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LIPA-Huntington tax trial wraps up

The LIPA Power Plant in Northport is shownin

The LIPA Power Plant in Northport is shownin this aerial picture on July 1, 2019. LIPA is challenging the plant's $84 million property taxes. Credit: Newsday/John Keating

The trial portion of LIPA’s tax case against Huntington Town over the value of the Northport power station wrapped up in state Supreme Court in Riverhead on Tuesday but a final ruling in the case isn’t expected for months.

Lawyers for LIPA and the town spent Monday and Tuesday, as they had during weeks of trial earlier this year, picking apart the other side’s expert witnesses, cost estimates and reports that alternately maintained the plant’s current assessment of $3.4 billion was justified or, as LIPA argued, was closer to $200 million. LIPA pays $84 million a year in taxes on the plant. 

The stakes are huge. If it loses at trial, the town could be forced to refund upward of $650 million in back tax payments to LIPA, and reduce taxes from here forward drastically, a scenario residents and the Northport-East Northport School district say would prove “devastating.”

LIPA filed the case nearly a decade ago, arguing that the 1,600 megawatt plant — Long Island’s largest — is used less than ever and valued at only $198 million.

The case moves forward even as officials for the town and LIPA say they are in contact with Deputy Suffolk County Executive Jon Kaiman to return to previous mediation talks. “We think everybody’s better served by continuing to negotiate and move to a place where everyone can agree to get this solved once and for all,” Kaiman said Tuesday. “The mediator is the ideal place for a settlement to be had.”

LIPA’s outside lawyer, Mark Lansing, spent much of Tuesday morning raising questions about the sourcing and information in reports by Huntington’s expert witness, Roger Bezdek, who had argued the plants dual-fuel capability and the pending closure of the Indian Point nuclear plant in Westchester made it vital to Long Island. Huntington’s lawyer, Patrick Seely, noted LIPA’s wide reliance on expert “estimates of estimates” rather than data in a report by the engineering firm Burns & McDonnell, and its managing engineer Mike Borgstadt.

Outside lawyers for the town argued that LIPA’s lower plant appraisal should be stricken from the record for lack of adequate facts, figures and calculations, said Huntington Town attorney Nicholas Ciappetta.

“They had to take those theoretical estimates and further estimate based on Northport,” he said. “We don’t think they satisfied the legal burden. Their appraisal is faulty as a matter of law.”

Bezdek, summarizing his testimony during a break in the trial, said without Northport “Long Island would be in deep trouble.” It supplies 30 percent of electrical capacity on the Island, even though, as LIPA has repeatedly noted as it prepared to contract for an influx of renewables, it’s used on average only around 15 percent of the time. He called LIPA’s $198 million appraisal “ludicrously low.”

Both sides are expected to continue to file briefs in the case for the next several months to state Supreme Court Justice Elizabeth Hazlitt Emerson, who may take another three months or more to render a verdict, lawyers said. Another round of oral arguments on the briefs could take place in December.

Mark Tulis, an outside lawyer for LIPA, said the utility was able to prove at trial that the Northport plant was “grossly overassessed.”

“Our appraiser and engineer demonstrated a 93 percent reduction,” he said, while the town “chose not to even put in an appraisal of their own. And they chose not to introduce their own engineering studies because their engineering studies support massive reductions in assessment.”

Mike Deering, LIPA’s director of customer service oversight and stakeholder relations, noted that LIPA “continues to offer the town of Huntington the [same] fair settlement accepted by the Town of Brookhaven” of a 50 percent tax reduction over eight years and forgiveness of past tax refunds. “The offer keeps school tax rates low for the Northport community while lowering energy costs for LIPA’s 1.1 million customers.”

“I don’t think that’s going to cut it,” said Tom Kehoe, a Northport Village trustee who attended the trial Monday and has lived “the better part of my life in the shadow of those smokestacks” of the Northport plant. “We never should have allowed ourselves to get this far down the road with LIPA.”

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