While discussions continue about a payment-in-lieu-of-taxes agreement for the proposed Galloo Island Wind Farm, at least one county legislator is pushing to keep sales tax breaks off the table.
Galloo Island's developer, Upstate NY Power Corp., has asked for a sale-leaseback agreement through the Jefferson County Industrial Development Agency. Such deals allow a developer to avoid sales and mortgage recording taxes. That would be in addition to a proposed $54 million PILOT, which offers a break from standard property taxes. If the sale-leaseback agreement went through, the developer would save $22.7 million, about $10.5 million of which would have gone to local governments.
Villages and towns would have received anywhere from about $4,000 to $230,000, based on assessed value. The city of Watertown would have received $2.3 million and the county $4.5 million.
"Both of those abatements should be eliminated," said Scott A. Gray, R-Watertown. "I think we could do better than the package we have, which is evidenced by the $5 million the developer put back on the table without being asked."
On Jan. 5, the day before the County Board of Legislators planned to vote to allow a proposed 20-year PILOT agreement, Upstate NY Power offered to move to an 18-year PILOT instead, meaning full property taxes would kick in two years earlier. Those two years at full taxation would net an additional $5.3 million over the proposed PILOT payments.
Legislature Chairman Kenneth D. Blankenbush, referring to Mr. Gray's call, said, "I don't believe that discussion is going to take place."
Upstate NY Power said in an Oct. 6 application to the JCIDA that $253 million in the project could be subject to sales and use tax. The sales tax rate in the county is 7.75 percent, which means the developer would save $19,607,500. The state receives about half of that, so the county and local municipalities would receive $9,487,500.
Normally, only the JCIDA board makes a decision on sale-leaseback agreements. But Mr. Gray said the county should make the sale-leaseback agreement part of the PILOT discussions.
"With almost all PILOTs, there is relief of sales tax," Mr. Blankenbush said.
The PILOT vote did not take place Jan. 5. Instead, JCIDA and legislators are discussing concerns the lawmakers have. One of the concerns voiced is that neighboring towns may feel ill effects from the island-based wind farm, but would have no monetary compensation.
If the villages, towns and city of Watertown were to receive the sales tax money, "that would certainly go a long way towards satisfying that request," Mr. Gray said.
Mr. Blankenbush said he thought concern over compensation would be better addressed through neighboring towns sharing in the $2.14 million PILOT payments.
The mortgage recording tax could total $3,093,750, with $1,031,250 going to the town of Hounsfield. The rest goes to the state.
In the application, Upstate NY Power projects it will spend about $500 million to build the wind farm. The application for mortgage recording and sales tax breaks for a proposed $153 million transmission line will come later, officials said.
Whatever the local concerns, the Legislature's leader warned that too much delay on the Galloo Island wind farm deal could cost the region dearly. Mr. Blankenbush said the Legislature could be faced with a decision between losing sales tax or some PILOT money, and losing the project.
"I don't think we can put the vote off much longer," he said.
