Without a bill, LIPA says it can't make PILOT payments to Riverhead 

LIPA and the Town of Riverhead are at loggerheads over how the electric utility can make millions of dollars in payment for its properties there after LIPA said the town declined to provide it with a consolidated tax bill, according to recent correspondence shown to Newsday.

In a letter to the town May 26, LIPA chief Tom Falcone expressed a “desire” to make the payment but noted the utility and the town “have been unable to agree upon a process to allow” it because Riverhead hasn’t provided a consolidated bill for taxing districts throughout the town.

“I would like to avoid additional litigation and hope that we can together work toward a solution that meets the needs of all the taxpayers in the town and LIPA’s electric customers,” Falcone wrote.

Officials with Riverhead Town and the Riverhead school district, a primary beneficiary of the payments, didn’t immediately respond to requests for comment. For the 2020-21 tax year, the town’s tax bill to LIPA was $5.2 million, but LIPA, citing a 2% state tax cap, paid $4.7 million.

LIPA’s letter said it believes that Riverhead Town’s tax receiver should provide a consolidated bill listing the costs for each of the taxing jurisdictions within the town “containing all the necessary information for LIPA to confirm that the amount of its payments satisfies its obligations under the LIPA Reform Act.” The law limited annual increases that LIPA can pay in local taxes to 2% a year.

LIPA and Suffolk County have been embroiled in a yearslong legal dispute over the application of the cap, after several towns drew payments from Suffolk County -- which disburses the money -- that ignored the 2% limit.

In 2021, a state Supreme Court judge ordered LIPA to pay $70 million in tax liens, penalties and interest resulting from tax bills sent by towns to Suffolk County on some 1,700 properties after LIPA paid taxes limited to the 2% cap. Suffolk County was obligated to make payments to the towns to pay the difference.

Suffolk County Comptroller John M. Kennedy Jr., faced with delinquencies tied to LIPA's lower payments, filed liens on the LIPA properties totaling $58 million, arguing that LIPA was no different from other property owners who failed to pay. LIPA argued that government properties can’t be foreclosed on, but the court said LIPA didn’t file tax challenges for the properties on time and ordered it to pay. The case is on appeal.

Meanwhile, LIPA has filed papers to remove its properties from the tax rolls in each of the jurisdictions to remedy the problem, because LIPA, like other government entities, technically doesn’t pay taxes, but instead makes payments in lieu of taxes, or PILOTs.

It’s unclear how, or if, the dispute with Riverhead is related to the larger Suffolk tax dispute. In any case, LIPA said in its letter, it is willing to pay the same taxes it paid last year to the town and its taxing jurisdictions until the matter is settled.

By Mark Harrington

mark.harrington@newsday.comMHarringtonNews

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