LIPA effort to settle tax grievance cases hits snags

The Long Island Power Authority's effort to settle tens of millions of dollars in power-plant tax grievance cases that it has filed against school districts and municipalities has hit a series of snags and could wind up back in court.

The authority, as part of overhaul legislation backed by Gov. Andrew M. Cuomo this summer, had given six Long Island municipalities and school districts until Oct. 20 to settle the cases, but none thus far have accepted, LIPA spokesman Mark Gross said.

"LIPA has not extended the deadline for the offer and is moving forward with the litigation," he said in a statement. And while noting that none of the parties has settled to date, he added, "LIPA remains open to any settlement discussions related to the tax litigation."

LIPA has proposed trimming millions of dollars in annual tax payments to each of the districts and municipalities over 10 years starting in 2014, while forgiving all of LIPA's claims of past overpaid taxes -- which amount to tens of millions of dollars more. If settlements aren't reached and LIPA wins the challenges in court, it would result in a significantly higher bill for taxpayers, including retroactive payments for the past taxes paid based on the overassessment.

The North Shore Central School District two weeks ago filed a lawsuit in State Supreme Court, alleging that LIPA and plant owner National Grid breached a 1997 power-supply contract by filing the tax claim in the first place. It joins a similar suit filed by the Town of Huntington and the Northport-East Northport School District that claim LIPA's original power supply contract and a letter from former LIPA chief Richard Kessel prevented the utility from challenging the assessments.

LIPA "didn't have the right to bring them [tax grievances cases] in the first place," said John Gross, an attorney for the districts.

LIPA says the plants -- in Northport, Port Jefferson, Island Park and Glenwood Landing -- are overassessed by upward of 90 percent, and have been depreciating in value for decades as they near the end of their useful lives.

Lawyers: More time sought

Under LIPA's proposed settlements, by 2024-25, the Oceanside Union Free School District would see a reduction of tax payments from LIPA to roughly $9 million a year from the current $13.6 million. The Island Park Union Free School District's LIPA payment would be cut to $10 million from a current $22.2 million. And the North Shore Central School District would see taxes cut to $8 million from a current $22.6 million. The latter district is host to the Glenwood Landing power station, large parts of which are scheduled for decommissioning and demolition.

Lawyers for the districts say they would prefer to see any reduction take place over a longer period -- 20 to 30 years rather than the 10 LIPA proposed.

Stephen Waldenburg, president of the Northport Board of Education, called it "regrettable" that LIPA wouldn't extend the settlement offer given the "significant legal concerns" in the offer. "At present, we believe we have a valid pending legal claim against LIPA, but stand ready to continue our related discussions," he said.

Huntington Town, whose Northport-East Northport Union Free School District faces a LIPA annual tax payment cut more than in half under the settlement, from $74.4 million to $30.8 million, has asked LIPA for an extension of the settlement offer to Jan. 15.

Tom Knierim, vice president of the North Shore Board of Education, said the district had "no choice" but to file suit against LIPA because "the potential impact to the district is great and it is important that we have a seat at the negotiating table."

Some near agreements

Not all parties presented with a settlement offer are balking. The Village of Port Jefferson, its school districts and Brookhaven Town have met with LIPA on at least three occasions on settlement talks and are close to reaching an agreement, said Margot Garant, mayor of Port Jefferson Village.

Under LIPA's proposed settlement, the Three Village Central School District and the Port Jefferson School District would see taxes drop from $27.5 million a year in 2013 to $9 million by 2024-25. The village would see tax payments from LIPA cut to $864,806 from a current $2.5 million a year.

"We continue to negotiate in good faith," said Garant. "We're all on the same page." She said she expects a settlement by early next year.

Jack Krieger, a spokesman for Brookhaven Town, said, "We are still negotiating the terms."

"The Huntington Town Board is greatly concerned with the impact that a tax reassessment of the Northport power plant will have on residents and throughout the town," Town Attorney Cindy Elan-Mangano wrote LIPA on Oct. 16. The town requested information on just how LIPA reached figures for its lower tax payment.

LIPA in a letter dated Oct. 21 to the Huntington town attorney said the settlement offer "has been pending for months," giving the parties ample time to decide "whether they would like to avoid the continued risk of litigation."

Nassau County Attorney John Ciampoli, who is representing Nassau districts in cases involving the Island Park and Glenwood Landing plants, said, "We are always working to settle cases, however, we are also prepared to move forward and fight this case in court to protect our taxpayers."

Officials for the Oceanside School District and the Island Park Public Schools didn't return calls seeking comment.