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Court: Nassau liable for tax refunds to utilities

Nassau County seal.

Nassau County seal. Credit: Nassau County

ALBANY - New York's top court affirmed Tuesday that Nassau County towns improperly taxed utilities for garbage services and that the county, not the towns, is liable for the refunds.

The decision means the county is on the hook for hundreds of millions of dollars, attorneys said.

The issue involved cases going back more than a decade that centered on assessments levied on properties owned by Verizon and its forerunner, New York Telephone, and KeySpan Generation and its forerunner, the Long Island Lighting Co. National Grid has since succeeded KeySpan.

The companies maintained taxes imposed by special garbage districts within Nassau towns for refuse collection were "illegal and void" because they were applied to property that didn't require sanitation services.

For instance, Verizon, according to court documents, contended it was taxed illegally for lands that contained "equipment such as lines, wires, cables, poles, supports, transformers, conductors, and enclosures for electrical conductors, which constitute a type of real property that is not amenable to human occupation."

The companies had won a number of lower-court decisions on the matter.

Tuesday, the Court of Appeals declined to hear the county's appeal, disposing of eight cases at once. By doing so, it upheld lower court rulings that the companies were owed refunds, said court spokesman Gary Spencer. Further, it upheld rulings that Nassau County must indemnify the towns for the refunds because of a local law known popularly as the "county guaranty."

The guaranty is the same reason that the county pays property tax refunds -- because of erroneous assessments -- for school districts, towns and other municipalities.

Spencer noted that a midlevel court previously ordered the county to hold hearings to determine the size of KeySpan's refund. A recent unofficial bond-offering statement estimated the county's total liability for all the utility cases at $295 million.

A Nassau County spokesman didn't immediately return requests for comment.

Jon Kaiman, chairman of the Nassau Interim Finance Authority, which controls the county's finances, said, "As far as NIFA is concerned, we will have our counsel read the decisions, provide an analysis, meet with the county and request a plan to address the immediate and long-term costs associated with the decisions."

An attorney for the Town of North Hempstead noted that state courts had previously held the county responsible for such refunds and blamed the county for delaying the eventual outcome.

"The courts have reaffirmed that the county must pay the refunds to utility companies for the amounts the county assessed them for transmission equipment located in garbage districts in all three Nassau towns," said Maureen Liccione, who represented North Hempstead, referring to a 2011 decision in a New York Telephone case. "The county has tried unsuccessfully for three years to reargue that decision while interest mounted. The county needed to remove these transmission properties from the tax rolls and failed to do so."

Attorneys for the energy and phone companies didn't immediately comment.

With Celeste Hadrick

State & Region