The Coos County commissioners took their concerns about the wind park and its spike in equalized valuation and taxes in two unincorporated places before the N.H. Supreme Court last week in a case that could have statewide ramifications.
The commissioners are appealing the July decision by the New Hampshire Board of Tax and Land Appeals that upheld the total equalized valuation set by the New Hampshire Department of Revenue Administration for the unincorporated places of Millsfield and Dixville.
Millsfield and Dixville host a wind park and have a Payment in Lieu of Taxes agreement with the utility based on one value, but now the BTLA has valued the wind park higher and the residents could potentially bear the increased property tax burden, since the wind park has a PILOT agreement.
In 2013, the commissioners requested to see the appraisal on which the DRA based its decision, but have been denied by the DRA as well as by the wind park owner, said Colebrook attorney Jonathan Frizzell, who represents the county.
The increase in equalized valuation stems from the value of the 33-turbine Granite Reliable Wind Park, which in 2012 the DRA appraised at $228 million.
But that figure, Frizzell argued, is twice the local assessed value of $113 million that DRA utility appraiser Scott Dickman gave them in 2007, when the county, using the $113 million figure, entered into a 10-year $495,000 annual payment-in-lieu-of-taxes (PILOT) agreement with the wind park owner.
If the $228 million figure is allowed to stand, the commissioners said the result would be a spike in the total equalized valuation of Dixville and Millsfield that in turn would result in an unprecedented spike in residential property taxes.
While Dixville has lost nearly all of its handful of residents after the closure of The Balsams and Millsfield has two dozen or fewer residents, the decision of the Supreme Court could impact how the state appraises utility properties, if it will factor in or ignore PILOT agreements and how residential taxpayers could be affected.
Presenting his argument before the court Thursday, Frizzell said DRA Property Appraisal Division Director Stephan Hamilton continues to make three mistakes.
"First, the DRA has failed to give weight to PILOT agreements that have been authorized by the Legislature and encouraged by the governor's office in respect to the creation of renewable energy facilities in this state," said Frizzell.
"The second mistake is the DRA fails to give due consideration to the circumstances in which these PILOT agreements have been entered into after direct consultation with the DRA," he said. "The third mistake the DRA has made is they are substituting a utility tax appraisal under RSA 83-F."
The DRA is putting the 83-F appraisal in the formula and not what municipalities said is the true and accurate value of the utility properties, he said.
Frizzell said at the time the wind park PILOT was negotiated the commissioners were working on the understanding the DRA would include the $113 million figure as part of its calculations.
Subsequently, however, the agency said it would not use that figure, but instead use the 83-F utility tax appraisal, he said.
"The county did not have a separately appraised fair market value because it relied on what the DRA said," Frizzell argued.
The commissioners initially said they would like to use a value of $150 million, but Dickman said the value was closer to $113 million, said Frizzell.
If they had used $150 million, the PILOT would have been negotiated differently or would not have been entered into at all, said Frizzell.
During the half-hour hearing, Justice James Bassett pointed out that at no point did the commissioners prepare an appraisal. They instead requested a review of the DRA appraisal.
Frizzell confirmed Bassett's view of the facts, but said the DRA, citing confidentiality, denied the county's request to review and challenge the 83-F appraisal.
"The BTLA would not allow you to see the appraisal done by the DRA," said Justice Robert Lynn. "I have some problem with what the BTLA did in this regard. What the BTLA did was to accept what the DRA did without scrutiny."
Lynn said he doesn't understand how the BTLA could make a decision based on non-disclosure when the information is directly related to a tax issue.
Representing the DRA was attorney Laura Lombardi, who argued the DRA is bound by the equalization process and not the PILOT agreement and the court should affirm the BTLA's decision.
The issue, said Lombardi, is about the equalization process.
"Which ultimately affects the amount of taxes paid," said Justice Carol Ann Conboy.
Lombardi said the DRA did request a release of the information in the appraisal, but the wind park owner denied it.
"The underlying information was not disclosed, but their ultimate equalization decision was based on it," said Conboy.
"That seems to me completely bizarre," said Lynn. "DRA said the value is $228 million. Okay, how did you get there? Well, we don't have to tell you that."
Conboy said the Coos case is likely the first time the high court will be interpreting a confidentiality statutory provision and the case might rise and fall in part on the court's construction of that provision and what is protected under it.
The wind park's majority owner is Brookfield Renewable Power.
Currently, residents in Millsfield and Dixville pay low or sometimes no taxes because the timber taxes on the land often provide enough revenue to cover the expenses of running the two places.
"This is a unique case," said Lombardi. "I think here, though, the unincorporated places did not do their due diligence in entering into the PILOT agreement and are trying to find a way out of that error at the expense of other communities in the area."
The Supreme Court will likely render a decision on the case in the coming months.
The city of Berlin, represented at the hearing by attorney Christopher Boldt, has entered into a PILOT agreement with the Burgess BioPower Plant.
Boldt stressed the public policy issue involved in PILOTs.
"There would be significant ramifications if you allow the DRA to ignore PILOTs," said Boldt. "The ramification would be tax implications on the city."