Nassau close to settling LIPA's tax challenges on Nassau power plants

The Long Island Power Authority and Nassau County are close to reaching a new agreement to settle LIPA’s two remaining power-plant tax challenges, with better terms for Nassau than were proposed in 2019, officials said.

Nassau County, in a statement to Newsday Tuesday night, said the "improved" agreement over payments LIPA makes in lieu of taxes for the E.F. Barrett plant in Island Park and a separate power station in Glenwood Landing, is expected to be filed "in coming days."

LIPA pays over $43 million in taxes on the Island Park plant, and another $24 million for the Glenwood Landing power station, which no longer has a large plant.

"The proposed agreement will incorporate more favorable terms," that are in line with terms LIPA reached in a separate settlement over taxes for a Northport power station in 2019, the Nassau spokesman said. Northport’s prior taxes of around $86 million a year will drop to around $46 million by 2027, under terms of that recently completed settlement.

Terms of Nassau's new agreement include a 47% tax reduction starting this year through 2027, compared with a 50% reduction announced in 2019. LIPA also would forgive hundreds of millions of dollars in tax refunds potentially due to the authority, and agree to a five-year extension of the 2027 tax payment, if the plants are still in operation. LIPA’s contract for the National Grid-owned plants ends in 2027.

"We look forward to passage of this agreement which is necessary to reach a settlement on LIPA’s assessment challenges against the county and which will achieve a comprehensive solution that protects residents from sudden significant tax increases," a Nassau spokesman said.

The improved agreement, added a senior LIPA official, "is really about helping the communities re-adjust" to the impact of LIPA's lower tax payment over time.

It’s unclear how the new terms will impact taxes of residents in the school districts. When LIPA and Nassau announced terms of their first agreement in 2019, Island Park residents at a public forum railed against it, most notably over the $203 per-month average increase Island Park residents would have to pay in taxes by the final year of the agreement. The agreement has been held up by the Nassau Legislature since 2019. A spokesman for the legislature didn’t immediately provide a comment.

The Nassau-LIPA agreement in principle does not include direct payments by LIPA to the school district or local governments that were part of the Northport/Huntington settlement, though they could still be separately negotiated. LIPA agreed to pay the Northport-East Northport School District some $14.5 million over seven years, to drop its lawsuit against LIPA over the tax challenge. Huntington Town also negotiated a $3 million payment to further ease the transition amid pandemic budget constraints.

Separately, LIPA is said to be in discussions with Brookhaven Town, which also settled its case with LIPA three years ago, to bring its agreement in line with other municipalities.

The Nassau Legislature must still approve the agreements. If not settled, the tax challenges would be resolved in court, with proceedings expected later this year. Meanwhile, the Island Park and the North Shore school districts are expected to discuss ending their lawsuits against LIPA as part of the agreement. But settlement of those cases would be separate from the Nassau case, and isn’t contingent on them, officials said. Peter Giarrizzo, superintendent of the North Shore School District, said, "I can't comment on such a settlement without seeing the details so that I know the interests of my students and community have been protected." Island Park school officials didn't respond to a request for comment.

The school districts "are scheduled to speak to LIPA about resolving their lawsuits, which are independent from the county," the Nassau spokesman said.

LIPA first filed the tax challenges more than a decade ago, arguing the plants were grossly overassessed, even as they are used considerably less than they were 10 years ago. In coming years, LIPA could use the plants even less as the state moves to a green-energy grid powered chiefly by offshore wind by 2035 and beyond.

By Mark Harrington

mark.harrington@newsday.comMHarringtonNews

Mark Harrington, a Newsday reporter since 1999, covers energy, wineries, Indian affairs and fisheries.