Following LeRay’s rejection of a proposed tax break a week ago, talks between parties resumed at a meeting Wednesday to negotiate another deal that will help an Albany-based energy company move ahead with its project to retrofit a former coal plant at Fort Drum to create biomass energy.

The fate of the proposed $34 million project proposed by ReEnergy LLC is murky, though, as LeRay Town Council members rejected a five-year payment-in-lieu-of-taxes agreement that would have cut the plant’s average assessment of $30 million in half over the five-year term, effective in 2014.

Board members who oppose the project argue ReEnergy doesn’t need a tax break to break ground on the project. They say LeRay would lose valuable sales tax revenue under the five-year plan because the property would be removed from its tax roll; the plant’s assessed property value is now $10 million, which yields about $31,000 a year in Jefferson County sales tax for the town.

Two board members who voted against the tax break — Jennifer J. Dindl-Neff and Samuel J. Biondolillo — attended Wednesday’s meeting at the Town Hall to discuss the proposed project with ReEnergy CEO Larry D. Richardson and Donald C. Alexander, CEO of the Jefferson County Industrial Development Agency. Also participating in the discussions were Supervisor Ronald C. Taylor and Councilman Michael J. Gracey, who voted in favor of the project. Councilman William R. Jesmore, who voted against the project, didn’t attend because of an illness.

While officials who sat in on the talks said they were positive, they didn’t say any tangible progress on reaching a deal was made at the meeting. Even so, Mr. Alexander said the company hopes to negotiate a deal as soon as possible and that talks will continue this month. He contended that board members’ concerns about the sales tax distribution formula, which is calculated with Jefferson County property values, is a separate issue that shouldn’t have any bearing on the negotiations.

“I think that perhaps the basis for this is the suspicion that this relates to the distribution of sales tax,” he said. “We’re going to continue our discussions and we hopefully have a time frame which will provide an answer in the very near future.”

But Mr. Taylor said the three board members who opposed the tax incentive will only approve a deal in which the sales tax revenue for the plant is distributed to the town; they won’t reconsider the same deal.

“It’s going to take some sales tax compensation to get any one of the (opposing) members to vote for it,” he said. “Their concerns are legitimate, but if a better offer is presented, I’ll take it to the board for consideration. I think (ReEnergy) realizes the predicament they’re in and that they need to make an adjustment.”

Mr. Taylor added he hopes board members will see the regional benefits of the project, which were highlighted during the meeting.

“Not only will this create over 30 jobs at the biomass plant, but it would generate a good number of jobs for loggers and truckers” in the region, he said.

By providing 60 megawatts of generation capacity, the plant would supply the entire 28-megawatt post and customers on the grid.

Despite those benefits, Ms. Dindl-Neff said Wednesday she still fundamentally opposes offering a tax break to the energy company. She said the project likely will move forward without a tax break.

“A lot of people are trying to understand how (the company’s) not paying taxes is going to benefit the town in the future,” she said. “I believe the project is going to provide some jobs and help the town of LeRay, but I hope this project would break ground without a tax break. I think this is a matter of the government interfering with business.”

Nonetheless, she said she would be receptive to tweaking the tax deal so that LeRay would get its share of sales tax over the term. To retain its sales tax for the plant, LeRay originally pushed to approve a modified deal that would grant the company a tax break by fixing the property assessment at a low value over the term instead of taking it off the tax roll; but that plan was nixed by county officials, who think it’s a separate issue.

“I really hope a new deal or possibly a tweaked one will work out,” Ms. Dindl-Neff said, adding she would “probably not” approve the same five-year deal if it’s proposed again.

Steven T. Harter, administrative clerk to the LeRay supervisor, initially advocated a tax break that would allow the town to still get its sales tax revenue from the plant. But after that plan was scrapped during negotiations, he still supported the five-year tax break.

“Parties are now agreeing that as soon as we get this figured out we’ll respond accordingly,” he said, adding a decision could be made before the town’s July board meeting if a consensus is reached soon.

Biondolillo and Jesmore could not be reached to comment Wednesday.

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