island Wind Farm is unique in that its developer, Upstate NY Power, is including a 50.6-mile transmission line in its proposal. The line would run nine miles underwater from the island to the town of Henderson, then run south through the towns of Ellisburg, Sandy Creek and Richland and the village of Pulaski to its end in the town of Mexico.

Mr. Alexander said Wednesday afternoon that the developer plans to retain ownership of the line for at least the life of the PILOT. That means it could sell the extra capacity available to other power generators that wish to connect.

The committee agreed that the transmission line should be included in the PILOT and any additional income the developer garners from selling capacity should be considered.

JCIDA's consultant for developing the policy, Mark E. Quallen, said that the state Office of Real Property Services hires someone to estimate private energy projects' income and expenses to create a taxable value for the project.

"This more or less validates our approach for this PILOT agreement," he said.

The uniform policy formula leads to about $2.5 million from the Galloo Island project, or 15 percent to 20 percent of what its taxes would be under full valuation, he said.

The transmission line adds many taxing jurisdictions to the PILOT as three towns, a village and Oswego County must be included. The value of the line in Oswego County will be about 3 percent to 5 percent of the total project cost.

The committee agreed that, ideally, PILOT proceeds would be disbursed to different jurisdictions based on how much of the project lies inside their boundaries.

"If Oswego County doesn't go along with the PILOT, I'm not sure we would want to be giving the developer an 80 percent discount and Oswego County gets 100 percent of the tax payments," said committee member William H. Fulkerson, who is also the supervisor of Ellisburg. "If they went along with it, I wouldn't have a problem with it."

Mr. Alexander said he would visit with his counterpart in Oswego County this week to discuss the structure of the PILOT.

The other issue the committee considered Wednesday was adding a set percentage to a base per-megawatt charge to ensure payments would increase every year.

This was first the suggestion of attorney Justin S. Miller, Harris Beach PLLC, Albany. He asked if it wouldn't be wise as a substitute for supplemental payments based on energy prices and projects' performance. Mr. Quallen will compare the numbers. Members will discuss whether the base payments should increase in addition to the supplemental payments.