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Sources: LIPA makes concessions in tax case but deal not imminent

The LIPA Power Plant in Northport on July

The LIPA Power Plant in Northport on July 1. The more than $84 million LIPA now pays in annual property taxes for the National Grid-owned plant would be reduced by around 47% over a seven-year ramp-down. Credit: Newsday / John Keating

LIPA has made several concessions in its attempt to settle Northport power plant taxes, according to sources familiar with the talks, but a final agreement could still be far off. 

The coronavirus pandemic has slowed progress toward a potential settlement that was encouraged by a state Supreme Court judge, said the sources, but lawyers for LIPA and the Town of Huntington remain in contact. Any settlement would have to be approved by the Huntington Town Board and the Northport School District, but not LIPA’s board of trustees, which has already given authorization to LIPA staff to resolve the cases, the sources said.

The more than $84 million LIPA now pays in annual property taxes for the National Grid-owned plant would be reduced by around 47% over a seven-year ramp-down, a change from the original 50%. The settlement would also include cash payments in the hundreds of thousands of dollars to the Northport-East Northport School District during the middle years of the seven-year term, the sources said.

“It’s a better deal than Brookhaven” Town agreed to in 2018, one source said, referring to a settlement with that town that reduced LIPA's taxes by 50% over seven years.

Under terms of that deal, though, Brookhaven would be entitled to the more favorable terms LIPA agrees to with other towns or Nassau in subsequent negotiations. 

Like previous settlement offers, the proposed offer to Huntington would absolve the town of having to pay LIPA tax refunds of more than $650 million, according to the sources. LIPA could also extend the agreement for four year's beyond its seven-year term. 

Representatives for LIPA and the town declined to comment.

But a senior LIPA official said the town and LIPA "continue to discuss a settlement agreement that gives the school district peace of mind by guaranteeing tax payments over the next seven years, while keeping school taxes below those of neighboring districts and providing relief to all Long Islanders." 

LIPA was near a settlement with Nassau County over taxes it pays for the E.F. Barrett plant in Island Park and in Glenwood Landing, but that pact is “in limbo,” said Republicans on the Nassau Legislature, who must approve the new tax payments. They cited State Senate passage of a law that would bar LIPA from collecting tax refunds and pursuing future tax cases. LIPA has opposed the bill.

Opponents of any tax deal for Huntington cite the financial calamity that has befallen the country from the coronavirus outbreak, and a lawsuit filed by a Huntington Town board member, in saying any tax settlement talks should be postponed or scuttled. One observer said he was unimpressed by LIPA’s latest concessions.

“It sounds like a used-car salesman put that one together,” said Eugene Cook, a Republican Huntington Town board member who has proposed condemning the plant and taking it over and recently filed suit charging that LIPA failed to get approval from a state board before filing the suit.

Cook said he’s informally heard numerous versions of settlement offers, but he is unwilling to accept them, citing a lawsuit he’s filed that challenges LIPA’s ability to bring such cases.  “I’ve heard many deals like this, more in conversation than an actual settlement agreement,” he said. “They’re always political deals and they’re always bad deals.”

He added, “I would definitely be a no on that for sure.”

Cook said his lawsuit will show that LIPA doesn’t have standing to bring the tax challenges because of its failure to get approval from the Public Authorities Control Board to file the suit, a notion the town and LIPA have dismissed as incorrect. But Cook also said the importance of the plant makes it more valuable than any other on Long Island. “There’s no other plant like it in the Northeast,” he said of the 1,650 megawatt plant with a critical natural gas supply line.

Paul Darrigo, a Northport resident who heads the Concerned Taxpayers Against LIPA, said given the altered financial landscape for the world, and Long Island, a settlement should be delayed.

“The economic realities we all live in are going to be altered,” said Darrigo, who is also a banker. “It would be horrible to do this to people right now. In a different environment you will feel this [increase] much more acutely than you would feel it today.”

But the senior LIPA official said the pandemic only heightens the need for lower taxes. 

"The settlement resolves an unsustainable situation by providing the local community more time to adjust than a court judgment would," the official said.

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