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Finger pointing, fisticuffs (almost) and few answers at Freedom tax forum

Freedom residents wondering how their taxes could have gone up this year despite a new $10 million wind development crowded into the Dirigo Grange Hall Sept. 30 expecting to have questions answered by an official from the Property Tax Division of the Maine Revenue Service. But the official never turned up, and the meeting that followed was fraught with speculation, suspicion and accusations, mostly to do with the wind turbines.

FREEDOM -- Freedom residents wondering how their taxes could have gone up this year despite a new $10 million wind development crowded into the Dirigo Grange Hall Sept. 30 expecting to have questions answered by an official from the Property Tax Division of the Maine Revenue Service. But the official never turned up, and the meeting that followed was fraught with speculation, suspicion and accusations, mostly to do with the wind turbines.

The three, 400-foot windmills on Beaver Ridge started pumping energy into the grid last November. During the planning stages of the project, wind developer Competitive Energy Services estimated the turbines would be valued at $10 million. According to company literature, the boost in the town's overall valuation would contribute to a 27-percent reduction in residents' tax bills.

Freedom town officials, with help from the state, valued the Beaver Ridge development at $9.7 million this year, and the Central Maine Power transmission lines running up the ridge at an additional $480,000. But the value added to the town made barely a dent in the mill rate, which went from 17 to 15.5.

According to Selectwoman Carol Richardson, the mill rate would have climbed... more [truncated due to possible copyright]  

FREEDOM -- Freedom residents wondering how their taxes could have gone up this year despite a new $10 million wind development crowded into the Dirigo Grange Hall Sept. 30 expecting to have questions answered by an official from the Property Tax Division of the Maine Revenue Service. But the official never turned up, and the meeting that followed was fraught with speculation, suspicion and accusations, mostly to do with the wind turbines.

The three, 400-foot windmills on Beaver Ridge started pumping energy into the grid last November. During the planning stages of the project, wind developer Competitive Energy Services estimated the turbines would be valued at $10 million. According to company literature, the boost in the town's overall valuation would contribute to a 27-percent reduction in residents' tax bills.

Freedom town officials, with help from the state, valued the Beaver Ridge development at $9.7 million this year, and the Central Maine Power transmission lines running up the ridge at an additional $480,000. But the value added to the town made barely a dent in the mill rate, which went from 17 to 15.5.

According to Selectwoman Carol Richardson, the mill rate would have climbed from 17 to 19.8, or $19.80 per $1,000 of property value, had the windmills not contributed to the tax base.

At 15.5, the mill rate is 22 percent below the hypothetical 19.8, but an increase in local valuations means many residents are paying the slightly reduced rate on property valued much higher than last year.

At the meeting, Richardson attempted to lead residents through a photocopied packet of tax commitment forms dating back to 2001, comparing the bottom lines of each year with a corresponding set of corrected figures.

For the past five years, Richardson said, town selectmen made a clerical error that contributed to an artificially low tax rate, a problem that was corrected this year. Richardson added that the overall town valuation was 67 percent of the state assessment prior to this year, well below the 75 percent required for state aid. In order to bring up the local valuation, taxes had to be raised across the board. These two factors offset what would have been a 4.3-point decrease, she said.

Referring to the handouts, resident Steve Bennett compared the increase in Freedom's contribution to the county and school district over eight years with the increase in the municipal budget over the same period. The county and school portion had increased 47 percent, he said, while the municipal budget had gone from $209,000 to $585,000.

"That's an increase of almost 300 percent (sic)," he said. "Tell me that's not true."

"That's not true," Richardson replied, returning to the assertion that the accounting errors had skewed the bottom lines in previous years. Richardson said the 2009 taxes were done properly with the help of the MRS Property Tax Division, but the town was now "playing catch-up."

"You can multiply, add, subtract, whatever you want, but that's where you are today," she said.

The discussion became heated when resident Carrie Bennett questioned whether the assessment of the wind development was consistent with that of other properties. Bennett said the turbines' contractor, Jay Cashman, claimed the development cost $12 million. If that were the case, she said, the town had assessed the turbines at several million dollars less than construction costs.

Bennett alleged that Richardson had told her some properties were valued at 100 percent. Why then weren't the turbines taxed at 100 percent? she asked.

One hundred percent of what, however, was the subject of disagreement between the Bennetts and the selectmen, because neither the actual building costs nor the recommendation from MRS could be corroborated.

