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Recent DRA & BLTA rulings raise red flags on PILOT agreement

September 04, 2013
BERLIN — Mayor Paul Grenier raised warning flags on exactly how iron-tight the Payment in Lieu of Tax (PILOT) agreement is between the City and Berlin Station, a.k.a. Burgess BioPower, signed on Aug. 30, 2011, in a Thursday afternoon conversation. Other tax experts who are also knowledgeable about the recent rulings of the state Department of Revenue Administration (DRA) and Board of Tax and Land Appeals (BTLA) are also concerned.

The six-page PILOT agreement, signed by then-City Manager Pat MacQueen, calls for minimum installment payments that would rise over $250,000 twice a year, starting in December 2015, and would culminate with at least two $1.5 million payments in 2033.

The PILOT agreement's total value over 20-plus years stands at a minimum of $34 million, with the possibility of additional tax payments starting in 2019.

Grenier is seriously concerned that the DRA and BTLA challenge to the PILT agreement on the 33-turbine Granite Reliable Power wind farm that the county commissioners signed five years ago on behalf of the Unincorporated Places of Millsfield and Dixville is a forerunner to putting the City's agreement under fire, despite continuing to believe it is in the City's best long-term interest.

"There are some differences between PILT agreement negotiated between the Granite Reliable Power in Millsfield and Dixville and the City's biomass plant PILOT," Grenier pointed out, however.

The City of Berlin employed utility expert consultant George "Skip" Sansoucy to work on the agreement, he noted. In contrast, the county commissioners of which Grenier was one relied on information that they believe was advice given to them by DRA employees at a meeting held in Lancaster.

Nonetheless, Grenier explained, the quixotic and unexpected assessments that are now being applied to the physical assets of the Granite Reliable Power wind farm in the two Unincorporated Places have struck fear into the hearts of communities all over the state.

"The value that the DRA placed on the GRP wind farm is about double that of the wind farm in Lempster," the mayor explained. "The BTLA ruling has tipped the whole state upside down!"

It is not likely that the biomass plant will operate commercially until after Jan. 1, 2014, Grenier said.

Nonetheless, the City will likely know before April 1, 2014, whether or not the DRA will challenge the City's assessment of the new 75-megawatt state-of-the-art wood-chip-burning facility that is now in its testing or commissioning phase. Only then will the City know what effect such a challenge could have on the City's overall valuation and whether it could potentially affect all other property taxpayers.

Although the timing remains unclear, Grenier is clearly concerned that the DRA could put an unanticipated spoke in the City's comeback wheel.

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