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LIPA/Northport school district tax deal defended as critics seek delay

The LIPA Power Plant in Northport in an

The LIPA Power Plant in Northport in an aerial photo, July 1, 2019. Credit: Newsday/John Keating

A lawyer for the Northport-East Northport School District defended the recently negotiated settlement of a decadelong tax case with LIPA and released details on the tax impact on residents as opponents to the deal began efforts to delay or scuttle it.

“Now we get to the difficult part,” said school district lawyer John Gross during a webinar Wednesday night. “I don’t want to mince words. There will be an impact on the taxes that are paid.”

Owners of a $500,000 home will see annual their total annual tax bill increase from $10,861 this year before the deal begins to $13,741 in the seventh year of the deal, Gross said. 

Annual increases for residents grow from an additional $288 a year in the first year to $556 a year by year seven. That cumulative increase doesn’t include the offsetting impact of $14.5 million in payments from LIPA as the utility’s tax bill is reduced, and any cuts in the school district budget.

But Gross said the impact pales in comparison to the cost if the district lost the case brought by LIPA — including payments of $10,000 to $25,000 from each taxpayer in refunds to LIPA. "There’s a concern that a devastating decision could come out," he said of a pending court judgment in the case. 

LIPA and the district can extend the agreement for five years beyond 2027-2028, when its contract with the National Grid-owned plant ends. If it doesn’t, the payments would cease.

LIPA has paid more than $86 million a year in property taxes for the Northport power plant, Long Island’s largest. Under the deal, taxes would gradually drop to $46 million over seven years.

Opponents of the deal, meanwhile, have been marshaling forces against the deal by demanding more transparency of its terms, and a potential delay. 

Eugene Cook, a Huntington Town councilman who has sued LIPA over its tax challenge of the plant, at a news conference Wednesday morning in the shadow of the plant, called for a separate public meeting to allow residents to air their opinions while demanding specifics of the deal’s implications for all town taxpayers.

He plans to offer a resolution at the next town board meeting calling for a public forum on the deal in Huntington on Sept. 16 — more than a month after the terms of the LIPA deal say the town board must approve the settlement by Aug. 11.

Fellow Councilman Ed Smyth said he supports the measure and he called for Suffolk County Comptroller John M. Kennedy Jr. to audit terms of the deal. Both councilmen on Wednesday also expressed renewed interest in prior plans by Cook for the town to condemn the plant and take over its operations. 

"We don't need your permission to take it," Smyth said, referring to the owner, British-based National Grid. "We'll pay you 154 million pounds and take it." 

Northport Village Councilman Tom Kehoe said he also supported the resolution for a town forum, calling the plant "a burden on the people of this district for many, many years," and noting "smoke and soot on our cars" and a fire at the plant just last weekend.   

Cook on Tuesday said he believes the tax case with LIPA is “still winnable” by the town, which faces payments of more than $850 million in refunds to LIPA if it loses the case. A verdict had been expected this summer in state Supreme Court in Riverhead when settlement talks accelerated.

The Northport school board, in a statement last week, said the proposed settlement “represents the best chance for the School District to maintain a high-quality education for our students,” while “protecting our residents from having to pay devastating retroactive tax payments."

State Sen. James Gaughran (D-Northport) has also expressed suspicion about the settlement.

“I still don’t understand why they [LIPA] are pressuring this settlement in the middle of a pandemic,” he said. He said he will press LIPA, to force the utility to make rebate payments to all customers from tax-challenge savings. “I would love to see that," he said. 

A senior LIPA official responded that the utility's power supply charge "updates each month to its actual costs, so as property taxes on the plants decline, so will rates to customers." 

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