Selectman Ronald Price tried to put an end to discussion of the turbines, but the Bennetts weren't finished with the subject. The exchange quickly escalated until Price shouted down the dissent and a half-dozen residents stormed out of the room.

The room quieted, but only briefly. Carrie Bennett directed accusations at Richardson and the selectmen that the town was overspending on "obvious things," like an expensive copier, an automated telephone system and whitewashing a municipal building before the annual Field Days event.

"You can dislike me to high heavens, but in your heart of hearts you know that spending is out of control," she said.

Selectman Clint Spaulding said spending was a subject for the annual town meeting.

Steve Bennett turned the conversation back to the wind turbines, citing the nearly-completed Fox Islands Wind development on Vinalhaven, which, like the Beaver Ridge development, comprises three 1.5 megawatt General Electric turbines. Bennett said Mike Rogers of MRS estimated the cost of that project at $12 million to $15 million.

Price, who owns the land beneath the Freedom turbines, said he had never seen a full disclosure of the construction costs for Beaver Ridge. He had heard $10 million initially and later heard $12 million, he said, an increase he thought was due to construction delays.

Steve Bennett maintained that Freedom had undervalued the turbines. In subsequent years, he said, the owner would claim depreciation while residents' taxes steadily increased. If the turbines were undervalued by $4 million, he said, Freedom residents would effectively be paying $60,000 of taxes that should be paid by the owner of the development.

"You should be hands off and you're not," he said to Price. When Richardson tried to reply to Bennett, Price shouted her down.

"God damn it, I want to answer him!" he barked, smashing his fist down on the desk.

When the exchange between Price and Steve Bennett had quieted. Richardson claimed responsibility for entering the value of the turbines into the computer. "Not with Ron Price's approval or disapproval," she said, but with guidance from MRS officials. "Maybe I made an error, and I can't fix it this year," she said, adding "There's an opening for a selectman in March."

Bennett asked the selectmen to recalculate the taxes on the turbines, but Richardson said it would be against state law. Taxes could be reduced through tax abatement, but not increased, she said.

"I can't go back and charge Steve [Bennett] more because I saw that he has some gold trim on his chimney," she said.

Bennett persisted and Richardson referred him to MRS.

Richardson appeared to be trying to end the meeting when there was a verbal exchange between Steve Bennett and Price, who had moved out from behind the selectmen's table to a position in the aisle, leaning against a desk, across the room from Bennett.

Price strode toward Bennett and several residents jumped out of their chairs to head off what looked like an overture to a fistfight. The men were kept separated and eventually returned to their places on diagonally opposite sides of the room.

The meeting continued for some time, hampered by questions that apparently only an MRS representative could answer.

Maine Revenue Service speaks

VillageSoup contacted the Property Tax Division of the Maine Revenue Service the following day and spoke with David LeDew. His colleague Mike Rogers had intended to come, but had been called away by an illness in the family, he said, adding that he thought it important that either he or Rogers meet with town officials in the near future to offer an outside perspective.

LeDew described the MRS as having "more experience than anyone in the state on the assessing side" of wind developments. But making an accurate assessment is difficult with the relatively new industry, he said, because there is no history to use as a guide. Of the three variables typically used in assessing - market value, cost and income - only the cost of building the turbines can be known, he said.

MRS has worked with developments in Mars Hill, Stetson Mountain, Kibby Mountain, Freedom and Vinalhaven, and most, LeDew said, with the exception of the Fox Islands Wind development on Vinalhaven, have cost $3 million to $3.5 million per turbine. Fox Islands cost more, he said, but no analysis has been done to figure out why.

"If Freedom has estimated a value of $9.7 million, that's ballpark," he said.

MRS is required to train municipal assessors, but LeDew said local authorities make the final decisions.

"We could tell them to do this and they can do that," he said. "And when they do that, they have to live with it."

At least for a year.

LeDew said the town can't supplement to make up for a low assessment, but the local assessor can increase the valuation in the following year.

"A lot of people second-guess the assessor," he said. "What I tell people to do is, put yourself in that person's place. If you hear that a turbine cost $3 million in another town, you have nothing else to go on.

"... it's just going to take time. It's a whole new industry. Until we can use an income approach, we're not really going to know what these things are worth."


Source: http://waldo.villagesoup.co...

OCT 5 2009
http://www.windaction.org/posts/22505-finger-pointing-fisticuffs-almost-and-few-answers-at-freedom-tax-forum
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