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Caithness II tax breaks to be weighed

An aerial photo of LIPA's Caithness facility in

An aerial photo of LIPA's Caithness facility in Yaphank shows the large rectangular parcel about the same size as the plant directly adjacent to the now operating facility on June 6, 2013. Credit: Doug Kuntz

The Brookhaven Industrial Development Agency will hold a public hearing Thursday to discuss prospective tax breaks for the proposed Caithness II power plant in Yaphank -- a package that could be smaller than originally anticipated.

Lisa Mulligan, chief executive of the agency, said the package being offered to plant developers will not include a previously proposed mortgage-tax exemption of about $9 million. Brookhaven Town splits about half the 1.05 percent tax with local villages, while about $5 million goes to Suffolk County.

Mulligan emphasized the current proposal isn't final and won't be until the IDA board votes on it after Thursday's public hearing, which starts at 9:30 a.m. in  Brookhaven Town Hall.

The primary benefit for the plant was relief from an 8.625 percent state and county sales tax on an eligible $690 million of the plant's total $1.09 billion construction cost. That would amount to about $59 million.

Caithness II, meanwhile, would begin paying millions of dollars into town, county, village and school district coffers through so-called payments in lieu of taxes beginning in the 2016-17 tax year, according to documents filed with the IDA.

Caithness would pay $3.5 million in the 2016-17 tax year, before the plant is opened, and $9.6 million when the plant, if approved by Long Island Power Authority trustees, begins operations in May 2018.

In 2023 and continuing through 2035, Caithness would pay $20.7 million a year, then increase to up to $22.9 million in its final year of 2040.

In all, the schedule shows, Caithness would pay about $450 million in taxes.

Most of the money would go to the Longwood school district, where the plant would be. Caithness I, just acres away, lies in the South Country school district. During the years of its contracts with LIPA, all the taxes will be paid by LIPA/PSEG Long Island ratepayers.

LIPA pays about $29 million a year in similar taxes on the less-used Port Jefferson power plant.

Brookhaven Town Supervisor Edward Romaine said the town would not receive a host community benefits package, as with Caithness I, which paid millions of dollars for local community centers, scholarships and other projects that benefited town council members' districts. Romaine has said any such package would be paid to the town's general fund, not individual members' projects.

"There is no payment whatsoever to the Town of Brookhaven" other than payments in lieu of taxes, Romaine said.

Romaine and the town board have adopted an environmental-impact statement for Caithness II, paving the way for a special permit needed to begin work on the plant. That could come later this year.

But construction won't begin until LIPA trustees vote on a power contract with Caithness II. Trustees are waiting on a review of LIPA power projects, including Caithness II, being conducted by system operator PSEG Long Island. An initial assessment from that review is due this summer.

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