Wednesday, June 16, 2010

Pilot Payments ~ Easy money ?

PILOT PAYMENTS
Wind turbines are fairly expensive
The average cost of buying & installing a commercial wind turbine (per internet estimates) is roughly between $2M and $3M each. Then the wind developer and local IDA negotiate a PILOT (Payment In Lieu Of Taxes) "deal" and the wind developer avoids paying his fare share of taxes pays a small fraction of the project's net worth as a result of the IDA PILOT "deal". [1] A PILOT is a payment in lieu of taxes (also sometimes abbreviated "PILT"), made to compensate a local government for some or all of the tax revenue that it loses because of the nature of the ownership or use of a particular piece of real property.[2]

No PILOT has been negotiated for the Cape Vincent project, but the developer's reliance on the Galloo plan to project payments to municipalities is a troubling sign that it will be presumed as the basis for the future talks.[3] There, the terms of the Galloo Island PILOT plan are being used to estimate possible PILOT payments for BP Alternative Energy's 124-megawatt project in a debate over the town's proposal to regulate noise levels. It is a consequence of the JCIDA's failure to follow the intent of the Legislature.[3]


Lowville Local taxing jurisdictions are considering a payment-in-lieu-of-taxes agreement on the proposed 39-turbine Roaring Brook Wind Farm that is expected to pay out between $17 million and $24 million over 20 years. [4]
However, given the recent legal wranglings over the last payment from the existing wind farm here, board members may choose to hold off on approving this deal formally until they have a clearer picture of that situation .[4] "Due to energy market conditions, among other reasons, the Company is not able to make any representations regarding when the project would be constructed and therefore when PILOT payments would actually commence," the proposed term sheet states [4] The terms of the proposed PILOT are similar to an agreement approved recently by the Herkimer County Legislature for Atlantic Wind's 37-turbine Hardscrabble Wind Farm project there .[4] The wind company claimed it should pay only the so-called "fallback amount" since it had been decertified from the Empire Zone program, through which it receives state reimbursement for the payments .[4]

Galloo
The PILOT, which allows the developer to make reduced payments to taxing jurisdictions instead of paying property taxes, was approved along with a sales tax exemption and sale-leaseback agreement, which eliminates mortgage recording taxes. "This has been a very involved, committed, thoughtful process," JCIDA Chief Executive Officer Donald C. Alexander said. "It is one that has always had the best interests of the community at heart." [5] JCIDA attorney W. James Heary said the supplemental payments put in the PILOT give taxing jurisdictions extra revenue when electricity prices give the developer high earnings. "We don't necessarily need to go into the nitty-gritty of their plan," he said. Other board members chimed in and said they don't know the bottom line with several projects .[5] The PILOT for the 252-megawatt project will run 20 years and have base and supplemental payments .[5]

After the PILOT and sale-leaseback agreements were approved, the board unanimously agreed to a moratorium on accepting tax abatement applications from wind power projects until a uniform tax-exempt policy is approved. The board will hold a special meeting this month to discuss the policy .[5] "The economic benefits and earning potential are the company's business," said attorney Justin S. Miller, Harris Beach PLLC, Albany, which has consulted on wind farm PILOTs with the agency .[5]

On the wind farm aspect, the agency had worked for months on developing the uniform policy before Galloo Island Wind Farm's developer pressed for an individual payment-in-lieu-of-taxes agreement. That project's PILOT was different from the standard PILOT laid out in the agency's policy and those changes were approved in February after months of intense pressure
[6] If the wind farm operator ceases operation and doesn't pay the agency the PILOT, the agency returns title to the developer .[6]

The wind PILOT is based on income, not assessed value, anyway, consultant Mark E. Quallen said. "You've got variability around the annual production and you've also got variability around the price," he said. Though the developer may not give a pro forma, he said, the investment costs and revenue stream are easy to figure out .[6]


The Galloo draft policy includes a separate clause for renewable energy PILOTs, which allows for a fixed base payment per megawatt, increasing each year, and supplemental payments based on high electricity prices .[6] Board member John Doldo Jr. said the Galloo Island project wasn't lucrative enough for the taxing jurisdictions. He said the PILOT payments represented less than 14 percent of full taxation. "If you give that much away, there must've been a need to give that much," he said. Mr. Doldo based his numbers on the cost of the project " about $537 million of on-island investment .[6] Only about one mediocre paying job is created for every 10 turbines installed that's hardly job creation. Government watchdog groups say the absence of uniform standards makes the whole PILOT program open to abuse, because each wind company gets to negotiate its own private deal with the IDA. In addition, wind companies that fail to meet their original IDA job creation promises rarely get penalized .[1] New Yorkers in general are beginning to become completely fed up with PILOTs, IDAs, wind farms and seeing their tax dollars squandered by politicians and bureaucrats to offshore ownership. Taxpayers are beginning to revolt against the wind developers, IDAs and local governments and the November 2009 election results underscore this attitude .[1]

Once again the taxpayer is paying higher taxes to support the corrupt wind industry and people say the wind is free. Think about this - 65% of a commercial wind farm is being paid for with your American tax dollars thanks to stimulus money, NYSERDA, PTC (Production Tax Credits), rapid depreciation schedules, PILOTs, etc. while the foreign owner enjoys the profits while raping your community .[1] PILOTs are supposed to make jobs for communities but with wind farms this never happens .[1] PILOTs should be completely repealed and eliminated and taxpayers should demand the full value of tax revenue from the wind project and nothing less
.[1]

1. Beware NY Wind: PILOT Agreements - Corporate Welfare Ad Nauseum

2. PILOT (finance) - Wikipedia, the free encyclopedia

3. Watertown Daily Times Wind PILOT

4. Watertown Daily Times PILOT proposed for new wind farm project

5. Watertown Daily Times JCIDA gives nod to Galloo wind PILOT

6.Watertown Daily Times : JCIDA's tax-exempt policy for wind farms won't include local, county issues

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