LEXIS-NEXIS® Academic Universe-Document

LEXIS-NEXIS® Academic

November 16, 2000, Thursday ,THIRD EDITION

SECTION: GLOBE WEST; Pg. 1

LENGTH: 413 words

HEADLINE: GLOBE WEST 4 / MEDWAY;
JURY STILL OUT ON TAX DEAL WITH POWER PLANT

BYLINE: By Jenna Russell, Staff Correspondent

BODY:
No one is saying much in Medway about ongoing negotiations between the town and the Sithe Energies power plant.

The two sides are hammering out a mutually acceptable tax plan in conjunction with the plant's upcoming expansion, expected to clear local boards without a snag.

One possible outcome is a "PILOT" (payment in lieu of taxes) program, which could lock in a stable payment rate for the plant. Deregulation of the electric industry, which Massachusetts adopted in 1998, lets towns devise individual payment plans that the state must then approve. A gas-fired "peaking" plant (one that generates electricity during high-use periods), the 25-year-old Medway facility has an assessed value of $24 million for fiscal year 2000, town officials said. Its value will increase with expansion: The tax bill is based on the assessment, varying as the tax rate rises or falls. This year it's about $420,000 before adjustments.

A fixed rate offers greater stability for both the property owner and the town that needs the tax income. Depending on rate fluctuations, either party can end up loser or winner.

Income from the power plant is vital in Medway, given its recent financial problems. Voters rejected a $1 million override six months ago that would have allowed level funding of municipal services. After the measure failed, some town employees were laid off.

Nearby Bellingham, where the financial picture is rosier, has a PILOT agreement with the incoming American National Power plant. The 20-year deal, made two years ago, guarantees the tax rate from that time.Town Administrator Denis Fraine said the agreement has favored the town, as the 1998 rate was $2 higher than it is now.

He said a separate agreement with the plant - now under construction - brought other financial concessions worth $4.5 million, some for scholarships and a new senior center. The new plant's assessed value, to be determined by an independent auditing firm, is expected to fall in the range of $180 million to $200 million, according to Fraine. The 1998 rate will be applied to that base.

An older plant in Bellingham, Northeast Energy Associates, is valued at $208 million and brings in about $3.3 million in annual taxes.

The state Siting Board has approved the Medway plant's expansion, but no application has been received by the Zoning Board of Appeals, and no hearings have been scheduled, Chairman Jan Morris said this week.

LOAD-DATE: January 12, 2001