LIPA sues Suffolk in tax dispute, wants liens invalidated

LIPA on Monday filed suit against Suffolk County and its comptroller, asking a court to invalidate tax liens placed on its properties by the county to halt their seizure or sale in an ongoing tax dispute.

In its filing in state Supreme Court in Riverhead, LIPA is asking for a declaratory judgment that any tax liens held by Suffolk on the disputed LIPA properties are “illegal and void,” and that they be “canceled immediately.”

LIPA is also asking the court to “immediately” rescind any tax sale of its properties. It also is seeking a permanent injunctions preventing the county from taking a deed to any LIPA property resulting from a tax lien, and preventing the sale of any tax liens.

LIPA has advised the county that “there are no unpaid taxes for LIPA properties, and Suffolk County has no authority to enforce a tax lien against property that belongs to LIPA, and New York State tax-exempt authority,” the suit states.

The dispute stems from Gov. Andrew M. Cuomo’s 2013 LIPA Reform Act, which placed a 2 percent cap on tax increases for LIPA properties. Some towns have taken issue with the cap, and assessed taxes above the 2 percent. LIPA, citing the state law, has declined to pay assessments above that amount. A similar dispute in Nassau County was settled last year.

A spokesman for Suffolk County Comptroller John Kennedy said that as of June, the amount Suffolk towns allege LIPA owes in unpaid taxes exceeds $6.7 million, an amount that accrues interest and penalties daily. He estimated it has since increased to $8 million.

LIPA in a note alleged that Kennedy’s office used county funds to reimburse the towns for the amounts they billed LIPA in excess of the 2 percent cap, “encouraging the continuation of the practice.”

LIPA in its filing noted that while it is exempt from paying property taxes on all its properties, it still makes payments in lieu of taxes in amounts equal to those formerly assessed on the Long Island Lighting Co., which LIPA acquired in 1998.

LIPA in August received 1,765 notices from Kennedy’s office alleging it had not paid property taxes in full for the 2015/2016 tax year, the filing states. The notices state that LIPA must redeem its properties within 12 months of a tax-lien sale last December 9. If it failed to do so, the notices state, “the tax lien sale purchaser is entitled to a tax deed to the property.”

By Mark Harrington

mark.harrington@newsday.comMHarringtonNews

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