Freedom turbines not as valuable as originally thought; Town grants abatement; bump in school assessment looms

The effect of the turbines on EPS meant that the full extent of the tax break from the Beaver Ridge development would last only until the state assessments caught up. After that, Freedom would most likely be asked to shoulder a larger portion of the local school district's operating costs, cutting into the tax break for residents.

FREEDOM - The value of the three-turbine Beaver Ridge Wind development has been hotly debated on many levels since the developer, Portland-based Competitive Energy Services, approached the town in 2006. But when residents cleared the way for the project in 2008, it was partly in hopes of reaping a 27-percent tax break promised by the developer.

The cumulative financial gains have been the subject of debate, but the actual reduction to local tax bills over the three years that followed was considerably smaller.

Further eating into the savings have been a recent abatement that cut close to $1 million from the value of the roughly $10-million development, and new numbers from the local school district show that the state's school funding formula is scheduled to take the added value of the turbines into account for the first time in the upcoming fiscal year.

How much did they cost?

In 2009, the first full year that Beaver Ridge Wind was online, the town assessed the development at $9.7 million. The figure was based on cost estimates from the developer, selectmen said at the time.

Town officials subsequently learned that bookkeeping errors had kept Freedom's mill rate artificially low in previous years. Maine Revenue Service got involved and as a result of correcting the error, much of the anticipated tax benefit of the turbines was lost. The mill rate dropped by 8.8 percent (from 17 to 15.5 dollars per $1,000 of property value), but town property values were raised substantially, and in some cases doubled from the previous year, to bring the town closer to the state valuation.

The 2009 tax books were later recommitted at 14.2 mills, yielding what to date has been the largest tax offset related to the value of the turbines, down 16 percent from the pre-turbine 2008 figure.

In 2010, the town did its own assessment and bumped the value of Beaver Ridge Wind up to $10.8 million. The figure was reportedly based on estimates from the Marshall & Swift building costs guide, a common reference for assessors. Beaver Ridge Wind, which had been sold to Quincy, Mass.-based Patriot Renewables, disputed the revaluation, arguing that there was no adequate precedent to assess a wind development on anything but cost.

Freedom officials agreed, but wanted verifiable cost figures.

According to Selectman Brian Jones, the company satisfied the request, and in November he and Selectman Clint Spaulding signed off on an abatement that dropped the value of the development to $9.87 million. The figure was higher than BRW wanted, but representative Todd Presson said Jan. 17 it was a move in the right direction.

In tax dollars, the abatement translates into almost $14,000 less for the town. Depreciation of the equipment, a variable that Presson said town officials didn't factor into the abatement, could cause the value to drop further in the coming years depending upon what repairs or upgrades BRW makes to the turbines.

A notable exception would be if the company erected more turbines or retrofited the existing towers with higher-output hub and blade assemblies, as some residents recently suggested could happen. But Presson said the company has no plans to do either of these.

School budget catches up

According to figures from Regional School Unit 3, Freedom will see a 19.4-percent increase in its contribution to the school system's budget next year.

The bump, which is believed to be due to the first-time inclusion of the value of the Beaver Ridge Wind development in the valuations used in the state funding formula, represents the only double-digit increase among the district's 11 towns this year, according to figures from RSU 3 and Maine Revenue Service.

The change in Freedom's valuation, from $51.2 million to $61 million, is the third largest of any RSU 3 town in the last 10 years (Monroe's value went up by 23.3 percent in 2005, Montville's by 20.4 percent in 2004).

Maine Department of Education's Essential Programs and Services school funding formula uses the state's 2011 valuation figures to compute the local share for the 2012-13 school year. The state valuations, however, lag behind local assessments by two to three years, accounting for the delay between when the turbines came to Freedom and when they will affect the town's contribution to the school district.

As residents learned from a Maine Revenue Service official shortly after the turbines went online, the effect of the turbines on EPS meant that the full extent of the tax break from the Beaver Ridge development would last only until the state assessments caught up. After that, Freedom would most likely be asked to shoulder a larger portion of the local school district's operating costs, cutting into the tax break for residents.

That scenario appears to have come true.

Freedom Selectman Brian Jones said the increase from the school district will amount to between $80,000 and $84,000. With the windmill abatement, Jones said the town will need to find roughly $100,000.

The final tally also depends upon whether the school district and town budgets change in the coming year.

RSU 3 Superintendent Heather Perry anticipated that the district would be getting $500,000 dollars less from state and federal sources than it received last year. While the district doesn't have an unresolved teacher contract like neighboring RSU 20 or other major wild cards in play, Perry said the operating budget could change.

The Freedom town budget won't be finalized until the annual town meeting in March.

Doug Van Horn of the town's budget committee said Freedom has deferred some maintenance and roadwork, but said he doesn't know what townspeople will want to do in those areas.

"Regardless of the windmills, if we want to keep from falling behind year by year, we're going to have to raise our taxes somewhere along the line," he said. "But I think the thing that will most significantly affect that upward move in the taxes right now is the school situation ... we're going to have to find that money somewhere if we're going to keep everything even, and I don't know if we're going to succeed."

Freedom residents received a note with their 2011 tax bills indicating that without the wind turbines, the mill rate - currently 14.9 - would have been 17.9. In light of the higher property values in town, the increase in the coming school assessment and the recent abatement, what financial gains Freedom residents have really made from the wind turbines is unclear.

Mostly likely, however, they will have been temporary.

"We had $140,000 of increased revenue from the windmills for three years before the school revalued, and I don't think the town used that windfall wisely," said Jones, "Because that's all it was a windfall and now that the school's gotten into the game, the mill rate's going to go back up. I don't know what to."


JAN 19 2012
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