Nassau County is disputing $185 million owed to its three towns that borrowed millions to refund utility companies for wrongly assessed garbage district taxes collected since the 1990s.
The Second Department Appellate Division ruled in 2010 that the county must eventually pay the towns for the refunds for taxes imposed on poles, wires, transformers and other equipment that doesn’t generate refuse.
The county is appealing 75 garbage district refund cases scheduled for hearings in 2016.
The towns have borrowed to pay the utility company refunds and are accruing hefty interest charges, officials said.
The state-mandated 9 percent annual interest rate that applies to nearly all lawsuit judgments is worrisome, said Maureen Liccione, an attorney for Jaspan Schlesinger LLP, of Garden City, who has represented North Hempstead in the garbage tax cases since the mid-1990s.
“It’s an avalanche coming down a mountain,” Liccione said of the future costs to taxpayers.
Since 2010, when the Second Department of the Appellate Division ruled Nassau County is obligated to repay the towns, Hempstead Town has paid $25.6 million to utility companies: $18.1 million to Verizon; $5.8 million to N.Y. Water, and $1.7 million to Long Island Water. North Hempstead has borrowed $3.15 million to refund Verizon and $3.67 million to KeySpan, town officials said. Oyster Bay Town has paid $3.3 million to Verizon, officials said.
Town officials said they are hopeful the county will pay them for the utility refunds and that the debt will have little effect on town operations. But a Moody’s report earlier this month cited reimbursements not yet received from the county for payments to utility companies in downgrading Hempstead Town’s bond rating.
Nassau is “challenging the constitutionality of making Nassau taxpayers pay refunds for services they did not receive,” County Attorney Carnell Foskey said. “The refunds should be borne by the towns and garbage district residents that got the benefit of having the utilities contribute to the levy when they were not supposed to, according to the courts.”
The only county payment to a town from the garbage district lawsuits was for $1.7 million to North Hempstead for a Verizon judgment, county officials said. Interest represented $532,104 of the payment.
North Hempstead officials said they have had to borrow more than the cost of the refunds to cover administrative costs related to borrowing.
The towns and county have generated millions in legal fees in the garbage tax dispute. The towns and county are using three law firms in the disputes.
Since 2010, Hempstead has paid Jaspan Schlesinger of Garden City $445,405 for work associated with the garbage tax lawsuits. North Hempstead paid Jaspan Schlesinger more than $483,000. Oyster Bay Town has paid $468,037.64 to Syosset-based Anthony J. LaMarca, PC. Nassau County has paid $1.8 million in outside legal costs to Rivkin Radler of Uniondale since 2010 for the garbage district cases and other cases.