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Thu May 22, 2014
Tiny Millsfield: 'Collateral Damage' In A Fight Over Wind Farm Taxes
It would be easy to miss Millsfield. The unincorporated place in the North Country is home to 10 households, many of which are tucked away in the woods, and just two businesses, a bed and breakfast called A Peace of Heaven and the Log Haven restaurant.
“Electricity didn’t show up until the 60s,” said Luc Cote, who’s lived in Millsfield for roughly forty years. “Phone line didn’t come up until mid-60s as well.”
Such a remote location seems like an unlikely setting for a commotion that includes a case before the state’s Supreme Court and a bill headed for the desk of Gov. Maggie Hassan.
But residents fear the dispute - over the value of the nearby Granite Reliable wind farm – could end up ruining them financially.
It started in 2008, when the Granite Reliable wind farm was proposed for the ridge lines above Millsfield and Dixville.
The Coos County Commissioners at the time - Paul Grenier, Tom Brady and Bing Judd – signed what would become a controversial payment-in-lieu-of-taxes or "PILOT" agreement with Granite Reliable.
Under the PILOT, the county would get roughly $500,000 a year rather than taxes based on the value of the facility which the county decided was worth about $113 million.
That was a surprise to Millsfield, where most of the wind turbines were to be located.
“Nobody from the county talked to anybody in Millsfield about the wind park prior to them signing the agreement,” said Wayne Urso. “We never knew it was coming. We never knew the impacts it would have.”
Once the wind farm began operating in 2012, the state’s Department of Revenue Administration decided that, under the law, it had no choice but to review its value, said Stephan Hamilton, the Director of the Municipal and Property Division at the DRA.
The DRA concluded the wind farm was valued at $228 million – more than twice the $113 million value locked in by the PILOT agreement.
But because Granite Reliable couldn’t be forced to pay any more than what was called for under the PILOT, tiny Millsfield suddenly owed the state around $800,000.
That was a scary thing to residents who were suddenly confronted with the possibility of a huge tax increase.
“Quite frankly if my house is worth $150,000 but the property taxes on it are going to be $25,000 a year, who is going to want to buy my house,” Mark Sandoe said.
The county commissioners appealed the new valuation to the Board of Tax & Land Appeals, but lost.
Fortunately, the county’s Millsfield account had funds stored up from the PILOT payments, land coming out of current use and some timber taxes – enough to cover the 2013 bill.
But now that account is pretty much empty, and with the 2014 taxes are looming, Millsfield could be on the hook for at least $500,000.
“A handful of people are going to have to pay that increase. It is something that simply can’t happen. It makes no sense,” said Fred King, the treasurer for Coos County.
Rick Samson, who was elected a Coos County Commissioner almost two years ago, said Millsfield residents are victims of county and state officials.
“I believe they are collateral damage,” he said.
There’s also some concern in Coos that efforts to reopen the Balsams resort could be collateral damage. It is located in adjacent Dixville, which also has some wind turbines and faces the same tax-hike issue as Millsfield. The theory is that an increased tax burden could fall on the Balsams, possibly complicating its revival.
Earlier this year, the case was argued before the state Supreme Court.
The county argued that it set the $113 million value after an official from the Department of Revenue Administration suggested it, and that the PILOT agreement based on that value should be honored.
The county also argued that the DRA had refused to show Coos how it arrived at the new, $228 million value.
The DRA said that information was confidential because it was based on material provided by the Granite Reliable wind farm, which didn’t want its financial information made public.
That seemed to surprise Supreme Court Associate Justice Robert Lynn.
“It really seems to me completely bizarre,” he said. “DRA says the value is $228 million. Okay, so how did you get there? We don’t have to tell you that. I means that just seems crazy.”
For its part, the state argued that the DRA was not bound by one employee’s statement of the wind farm’s value, and that the agency was required by the law to review the facility’s value. The state also argued that Coos officials didn’t understand Pilot agreements, failed to do the proper research and had simply failed to prove that the new value was too high.
The Supreme Court is expected to rule later this year.
Meanwhile, there is a potential safety net for Millsfield.
According to the DRA’s Hamilton, the commissioner of revenue has the authority to make adjustments in cases of unfair burden – although he acknowledged that authority has rarely been used.
There’s another possibility - House Bill 1590.
The bill, which passed the House and Senate, locks the value of the wind farm at $113 million for the length of the PILOT agreement. That could be as long as 20 years.
Sen. Jeff Woodburn, a Democrat who represents the North Country, said it is “vitally important” that Gov. Hassan signs it into law. A spokesman for the governor said she “will review it closely.”
The bill could have a statewide ramification, however. One is that if it becomes law, other jurisdictions could be inspired to resolve their disputes with the DRA by going to the legislature.
Another statewide issue involves future PILOT agreements, said Jonathan Frizzell, the lawyer for Coos County.
“If the state wants to continue to promote renewable energy facilities it needs to look at the entire situation including how those PILOT agreements are analyzed by DRA,” he said.
All Things Considered