NORTHFIELD — After more than two years of negotiating how much Northfield Mountain Pumped Storage Project should pay in property taxes, its owner has agreed to pay twice as much as it had originally wanted.
According to Northfield Town Administrator Brian Noble, the controversy resulted from a dispute between the town’s assessors and the utility’s appraisers concerning the accurate value of the power plant for fiscal years 2014 through 2016.
The agreement signed by FirstLight Power Resources and the Selectboard this week settled on nearly $4 million for the three years, roughly twice what the company originally proposed.
Bob MacEwen of the Northfield Board of Assessors, who spoke at the Selectboard meeting Tuesday, explained the town valued the property at $65 million in 2014 and 2015, and at $103 million in 2016. FirstLight claimed it was worth less than $40 million. The business represents 12 percent of Northfield’s tax revenue.
According to MacEwen, FirstLight made improvements to the property which raised its value from 2015 to 2016, including replacing four turbines with larger turbines that will produce more electricity.
The towns of Gill, Montague and Erving are also disputing the value of the utility’s property in those towns.
“We’re the first town to reach an agreement,” Noble said.
According to both Noble and FirstLight’s Director of Massachusetts Hydro Operations, Gus Bakas, as a result of the agreement Northfield keeps all taxes paid by FirstLight in 2014 and 2015. For 2016, FirstLight agreed to pay $1,694,766.93, an increase of more than half a million over the 2015 tax, according to Clerk of the Northfield Board of Assessors, Bethany Walker.
For all three years, FirstLight will pay nearly $4 million, roughly double what it would have paid based on its own original assessment of $40 million.
By reaching a settlement, the two parties kept the case out of court. While the town of Northfield ordinarily keeps around $100,000 in reserve to cover court cases each year, Noble said the town has set aside about $640,000 because of the longstanding tax disagreement.
Noble speculated that if the town were to go to court and lose, it could have needed to pay $500,000 to $800,000 plus interest. Northfield would have needed to either increase taxes or cut its budget to make up the difference, Noble added.
“This was just the absolute best way out,” MacEwen said of the agreement.
Noble added that a lot of credit in reaching the settlement goes to Bakas and the staff at FirstLight.
“They recognized the impact this would have on the town if it went the wrong way,” he said. “I think they were very good corporate citizens to come forward and say, ‘We can work this out.’”
“It’s a fair agreement that addresses both the town’s and FirstLight Power’s need for stability and our tax obligation going forward,” Bakas said of the agreement.
At the end of the year, the town’s court contingency fund can be returned to the taypayer or used on other necessary town expenses depending on the decisions made during town meeting. Furthermore, the settlement established the utility’s value for fiscal year 2017 through 2019 to be almost $88 million, eliminating future disputes.
“We know what we can count on for tax revenue, they know what they can count on for an expense,” Noble said.