Steve Bennett: Freedom provides wind power lesson (Village Soup - Capital Weekly)

 Apr 28, 2011

Freedom provides wind power lesson

Small towns in the less affluent sections of Maine are being pounced upon by wind developers who know better than to try to place turbines in places like Cape Elizabeth. First Mars Hill, then Freedom, now other places like Winn, Oakfield, Roxbury and many other small and tax-starved towns, all confronted with the promise of big money in exchange for hosting big wind. But communities beware.

Take the example of Freedom, a town that was suckered into voting for an industrial wind project by Competitive Energy Services and Richard Silkman. In its initial application, CES stated that taxes in Freedom could go down by as much as 27 percent if the town supported the turbines. When CES refused to obey the terms of the town’s wind ordinance, they encouraged the town to vote for its repeal. In a letter mailed to all residents prior to the repeal vote, CES again reminded us of the tax benefit if people voted the right way.

As soon as the ordinance was repealed, CES partnered with Patriot Renewables, a subsidiary of Jay Cashman Inc., a construction company from Quincy, Mass. Within a few days, a new company, Beaver Ridge Wind LLC had a “building permit.” In 2008, Freedom became home to the only industrial wind site in Maine to not have a Maine Department of Environmental Protection site review or DEP regulation.

Freedom hasn’t been the same since. People who were once friends no longer speak. The lure of money can divide a town, or a neighborhood, just like it can divide a family. One resident, whose home is about 1,300 feet from the closest turbine, has sold his home to the wind developer. In that resident’s words, “no one else would buy my home and selling my home was the only way to get away from the noise.” Another neighbor informed me that he was also negotiating with BRW.

What about the tax windfall Freedom was supposed to receive? Is the loss of folks who lived in town for over 30 years, the loss of sleep, peace and quiet, and reduced property values for abutters to the project acceptable as long as the majority of townspeople get a pinch of tax relief?

Early in 2009, the wind consulting firm, Eaton-Peabody came to Freedom to try to talk the town into a TIF agreement. These lawyers tried to convince the town that refunding 60 percent of the property taxes back to the developer was a really good idea. It didn’t work. Freedom residents wanted all the tax money they could get. Later in 2009, the tax bills came out and our taxes did not go down. Many residents were angry, especially folks who had been some of the project’s biggest supporters. In order to assuage us, the selectors held two special town meetings in 2009 to try to explain what happened. The select board — who are also the assessors — stated that they valued the turbines at $9.7 million, using a cost approach based upon information provided to them by BRW. These detailed cost figures were deemed to be sensitive information according to BRW, so the select board had to sign a confidentiality agreement.

In 2010, the selectors, led by Carol Richardson, increased the turbine value to $10.8 million. BRW cried foul and asked for a $1.4 million abatement, placing the value at $9.4 million, which was less than the original assessment. To date, this abatement has not been granted.

At the March 28, 2011, select board meeting, new selector Brian Jones decided to look for the letters that BRW sent to the town office in 2009. Brian noticed two interesting items. The first concerned the “sensitive cost information” about the project. In a letter to the select board dated March 30, 2009, BRW submitted four cost figures totaling $9.7 million. Included in that total was $6.6 million listed as the cost for all the equipment. What Brian found particularly interesting was the lack of detail or anything that could possibly be considered “sensitive.”

The second item Brian noticed was that the select board and BRW never signed the letter of confidentiality as had been asserted numerous times by our selectors at the 2009 meetings. Quite obviously the selectors in 2009 had merely accepted BRW’s statement. And those of us who asked at that 2009 meeting to see the information from BRW, and who were denied because of the so-called confidentiality agreement, were deceived by the selectors.

Brian also questioned if BRW filed the same cost figure with the IRS that they filed with the town. He wondered if BRW would have filed a low figure with the town in order to minimize their property taxes, and then if they would have filed a higher figure with IRS in order to maximize their income tax depreciation. This is a good question and one that should have been asked by our selectors two years ago. Would wind developers resort to such schemes with their tax reporting?

Recent research at the registry of deeds in Belfast turned up a UCC financing statement recorded on Aug. 25, 2008, between Sovereign Bank of Boston and BRW. The document stated that BRW borrowed $8.4 million for three GE turbines. No other equipment is listed. Here’s my question: If all the equipment costs as listed in BRW’s 2009 letter to the select board was $6.6 million, why did BRW borrow $8.4 million in 2008 — for just three turbines?

It seems that the selectors would have been interested in an answer to that question if they had known about the UCC statement. Maybe they didn’t.  However, one of the selectors, Ron Price, should have known about it because Ron Price owns the land upon which the turbines sit, and his land lease is also collateralized, along with the turbines in this same financing statement. I wonder why he didn’t mention that to the other selectors and to the other taxpayers in Freedom?

Furthermore, banks will generally not lend more than 80 percent of value. Assuming Sovereign Banks is prudent with investor’s funds, then the real cost of the turbines alone, could have been as much as $10.5 million. Add on other equipment and construction costs, and the cost could be much higher than what BRW is letting on.

So will BRW get the abatement they have requested? Also at the meeting on March 28, 2011, just before they renewed their request for a lower valuation, BRW donated $10,000 towards the purchase of a fire truck. Of course, if BRW were to get the $1.4 million abatement, their taxes could go down by more than $20,000, per year.

Will Freedom get the tax relief it has wanted all along? What will happen to our taxes next year when, for the first time, the turbine values are added to the school district assessment, increasing Freedom’s share of the school budget, while reducing state aid to education? The answers are painfully obvious. Freedom provides lots of lessons about dealing with industrial wind. Folks in other small Maine towns could learn a lot from our experience.

Steve Bennett
Freedom

http://capital.villagesoup.com/column/columnpost/capital-letters/39...

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