LIPA tax-challenge case against Town of Huntington resumes Monday

Arguments in the LIPA tax-challenge case against the Town of Huntington resume in state Supreme Court in Riverhead on Monday, even as lawyers and lobbyists for one school district have been working to head off what some have described as a potentially “devastating” court outcome.

The efforts appear to be paying off. A lawyer for several districts said he expects mediation talks with LIPA could restart by early September.

LIPA’s challenge over the Northport power station taxes argues that the plant is vastly over-assessed at $3.4 billion; LIPA says the plant’s value is closer to $198 million. LIPA is seeking a 50 percent reduction of the $84 million it pays annually in taxes for the plant, and its settlement offer proposes a nine-year ramp-down to the 50 percent lower tax figure, while forgiving past tax refunds valued in the hundreds of millions of dollars.

But even as LIPA and Huntington return to court, the Northport-East Northport School District is working with a roster of lobbyists and lawyers to convince state and local governments that LIPA’s plan would wreak havoc with district finances. They want a better deal, and indications from a top Suffolk County official suggest the efforts may be paying off.

“The impression we got is this would be a fortuitous time to get back to the table,” said John Gross, a lawyer for Northport-East Northport and other school districts facing cutbacks by LIPA tax challenges. He acknowledged the Northport district is paying lobbyists at the Parkside Group in Albany, among others, to “assist us in discussing the LIPA matter with the second floor,” a reference to Gov. Andrew M. Cuomo’s office in Albany, as well as for public relations advice.

Gross said he had been speaking with Deputy Suffolk County Executive Jon Kaiman to get LIPA back to the mediation table, and there appeared to be movement.

“We have reached out to the mediator asking that he recommence mediation,” Gross said. “There has been some interest expressed by Jon Kaiman urging us to get back to the table. There is a sufficient basis that led us to suggest the mediator’s office would like to do so.”

The resumption of the LIPA/Huntington trial is expected to last through this week, with closing arguments by week’s end. Gross said he doesn’t expect a verdict by State Supreme Court Justice Elizabeth Hazlitt Emerson until September.

Kaiman wasn’t reachable. 

Huntington Town attorney Nicholas Ciappetta said the town was confident "we've put on a good case and that their appraisal is flawed and that they don't have enough information they've provided to support their numbers." 

He also acknowledged that he spoke to Kaiman on Thursday. "He did reach out to me," Ciappetta said. "We're always willing to talk about this and see if there's a way this can be resolved prior to a verdict. We're happy to go back to mediation and see what comes out of that."

He added, "We feel we've made fair offers that save LIPA hundreds of millions of dollars," but that LIPA hasn't made viable counter offers.

LIPA in a statement said it "continues to offer a settlement similar to the one accepted by Brookhaven that is fair to both Northport and all LIPA customers."

The "problem," LIPA said, "is caused by the town having severely over-valued the plant and that is the focus of the trial." Huntington Town's offers to settle thus far, LIPA added, "provide LIPA’s customers with virtually no reduction in taxes on the Northport plant. LIPA remains open to discussing realistic solutions.”

Gross said his office spoke with the mediator Friday. The school’s attorney said he expects that any settlement, if reached, would be global, encompassing other taxing districts. Gross said his best guess was that mediation could restart in the September time frame.

By Mark Harrington

mark.harrington@newsday.comMHarringtonNews

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