Nassau must reimburse town millions of dollars, court rules in garbage-tax dispute

ALBANY — Nassau County will have to reimburse North Hempstead millions of dollars after New York’s highest court ended part of a tax dispute dating back to the 1990s.

The dispute involved garbage taxes that initially were imposed on energy, water and telephone utilities long ago by local governments and array of "sanitation districts" created to impose the levy. The companies pursued a lawsuit, which they eventually won, claiming they were wrongfully assessed and shouldn’t have to pay the tax essentially because they didn’t use local garbage services.

For the last decade, the county and the towns of North Hempstead, Hempstead and Oyster Bay skirmished in court about who had to repay the companies.

And on Wednesday, the state Court of Appeals effectively said the county is responsible.

The court declined to hear one last appeal from Nassau, involving lawsuits by Verizon and Keyspan Gas East, an energy company succeeded by National Grid. The court's action this week applied only to the town of North Hempstead, county spokeswoman Christine Geed said Friday.

The outcome means the county must repay the town $5.2 million plus interest, which could add roughly $2 million or more to the bill, she said.

In 2015, Nassau and the local governments acknowledged that about $185 million was at stake in the overall dispute. Some of the claims have been paid already, Geed said. The county didn’t have figures immediately Friday about how much money is still in legal limbo.

“Nassau County understands that this lengthy dispute has come to an end and is disappointed in the court’s decision to not accept our appeal,” Mike Fricchione, a spokesman for Nassau County Executive Laura Curran, wrote in an email.

Fricchione later added: “The judgment will not have any impact on the county’s budget or tax levy. A payment schedule has not been determined.”

“It has been a long legal battle, and we are pleased that the court agreed with the town’s understanding of the law,” said Gordon Tepper, spokesman for North Hempstead, the lead municipal defendant in the lawsuit. “The town now stands to be reimbursed for a substantial amount of money that it had advanced.”

Tepper couldn’t immediately provide an estimate for how much the town expects to receive.

In dismissing the county's petition, the Court of Appeals sustained a series of lower court decisions.

Most recently, the midlevel Appellate Division of state Supreme Court ruled in 2019 that a provision of county law, known popularly as the “county guaranty,” means the county must pay the bill, not the towns. That decision also rejected Nassau’s petition to revisit the utilities’ claim one more time. 
In 2014, North Hempstead reported borrowing to pay about $7 million to repay the utilities. It also paid about $500,000 at the time to an outside law firm for representation in the case.

The court case also resulted in significant bill hikes for Nassau residents because the utilities — then, KeySpan Gas East, Verizon and New York Water — were removed from the garbage-tax rolls in 2014. A year later, a Newsday analysis showed the average annual residential garbage-tax bill rose to as much as $1,200.