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LIPA tax challenge vs. Huntington continues in court

Arguments over LIPA's effort to reduce taxes on the Northport power plant resume as some protesters gather outside.

Residents of Northport and Huntington protest outside the

Residents of Northport and Huntington protest outside the state courthouse in Riverhead Wednesday as the LIPA tax challenge case reconvenes. Credit: Newsday/Mark Harrington

LIPA’s high-stakes tax case against the Town of Huntington continues in state court in Riverhead this week with a new wrinkle: around a dozen protesters seeking to stop LIPA’s challenge of the Northport power plant's taxes.

The case over what LIPA calls the grossly over-assessed plant owned by National Grid has been working its way through the courts before a trial began in February. It's expected to continue for another two weeks, and Wednesday marked the first time protesters attended the trial. LIPA has similar tax challenges over National Grid owned plants in Island Park and the remnants of a Glenwood Landing power station. 

Protesters from Northport and Huntington have been visible in recent weeks as the trial pushes toward a conclusion and could, they fear, leave taxpayers on the hook for nearly $500 million in tax refunds that LIPA can seek for years of tax past payments as well as greatly reduced future payments.

LIPA has offered to settle the Huntington/Northport case with a 50 percent reduction in tax payments over nine years, an offer the town has thus far rebuffed.

At trial Wednesday, Patrick Seely, an outside lawyer for the town, spent much of the day cross examining Michael Borgstadt, a project manager for the firm Burns & McDonald, which came up with an estimate for the cost of replacing the plant with, among other options, a modernized fuel-efficient power station. All of LIPA’s estimates are below the $3.4 billion value for which the town currently bases its taxes of the plant.

Lou Lewis, another outside town attorney, said of LIPA’s plant replacement costs, “There’s no way to determine if it’s accurate or not, because they left out all the stuff [documentation], and even if you put the stuff in there, they refer to a mysterious database back at their office we don’t have access to.” The town’s lawyers won’t be offering any estimates of their own to rebut those cost claims, Lewis said.

LIPA chief executive Tom Falcone said the town's estimated replacement cost for the plant was only sightly higher than LIPA's at $2.37 billion. 

Paul Darrigo, a banker from Northport who is leading residents in opposition to the tax case, said he is working to meet with civic groups from around the island who face similar tax challenges. He met Tuesday night with a civic group in Island Park, he said, where protests are being planned over LIPA’s efforts to reduce the taxes on the E.F. Barrett power plant.

He charged LIPA’s plan was to “squeeze money” from reduced property taxes to help fund a generation of renewables such as offshore wind that are slated to take on a greater percentage of the region’s energy mix. “Why should the cost of transitioning to new renewable sources be borne by just a few?” he said.

Falcone acknowledged the Long Island electric landscape will look different with more renewables in coming decades, but noted the big fossil fuel plants have been used less and less and that LIPA is paying taxes on what’s essentially a “dirt lot” at Glenwood Landing. He said that there were “very good ongoing” discussions with Nassau County concerning taxes for Island Park and Glenwood Landing and that LIPA has made “very reasonable offers” to settle. Port Jefferson and Brookhaven town have already settled a case over the Port Jefferson plant.

As for Northport, Falcone stood by LIPA’s view that a settlement offer of 50 percent over nine years would increase average homeowners’ taxes by an average $13 a month, cutting the $84 million to around $41 million by the ninth year of the settlement.

“Forty-one million seems pretty good to me,” Falcone said. “It moves the plant from being the most expensive [commercial tax property] in country to number 11 on the list.” He added, “We’re still going to pay more than Empire State Building and Disneyland.”

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