Communities should consider many factors with PILOT agreements for wind energy
Wind energy is going to happen sometime, somewhere. I write only about the economics of a PILOT – a payment in lieu of tax agreement which can reduce the energy producer’s taxes and costs. The check list should include full disclosure and examination of the following:
1) Is any municipality going to work its magic so it can perform infrastructure work on the property? What will be the cost and how will it be recaptured?
2) Has the assessor been involved to determine the full assessment value and any offsets that the state may impose on school tax?
3) If the producer does not generate the projected local jobs under what circumstances and formulas will it be penalized? Will it have a local energy storage farm? How will job production be audited and accomplished in accordance with due process (state action doctrine)? Is there any requirement that local contractors be used when possible?
4) Has any municipality or agency incurred any costs that it cannot pay out of current revenue so it is dependent on the PILOT being consummated? This effects the trustworthiness of the process.
5) Has the environmental lead agency hired its own environmental consultants to assist it at the applicants sole cost and expense as provided by law? Will the lead environmental review agency at time be paid for that or any other services? (The ECL says the lead agency can take no fee. Clearly it is cannot negotiate a PILOT fee or other fee at the same time as it is lead agency. Also if it does so behind the scenes or trades one for the other it is criminal extortion. That needs to be known or there can be no trust in the PILOT process!)
6) Does the PILOT payment propose to be tied to revenue or profit? If you remember Enron, its tax returns showed profits but the accounting assumptions actually covered up huge losses; the opposite can hold true too! This can trap the unwary municipality into getting nothing or close to nothing due to the way the books are compiled. Expert consultation is required.
7) Are the proposed payments in line with the PILOT charges across the state? Is wind energy locating here because they can make more profit?
8) How much energy generation is going into the local grid as a way to hold down county residents’ electric costs?
9) How much of the project cost and costs are being paid or offset by other governmental programs? Both set annual subsidies and subsidies based on production, sales, and losses need to be disclosed in full and evaluated by forensic accountants familiar with wind energy production.
10) What is the projected wind production for each proposed wind mill? Will it justify its costs without long term and continued subsidization?
11) Do the public experts (again by law paid at Apex’s cost) indicate the planned units are the best and least intrusive alternative? How long before they will be obsolescent and will the cost of replacement be justified without more local contribution? If there a commitment to rebuild?
I hope this list proves useful.
Very truly yours,
Conrad F. Cropsey