Responses varied, but one concern – a potential loss of critical tax revenue from the properties due to state ownership – rose to the top of the list. Vernon officials say any tax hit would be “just plain cruel” in light of the recent closure of Vermont Yankee.
So this week’s news that a state purchase of TransCanada’s hydroelectric properties is “extremely unlikely” may bring a sigh of relief for some in Windham County.
“I think the unlikelihood of a state purchase may relieve town concerns about the loss of tax revenue, since it seems probable that the lead purchaser of TransCanada hydro power assets would be a private entity,” said Chris Campany, Windham Regional’s executive director.
At the same time, lingering uncertainty about who might eventually buy TransCanada’s assets means no one can say what future tax revenues might look like for towns that host affected properties.
“This is definitely not an easy question at all,” said Rep. Mike Hebert, R-Vernon. “It truly depends on what TransCanada’s going to do.”
TransCanada is looking to unload some of its assets to finance acquisition of a Texas natural gas business. Among the properties up for sale are six hydroelectric stations on the Connecticut River and seven on the Deerfield.
Vermont officials in April put together a special working group to study a “partial or full acquisition” of those properties.
That study continues, but a recent state Department of Public Service memo said time constraints and other issues will make it “extremely difficult” for the state to independently bid on the TransCanada assets. State officials say Vermont still could acquire some interest in the properties, whether via a partial ownership agreement or a power-purchase agreement.
The possibility of an outright state purchase of TransCanada’s assets had spurred financial worries among Windham Regional towns where the company owns generating facilities or other property, including easements. In late April, the commission compiled a list of town comments on the matter: Seven of the first 10 items on the list touched on land values or other financial issues.
There were, Windham Regional officials wrote, “serious concerns about what a purchase by the state would mean for grand list valuations and revenue.” While officials anticipated that the state would hand over a payment in lieu of taxes, there were concerns that such “PILOT” money could be less than TransCanada pays in taxes now.
Those concerns are based on the size of TransCanada’s presence on municipal grand lists, especially in towns that host hydroelectric dams. Chip Stearns, municipal manager for the town of Rockingham and the village of Bellows Falls, said TransCanada accounts for more than 20 percent of the town’s tax revenue and close to 45 percent of the village’s.
The current assessed value of the dam is $110 million.
In the event of a state purchase, “the understanding was that the state was going to make the communities whole” in terms of tax revenue, Stearns said.
Others, though, were skeptical that would happen. In response to Windham Regional’s TransCanada survey earlier this year, Stratton Town Clerk Kent Young wrote that “PILOT payments on state-owned lands will not sufficiently compensate the loss of property taxes to towns affected by (a state) purchase.”
The anxiety level may have been all the higher because some towns have spent much time and resources solidifying tax values for TransCanada properties. Rockingham’s battle is ongoing: Though a Superior Court judge last year ruled in favor of the town, TransCanada’s subsequent appeal means “we are now awaiting a decision from the (Vermont) Supreme Court,” Stearns said.
In late 2014, Vernon settled a long tax fight with TransCanada, with the two sides agreeing that the hydroelectric station there would be assessed at $30.5 million for five years.
“It took Vernon a long time to get an agreement with TransCanada about what that place was worth,” Hebert recalled.
If and when the dam is sold, “for the company coming on board, we would like an open relationship with them and some assurance that the revenue coming to the town reflects the value of the plant,” Hebert said.
For now, it appears that communities that host TransCanada property will have to watch and wait. Though regulatory approvals will be necessary for any sale of the hydro dams, “for the most part, we’re probably looking at a private-to-private sale,” Stearns said.
Still, Campany said there are “myriad hypothetical partnerships that could still bring the state into the picture even beyond power-purchase agreements.” For example, he said the state could partner with the new owner of the dams to manage property, including recreational facilities that are important in some of the host towns.
If that happens, Campany asked, “what does that look like, not only from a grand list perspective but also from a business and economic activity perspective?”
“As the picture becomes more clear, it is my hope that affected towns will ponder not only what they don’t want but what they do want as well,” Campany said. “There’s an opportunity here for towns to engage with one another to explore numerous shared interests in the ongoing stewardship and management of these resources.”
