Legislators to take time on PILOT

The Jefferson County Board of Legislators will take its time in considering a payment-in-lieu-of-taxes agreement for the proposed Galloo Island Wind Farm.

That pace is at odds with the project developer, which has requested the PILOT be approved by the end of the year so the project will qualify for a 30 percent rebate from the federal government through stimulus funding.

"It is not our intent to rail this thing through without weighing the pros and cons," said Barry M. Ormsby, R-Belleville, chairman of the Planning and Development Committee.

At an extended Planning and Development Committee meeting, the Legislature listened to explanations of the proposed PILOT and wind farm. They also heard from nearly 40 members of the public; more than 100 people attended the meeting.

Donald C. Alexander, chief executive officer of the Jefferson County Industrial Development Agency, explained the PILOT. JCIDA was charged with developing a uniform policy for all the proposed wind farm developments in the county in May 2008.

"A uniform policy would be without variation," he said. "What we've arrived at is a model policy that will provide a tool that the taxing jurisdictions can apply to different projects. Each project will, to some extent, despite our best efforts, need to be treated a little differently."

The resolution under review allows JCIDA to deviate from its standard policy in allowing a 20-year instead of 15-year PILOT. It would also create a PILOT agreement that does not follow normal property tax distribution.

The Galloo Island PILOT would send 50 percent of the proceeds to Sackets Harbor Central School District, 35 percent to Jefferson County and 15 percent to the town of Hounsfield.

Proceeds in the first year would total about $2.14 million, based on receiving $8,500 per megawatt from the development. That payment would increase 2.5 percent each year. In addition, if energy prices topped certain thresholds, beginning at $60 per megawatt, the taxing jurisdictions would receive a supplemental payment.

Mr. Alexander told the board members the PILOT would bring between $60 and $100 million in payments for the towns.

"Some have said we're going to leave money on the table - that's inaccurate," he said. "This project does not get built without a PILOT."

Legislator Scott A. Gray, R-Watertown, asked about what happens to the tax obligation in year 21, the year after the PILOT would end.

"The capital used to finance this project is paid back, so the project is viable on its own to pay full taxes without paying on a large debt load," Mr. Alexander said.

Legislator Michael J. Docteur, R-Cape Vincent, asked if workers will be paid prevailing wages because public money is going toward the project.

Mr. Alexander said that because of the 30 percent grant for the project that the developer expects to receivefrom the stimulus funding, they will need to pay prevailing wages according to the federal Davis-Bacon Act.

Robert W. Burgdorf, of Nixon Peabody, Rochester, represents the Galloo Island developer, Upstate NY Power Corp.

He clarified that the developer will not ask for a PILOT on property taxes on the transmission line, only about $22.7 million in sales and mortgage recording tax abatement, according to the developer's application to JCIDA.

He reminded legislators the developer has been working on the environmental impact statement for two years. The approval of a final environmental impact statement by the state Department of Environmental Conservation is one of the approvals the developer wants by the end of the year, along with the PILOT agreement, site plan approval by the town of Hounsfield and other permits from DEC and other agencies.

Legislature Chairman Kenneth D. Blankenbush, R-Black River, asked what portion of the work would need to be done at the end of the 2010 construction season for the developer to receive its 30 percent grant.

Mr. Burgdorf said five percent of the work on the island would have to be completed.

"We can do that without knowing where the transmission line is exactly," he said. "By July of next year, we hope we're far enough along that we know the three lead horses and the company can say, 'Yeah, we'll take the risk.'"

Other hold-ups in approvals could kill the project, Mr. Burgdorf said. That includes agreement on the transmission line with the Public Service Commission and interested parties.

Mr. Blankenbush also asked whether the use of eminent domain would occur on the line.

Mr. Burgdorf said the PSC process should iron out the route and avoid landowner disputes.

"We don't want to upset people, but we do want to get our power to the market," he said.

Two alternative routes besides the proposed route through Henderson and Ellisburg on its way to Mexico may receive more scrutiny. One is an underwater route straight from Galloo Island to Scriba. That route received an endorsement from the Planning and Development Committee on Tuesday night. That resolution will be considered by the full board in December.

The other route is to a National Grid substation on Coffeen Street.

"There is no additional capacity," Mr. Burgdorf said. He suggested Upstate NY Power may be asked to connect there, upgrade the substation and a transmission line along a corridor already in use.

Mr. Blankenbush asked whether the 200 to 250 construction jobs would be local workers.

Mr. Burgdorf said about two-thirds would be local, depending on the skills of the workforce.

Several union officials spoke later in the session and said the project would be good for local union workers, including electricians and heavy equipment operators.

Officials from Sackets Harbor and Hounsfield also defended the PILOT, while residents of Henderson, Ellisburg and other wind development critics argued against the PILOT.

Mr. Alexander and Mr. Burgdorf said they would investigate several questions on the project, including the subsidy per job and the breakdown of types of jobs among the 24 permanent jobs.