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The Frankfort Village Board is preparing to move forward with negotiations to enter into an agreement with Empire State Wind Energy (ESWE) to conduct feasibility studies on potential wind turbine sites.
In order for ESWE to begin investing on researching the project the village needed to first prove that the school district, which is the biggest taxing authority, had, “agreed to come to the table to share the profits,” according to Keith Pitman, president.
If Frankfort-Schuyler Central School District decided to fully tax the project, “it might well render the idea very difficult or useless,” said Pitman in a phone interview.
At a recent meeting, the Frankfort-Schuyler Board of Education unanimously approved a resolution to instruct the district’s attorneys to contact the village to start negotiations, according to Christopher Abdoo, business manager.
“To enter into negotiations with the village; if and when the project gets approved,” said Abdoo.
The next step for the village is to set up a meeting with the town of Frankfort to enter into the same venture, said Mayor Frank Moracco at a meeting Thursday. Once all three are “in favor” of the project the village is able to discuss profit sharing, he added.
As opposed to other wind power payment in lieu of taxes (PILOT) programs, Pitman recently explained at a presentation to the Herkimer County Finance Committee that his company, which he founded in partnership with New York entrepreneur Tom Golisano, offers net revenue sharing as part of its program.
He said the breakdown of this energy sale profit sharing, thus far, involves anywhere from a 50 percent divide between developer and municipality; to 75 percent for the municipality and 25 percent for the developer.
Net revenue sharing is going to need to be discussed in Frankfort, said Pitman by phone. The 50-50 or 75-25 split, “That’s what we’re hoping to be able to do.”
After all three interested parties are apprised of the situation, ESWE begins evaluating factors such as conceptual design, land right acquisition, and permits.
The project had previously been on hold, “from a property tax perspective,” in relation to the impact of the school district, said Pitman.
Approval from the school and town is necessary because ESWE doesn’t receive and direct financial assistance from the municipalities during the feasibility studies, which are ongoing up until construction of the turbines.
“No financial obligation on the taxing authorities of any kind,” he said. Even if the project is canceled for any reason after the company has invested, the village, school, and town aren’t involved in the loss.
Pitman said the construction is at least a year off if the project gets approved. Since the process is still being planned there is currently no site under consideration.
The estimated costs and revenue projections, presented to the Finance Committee, of a project involving 10 or more 2-megawatt turbines under the 75-25 revenue sharing is as follows:
Each turbine, $4.2 million (all inclusive).
Annual sale of power, $525,000, with federal production tax credit (PTC) and state incentive, $100,000 (each), for a total of $725,000.
Annual maintenance is $75,000 (including land lease).
Total annual pre-debt cash flow, $650,000.
On a 15-year turbine payment plan, at 6-percent interest, the debt-service is $430,000 annually.
This brings the after-debt cash flow to 220,000 per turbine.
But the PTC and state incentives, (which are subject to dramatic fluctuation) only last for 10 years, so in between years 10 and 15 the cash flow drops to $20,000 annually.
After year 15 the total cash increases to $435,000, with an additional option for purchase of the power project.
The Frankfort Village Board is preparing to move forward with negotiations to enter into an agreement with Empire State Wind Energy (ESWE) to conduct feasibility studies on potential wind turbine sites.
In order for ESWE to begin investing on researching the project the village needed to first prove that the school district, which is the biggest taxing authority, had, “agreed to come to the table to share the profits,” according to Keith Pitman, president.
If Frankfort-Schuyler Central School District decided to fully tax the project, “it might well render the idea very difficult or useless,” said Pitman in a phone interview.
At a recent meeting, the Frankfort-Schuyler Board of Education unanimously approved a resolution to instruct the district’s attorneys to contact the village to start negotiations, according to Christopher Abdoo, business manager.
“To enter into negotiations with the village; if and when the project gets approved,” said Abdoo.
The next step for the village is to set up a meeting with the town of Frankfort to enter into the same venture, said Mayor Frank Moracco at a meeting Thursday. Once all three are “in favor” of the project the village is able to discuss profit sharing, he added.
As opposed to other wind power payment in lieu of taxes (PILOT) programs, Pitman recently explained at a presentation to the Herkimer County Finance Committee that his company, which he founded in partnership with New York entrepreneur Tom Golisano, offers net revenue sharing as part of its program.
He said the breakdown of this energy sale profit sharing, thus far, involves anywhere from a 50 percent divide between developer and municipality; to 75 percent for the municipality and 25 percent for the developer.
Net revenue sharing is going to need to be discussed in Frankfort, said Pitman by phone. The 50-50 or 75-25 split, “That’s what we’re hoping to be able to do.”
After all three interested parties are apprised of the situation, ESWE begins evaluating factors such as conceptual design, land right acquisition, and permits.
The project had previously been on hold, “from a property tax perspective,” in relation to the impact of the school district, said Pitman.
Approval from the school and town is necessary because ESWE doesn’t receive and direct financial assistance from the municipalities during the feasibility studies, which are ongoing up until construction of the turbines.
“No financial obligation on the taxing authorities of any kind,” he said. Even if the project is canceled for any reason after the company has invested, the village, school, and town aren’t involved in the loss.
Pitman said the construction is at least a year off if the project gets approved. Since the process is still being planned there is currently no site under consideration.
The estimated costs and revenue projections, presented to the Finance Committee, of a project involving 10 or more 2-megawatt turbines under the 75-25 revenue sharing is as follows:
Each turbine, $4.2 million (all inclusive).
Annual sale of power, $525,000, with federal production tax credit (PTC) and state incentive, $100,000 (each), for a total of $725,000.
Annual maintenance is $75,000 (including land lease).
Total annual pre-debt cash flow, $650,000.
On a 15-year turbine payment plan, at 6-percent interest, the debt-service is $430,000 annually.
This brings the after-debt cash flow to 220,000 per turbine.
But the PTC and state incentives, (which are subject to dramatic fluctuation) only last for 10 years, so in between years 10 and 15 the cash flow drops to $20,000 annually.
After year 15 the total cash increases to $435,000, with an additional option for purchase of the power project.
