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Talks break down in two power-plant tax cases in Nassau County

Talks between LIPA and Nassau County to settle

Talks between LIPA and Nassau County to settle tax challenges for the E.F. Barrett power plant in Island Park, seen here, and a separate power station in Glenwood Landing, have broken down, a LIPA official said. Credit: Kevin P. Coughlin

Talks between LIPA and Nassau County to hammer out a settlement of LIPA’s looming tax challenges to two Nassau-based power plants have broken down and the high-stakes cases are likely to be decided in court, a LIPA official said Thursday.

LIPA had originally set a late February deadline for settlement talks over tax challenges for the E.F. Barret power plant in Island Park, and a power plant property in Glenwood Landing, but extended that deadline to March 31.

LIPA’s proposed settlement would have lowered the current $43 million the authority pays in property taxes for the Island Park plant, and the $24 million in Glenwood Landing, by around 47% by 2027, with an option to extend the reduced amount for five years beyond that. LIPA would also forgive hundreds of millions of dollars in refunds that could result from a court verdict in its favor.

"The settlement is likely not to move forward and our offer expires at the end of March," LIPA chief executive Tom Falcone said in an interview Thursday. "We thought it was a fair offer but the Nassau legislature did not take it up. At this point I do not expect a settlement in 2021."

Talks broke down in recent weeks, Falcone said, after Nassau sought to tie the settlement to a separate property tax dispute with plant owner National Grid over unrelated power plants. "It was important to Nassau to settle both [cases] at the same time" but the county was "unable to reach an agreement" with National Grid, Falcone said.

Nassau County spokesman Mike Fricchione indicated talks broke down for a different reason.

"It’s unfortunate that the North Shore and Island Park school districts did not receive offers comparable to the $14.5 million given to the Northport School District," he said in a statement. "We will proceed to the courthouse where we hope LIPA will re-evaluate their position."

Late last year, LIPA settled a separate tax case with Huntington Town on much the same terms — a 47% tax cut over seven years, forgiveness of past refunds and a 5-year potential extension. LIPA also reached a settlement with the Northport School District over its lawsuit against LIPA that provided for $14.5 million in payments to the district over seven years. LIPA also agreed to pay Huntington Town $3 million.

A National Grid spokeswoman didn't respond to requests for comment.

The breakdown means that the two LIPA tax cases are likely to go to court, where a judge will determine whether LIPA’s taxes should be reduced — drastically so, LIPA says — and whether local Nassau residents owe hundreds of millions in tax refunds to LIPA.

The Island Park and North Shore School districts had been separately negotiating to settle their similar suits against LIPA, but apart from the Nassau negotiations because Nassau wasn’t a party to them.

Falcone said proceeding to trial in the case would prompt both sides to present their own assessments for the properties’ value in court in the coming months.

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