EASTBROOK — An $18.2-million payout over 30 years sounds like the result of a winning Powerball ticket, but in Eastbrook it’s what the town stands to gain from the construction of eight wind turbines.
That’s what an audience of about 15 residents heard at a meeting on Monday night, where town officials, attorneys and wind company representatives gathered to explain a proposed tax increment financing (TIF) deal for the town.
SunEdison intends to build a 22-turbine wind farm called Weaver Wind. Eight of those turbines would be in Eastbrook, while the other 14 would be in Osborn.
The $18.2 million would come from various sources. Just over $13.9 million would come from property taxes on the new development.
A TIF removes the value of new development from use in equations that determine how much money a municipality gets from the state in revenue sharing and education subsidy funds and how much it pays in county tax.
“Without a TIF, when the valuation increases, the state says, ‘Oh, your town is much richer now — you don’t need as much education subsidy, you don’t need as much revenue sharing, and you can pay more in county tax,” said Noreen Norton, an economic development consultant with Rudman Winchell, at Monday’s meeting.
If the TIF is approved as presented, and the development is completed, Eastbrook stands to save almost $1.3 million over three decades — money it will keep in its coffers but would otherwise lose in revenue sharing, or have to pay in county tax or for its school bill from Regional School Unit 24.
The remaining $3 million would come in the form of a community benefit agreement with SunEdison — separate from the TIF, but also as a result of the new wind farm. That money would be paid by SunEdison in annual installments of $150,000 over 20 years.
It’s easy to see what’s in the TIF for Eastbrook, but what’s in it for SunEdison? Essentially, a sizeable tax break.
Through a mechanism known as a credit enhancement agreement, 50 percent of the company’s property taxes on the wind farm will be forgiven for 20 years. That amounts to a $7.4-million benefit for SunEdison, according to estimates provided at Monday’s meeting.
Erik Stumpfel is an attorney with Rudman Winchell who has worked with the town to craft this TIF proposal. He acknowledged the TIF would mean giving a tax break to SunEdison, but said the town would “see less than $18 million in revenue if you didn’t do a TIF.”
If the town didn’t do a TIF, the project’s new value would not be protected. The higher valuation would lower the town’s property tax rate, Stumpfel said, meaning SunEdison would pay just over half of what it is projected to pay in taxes under the TIF.
“With a TIF or without a TIF, the company’s bottom line is pretty much the same,” he said. “It comes out pretty close to the same value.”
The advantage for the town, Stumpfel added, is that “you’ve sheltered the value from the funding formula impacts.”
The $13.9 million the town stands to receive in taxes — an average of $463,514.33 annually over 30 years — must be used for economic development purposes. That includes road work on any town roads, because they are deemed essential to the town’s existing businesses (forestry and farming).
Officials said Monday night the town could likely cover all of its road costs with TIF dollars, meaning no general fund money would need to be spent on roads.
Other uses of the TIF money, as permitted by state law, include the purchase of land, renovation of the town’s former library building into a commercial space or a revolving loan fund.
One resident asked if the money could be used to improve Internet connectivity in town. Norton said it could be if it was tied to business and economic growth.
None of the financial benefits the town stands to see from Weaver Wind would materialize until the project is in place. Charlie Baldwin, a development project coordinator with SunEdison, said Monday the company estimates that is three years down the road.
Eastbrook residents will gather for a special town meeting on Tuesday, Sept. 15, at 7 p.m. at the municipal building to vote on whether to approve the TIF proposal. The vote will be preceded by a public hearing on the subject.
To the north, Osborn is not pursuing a TIF plan with SunEdison. Instead, voters there earlier this year approved a $1.87-million community benefits agreement with the wind farm developer in exchange for the 14 turbines it intends to erect there.
Nearly 60 percent of that total is community benefit funds that can be used for any municipal expense. Half a million dollars is set aside for an energy conservation fund, while $250,000 is set aside for public safety costs.
That $1.87 million total is separate from the property taxes SunEdison will pay to Osborn.