LOWVILLE — The owners of Maple Ridge Wind Farm are seeking to have the assessments on the project’s Lewis County properties reduced by hundreds of millions of dollars.
Flat Rock Windpower LLC and Flat Rock Windpower II LLC have filed tax certiorari actions in state Supreme Court challenging the assessments on its nearly 200 wind turbines and associated transmission lines spread across the towns of Martinsburg, Harrisburg, Lowville and Watson.
According to court filings, the companies’ properties currently have an assessed value of about $565 million. The companies are claiming the total assessed values should be $18.3 million, a nearly 97 percent reduction.
The companies base their proposed reduction in values on a claim that the assessments are illegal, the court complaint states. They contend that the assessments “include personal property or moveable machinery and equipment” that is not considered “real property” for purposes of real property taxation under state Real Property Tax Law.
The companies maintain that none of the component parts of the “wind energy system” on each parcel constitutes real property, “and to the extent that the value of such was included in the final assessments of the Property, such assessments are illegal.” Court documents do not otherwise contain information about what methodology the companies used to arrive at final claimed assessed values for each parcel.
The case has statewide ramifications. If the court ultimately decides that the company is correct on its claim of illegal assessment, it would set the standard for assessments on all wind farms.
If that happens, projects that cost hundreds of millions of dollars to build and will yield, over time, hundreds of millions of dollars in revenue will be assessed at a tiny fraction of their costs.
Until now, assessments have played little role in the amount of money the companies have provided municipalities and three school districts for locating turbines within their jurisdictions, as the entire project is subject to payment-in-lieu-of-taxes (PILOT) agreements.
The only time assessments come into play are for fire districts, as special districts are exempt from PILOT agreements. The companies now contribute about $100,000 total annually to various fire districts based on assessments. Under the PILOT agreements, the companies currently make $8.75 million annually in PILOT payments to the various municipalities and school districts, an amount due to escalate under the remaining years of the agreement.
One PILOT agreement, granted for the project’s initial phase in 2005, is due to expire in 2020. A second agreement, covering the project’s second phase, is due to expire in 2022. Lewis County, the four municipalities and three school districts — Lowville Academy, South Lewis and Copenhagen — as well as the Lewis County Industrial Development Agency, are in negotiations with the companies for a new PILOT agreement.
That is why the timing of the assessment challenge surprised County Manager Ryan M. Piche and County Attorney Joan E. McNichol.
“We’ve worked pretty well with the wind companies,” Mr. Piche said. “I didn’t think (the assessment challenge) was necessary, but they clearly thought it was.”
Paul Copleman, a spokesman for Avangrid, Flat Rock Windpower’s parent company, said in an emailed statement that the company continues to have “positive conversations” with each of the tax jurisdictions regarding the extension of a PILOT agreement.
“We have filed in order to preserve our legal rights while discussions continue, but this action is a placeholder formality while we attempt to help the tax jurisdictions ease the revenue downturn from the expiring PILOT,” Mr. Copleman said.
At issue is a clause in the PILOT agreements that states that Flat Rock will never pay more under the agreements than it would be required to pay were the project not exempt from real property taxation. If the assessments were lowered to what Flat Rocks claims is their true value, payments would be less than called for under the PILOT.
Ms. McNichol said the county, as lead agency, the municipalities and school districts will now consider Flat Rock’s proposed assessments and likely counter them in what may become “a battle of experts” in court.
“It comes down to our appraisal versus their appraisal, our experts versus their experts,” Mr. Piche said. “At the end of the day, the judge is probably going to go right down the middle.”
Mr. Piche said the county recognizes that energy prices have dropped since Maple Ridge was brought on line and was willing to consider this during negotiations of a new PILOT, providing the companies could “show some indicators” as to why a reduction in payments is warranted.
“I think what’s triggering this is the drop in energy prices,” Ms. McNichol said. “They haven’t seen the same revenue return over the last several years.”
“There’s no doubt about that,” Mr. Piche said,“but we still had a deal.”
Avangrid has two other wind projects in the works for Lewis County, Deer River Wind Farm and Roaring Brook Wind Farm and will likely be seeking PILOT agreements on both. Mr. Piche said elected officials will be mindful of assessments for both projects.
“Our goal is always to have every project, industrial or residential, assessed at a fair value,” he said.