Maine counties chafe at lower-than-expected payments from wind farms

Source: By Bill Trotter, Bangor Daily News • Posted: Sunday, April 11, 2021

Turbines in the Bull Hill Wind project in Township 16 in Hancock County rotate in the breeze in this May 2018 file photo. TerraForm, which owns and operates the project, is one of multiple wind farm operators in Maine to request tax abatements in recent years, which has reduced the amount of revenue counties have received as part of tax increment-financing agreements. Credit: Bill Trotter / BDN

For nearly two decades, commercial wind farms have been touted in Maine as a way to generate electricity without pollution, and as a way rural locales in Maine can generate revenue for themselves by hosting turbines worth hundreds of millions of dollars.

But several counties and towns are finding out they are getting less revenue out of the wind projects than they had expected when they were wooed in the 2000s and 2010s by developers looking to erect turbines several hundred feet tall along local remote, elevated ridgelines. In some cases, the developers are arguing that recent advancements in wind turbine technology have made newer models so efficient that older, less efficient turbines erected nearly a decade or more ago have lost much of their taxable value.

In Franklin County, Maine Revenue Services granted a tax abatement on the Kibby Wind Power project that last month forced county officials to return $187,844 in tax-increment financing, or TIF, payments to Helix Maine Wind, which owns the 44-turbine wind farm.

In Hancock County, state officials granted an abatement to another wind farm, TerraForm-owned Bull Hill Wind, that is forcing the county to return $17,342 it had received in TIF payments last year for the 19 turbines erected in that county’s unorganized territory in 2012.

In Kingsbury Plantation in Piscataquis County, local officials agreed to reduce taxes on part of the Bingham Wind project by $23,000 for three years in a row, from 2018 through 2020. The firm that currently owns and operates the wind farm also sought and was granted a tax abatement in the nearby Somerset County town of Bingham, where 11 of Bingham Wind’s 56 turbines were erected in 2016.

In counties that have TIF agreements with wind farm operators in their unorganized territory, all the tax revenue generated off the turbines and related equipment — which normally would be kept by the state — is divided between the developer and the county by percentages that often change over the 30-year term of the agreement.

Somerset County officials were disappointed enough in the revenue they were getting through their TIF agreement from Bingham Wind, which includes 24 turbines in that county’s unorganized territory, that in 2017 they filed a Freedom of Access Act request with Maine Revenue Services to try to find out how the state determined its valuation for the development, which the state agency does for all development projects in Maine’s unorganized territory.

Maine Revenue Services denied the request, saying that the information was proprietary to the developer, according to David Spencer, Somerset County’s UT coordinator. The county took the case to court in an attempt to force the state to disclose its formula, but lost the case.

“We never got permission to see how the state’s value was established,” Spencer said, adding that the county was opposed to the project but pursued a TIF agreement with the developer anyway, figuring some revenue out of it would be better than nothing.

“When we finally got the checks, they didn’t live up to what we had been told we would get,” Spencer said. “Plus, the turbines are an eyesore.”

The Bingham Wind project had been spearheaded by SunEdison but was acquired by Novatus — which recently changed its name to Onward Energy — after SunEdison filed for bankruptcy in 2016.

Stacey Fitts, Maine asset manager for Onward, said Wednesday he could not comment on whatever Somerset County’s TIF revenue expectations may have been in 2016, because the county negotiated that agreement with now-defunct SunEdison. He said Onward reached “amicable” valuation settlements with Kingsbury and Bingham after the firm questioned the methodology the two municipalities used to determine the value of the turbines.

Officials with Maine Revenue Services did not respond to voicemail messages left Tuesday and Wednesday at their offices in Augusta but Justin McMann, a field appraiser with the agency, spoke with Hancock County commissioners during their public Zoom meeting on Tuesday.

McMann told commissioners he agreed to reduce his estimated value of the 19 turbines in the Bull Hill Wind project, which are a decade old, because of advancements in turbine technology. In the current market, in which newer turbines with longer blades can generate more power at slower wind speeds, the value of the older turbines is lower than he initially had thought, he said.

“They don’t produce energy like the newer ones do,” McMann told Hancock County officials.

Scott Adkins, Hancock County’s administrator, said after the meeting that such a quick depreciation in value for the turbines “worries me.” If the equipment continues to rapidly become obsolete, the county’s TIF revenue also could rapidly shrink, he said.

He said state officials have suggested they might change their valuation method to base their estimates on income, rather than the market price of the equipment being used. If this happens, and if the turbines become so obsolete that TerraForm decides to shut them down, they wouldn’t generate any income at all, which could result in the county getting no TIF funds out of the facility.

But Adkins said his more immediate concern is the lack of information the county received from the state about the abatement request. He said the county did not find out about it until after the state had agreed to reduce its valuation of the turbines. Because of the TIF agreement, the state doesn’t get any tax revenue generated by the turbines, he said. It is the county that loses out when the state decides to grant the abatement request.

“We haven’t been included” in the discussions, he said. “We should be.”

Adkins said that because of the abatement, the county now expects to get $650,000 less in total TIF revenue than it would have gotten otherwise over the remaining 19 years of the agreement — and that’s if the developer doesn’t secure another abatement from the state over the next 19 years.

“That’s one of the larger frustrations,” he said. “You’re kind of changing the rules in the middle of the agreement.”

TerraForm officials also did not respond Wednesday to an emailed request for comment. In addition to Bull Hill, TerraForm also owns and operates wind farms in the Aroostook County town of Mars Hill, the neighboring Penobscot County towns of Lincoln and Lee, and at Stetson Mountain in Washington County, but local officials said this week they have not been notified of any abatement requests in connection with those developments.

Julie Magoon, the county clerk in Franklin County, said that county officials there first heard last fall from Helix Maine Wind that it was planning to request an abatement on the state’s valuation of the Kibby Wind project. But the next they heard about it, the state had granted the abatement, she said.

Should the windpower firm ask for another abatement during the next 19 years that Franklin County’s TIF agreement is in effect, Franklin County also would like to be involved in those discussions, she said.

“We have expressed the same concern to Maine Revenue,” Magoon said.

As for the reduction in TIF revenue, the county clerk said it won’t have any significant impact on the county’s finances. The county can only use the funds for specific purposes such as recreational trail improvements in the UT or tourism marketing — not to support its regular operations.

“We’re going to be fine,” Magoon said.