Monday, November 9, 2009

PILOT Agreements - Corporate Welfare Ad Nauseum

When you purchase a new home or build one for, let’s say $200k, the transaction must be recorded with the county clerk in the county where the property is located. The sale/build price is also part of this legal requirement and this figure is publicly available and of interest to your local assessor. As a result - the property assessment must be as close as possible to 100% of the property value – the price you paid for it. Therefore if you paid $200K then the assessment will likely be $200K – period. And your property tax will be based on this assessment.

Now consider a wind developer who comes into a rural community and builds a “wind farm”. The average cost of buying & installing a commercial wind turbine (per internet estimates) is roughly between $2M and $3M each. Then the wind developer and local IDA negotiate a PILOT (Payment In Lieu Of Taxes) “deal” and the wind developer avoids paying his fare share of taxes – pays a small fraction of the project’s net worth – as a result of the IDA PILOT “deal”. Furthermore – the developer is probably based in a foreign country and never even visited the area where the wind farm is located. Because of the PILOT program the foreign wind developer can legally pay a mere fraction of the true 100% value of the wind farm while home owner’s taxes are based on 100% value of his new property. How can this be fair? This is corporate greed and manipulation at its worst combined with misdirected irresponsible government. And it’s likely the turbines are manufactured in a foreign country too. And the crew that installs the entire wind project would never be from your community – they are a transient bunch and gone a few months after construction never to return. And often the lessor is an absentee landlord and doesn’t live anywhere near where the turbines are sited, Turbinetown, and avoids the noise, loss of viewshed, shadowing, etc. much less face-to-face contact with extremely upset neighbors who have suffered physical pain and permanent loss of property value. Turbine neighbors have become prisoners in their own homes (because their homes will never sell for anywhere near what they were worth before the creation of the windfarm – if they’re sold at all) and their only escape is to abandon their life’s major investment to gain relief for health reasons. But some town board members make out well approving wind development because they are likely to have a conflict of interest and benefit financially either directly or indirectly and as a result betray their own neighbors including people that trusted them and may have actually voted for them. And think about this – the bad guys assisting the foreign wind developer with PILOTs are your county IDA reps. They would sell out their mother for a low paying job in your county and IDA staff are not even elected. The whole relationship between your IDA and your county legislative board needs constant monitoring. The IDA officials are appointed by your county legislature or board of supervisors. Like a bad cold - corrupt IDA staff are difficult to get rid of. PILOT agreements are developed by your IDA not the town board.
The office of the NYS Comptroller says the following about IDAs:
There are 20 Industrial Development Agencies (IDAs) in the eight county
region of western New York. Pursuant to General Municipal
Law, Section 858, these IDAs are independent public benefit
corporations created by State legislation to improve economic
conditions by encouraging and assisting businesses in maintaining,
constructing or improving facilities. In so doing, they advance job
opportunities and improve the health, general prosperity and economic
welfare of the people of the State of New York.

To accomplish this, IDAs provide project owners financial assistance
which includes, among other things, exemptions from taxation.
Without this assistance, project owners would generally pay a real
property tax based on the assessed value of land and improvements to
a site. Any real property owned or controlled by an IDA is not subject
to ad valorem real property taxes. Therefore, the IDA would take
title to, or leasehold interest in, real property and the property would
become 100 percent exempt from ad valorem real property taxes. To
accommodate the needs of affected taxing jurisdictions, many IDAs
execute written agreements requiring Payments In Lieu Of Taxes
(PILOT) by project owners to municipalities and school districts
where the projects are located. These affected tax jurisdictions (ATJ)
receive PILOT revenue that is generally equal to, or a portion of, the
amount they would have received had the IDA not been involved.
PILOT agreements must contain, among other things, the amount due
annually to each ATJ, or a formula by which the amount due can be

PILOTs are supposed to make jobs for communities but with wind farms this never happens. Only about one mediocre paying job is created for every 10 turbines installed – that’s hardly job creation. Government watchdog groups say the absence of uniform standards makes the whole PILOT program open to abuse, because each wind company gets to negotiate its own private deal with the IDA. In addition, wind companies that fail to meet their original IDA job creation promises rarely get penalized.

In addition, the presence of a wind power facility will drive down the value of surrounding properties (homes), lowering assessments and thus causing a loss of tax revenue that cuts into any possible gain by the presence of a wind farm. NYS property owners have already successfully had their assessments reduced because their properties had the unfortunate circumstance of being located near a new wind farm. This reduces the tax base for the community and must be made up by increasing the tax rate which is then paid by those property owners within the community. Once again the taxpayer is paying higher taxes to support the corrupt wind industry and people say the wind is free.

And think about this - 65% of a commercial wind farm is being paid for with your American tax dollars thanks to stimulus money, NYSERDA, PTC (Production Tax Credits), rapid depreciation schedules, PILOTs, etc. while the foreign owner enjoys the profits while raping your community.

One of the worst recent situations involving IDAs & PILOTs is in Cattaraugus County New York. In Cattaraugus County, a proposed 32-turbine Everpower wind farm in the Chipmunk area of the town of Allegany – the town’s portion of the payment in lieu of taxes (P.I.L.O.T.) negotiated by the Cattaraugus county IDA would be roughly $22,000 a year for the entire wind farm! That’s right - the town would only be getting about $22,000 in PILOT payments a year. That’s for all 32 wind turbines, not each one. Town supervisor Eaton said he did not believe there would be additional “host community fees” available outside of the PILOT agreement, which is negotiated by the IDA. “We’re not doing it for $22,000,” he stated.

Attorney Dan Spitzer said the wind-turbine issue, and its legalities, are complicated at best.

“It’s a very complicated topic and the one thing I say, whether I’m representing the community or representing the developer, is that it will change your community for a generation, at least,” Mr. Spitzer said of a wind-turbine farm.

Mr. Eaton, Allegany town supervisor, who was listening in the background, revised Mr. Spitzer’s statement by saying, “It will change it forever.” Can you imagine a more outrageous IDA than the one in Cattaraugus County? Are they taking a kickback from the wind developer? They are certainly not acting in the best interests of the community. Shame on the Cattaraugus County Legislature and the IDA for attempting to sell the Allegany residents all out, for so very little.

New Yorkers in general are beginning to become completely fed up with PILOTs, IDAs, wind farms and seeing their tax dollars squandered by politicians and bureaucrats to offshore ownership. Taxpayers are beginning to revolt against the wind developers, IDAs and local governments and the November 2009 election results underscore this attitude.

PILOTs should be completely repealed and eliminated and taxpayers should demand the full value of tax revenue from the wind project and nothing less. Industrial Development Agencies should not endorse industrial wind development in NYS, since IDAs were created to stimulate economic development by industries that create permanent jobs and financially benefit the area. Industrial wind will do neither, and is actually contrary to the IDA mission. IDAs are eroding your quality of life in collusion with an “unscrupulous” industry and this must stop. Can you wonder why NYS Attorney General Cuomo is investigating the corrupt wind industry and asking the wind developers to adopt and sign his wind industry ethics code? What other industry or business have you ever heard of in NYS being asked to sign an ethics code? Does this speak well of the wind industry? New Yorkers cannot afford the corrupt wind industry or PILOT agreements.

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