In 1999, the for-profit company that owned two power-generating facilities in Rockland County, the Bowline plant and the Lovett plant, sued to get its tax assessment reduced.
Residents and politicians worried that if the company won the huge and immediate reduction in taxes as well as the substantial refund it sought for prior overpayments, local property taxes would soar. There had been settlement talks that would have cut the plants’ taxes by far less and more slowly than what the suit demanded and dramatically reduced the refund. But at the last minute, the deal was off.
As expected, a state Supreme Court justice in 2006 slashed the taxes and ordered the county, villages and school district to pay a $225 million refund to the utility. Taxes from the plants plummeted from $60 million a year to $20 million. Many local residents saw their tax bills double instantly, and their property values nosedive. New York State did not come to the rescue. Communities were devastated. The North Rockland school district eventually lost about 20 percent of its staff, or 200 positions.
By comparison, the two Rockland plants were not as overtaxed as power stations on Long Island: Northport, Port Jefferson, Glenwood Landing, and E.F. Barrett in Island Park.
Four years after the Rockland decision, the Long Island Power Authority filed lawsuits seeking 90 percent reductions in the $185 million it pays in property taxes for those four plants. The facilities are owned by National Grid, but the power is sold to LIPA under a long-term agreement that requires the public authority to pay the taxes, which are passed through to all ratepayers.
Soon after the suits were filed, LIPA began offering settlements to the entities that would have to pay the refunds: Nassau County, which assesses Barrett and Glenwood Landing; Huntington Town, which assesses the Northport plant; and Brookhaven Town, which assesses Port Jefferson.
LIPA is offering to forgo the refunds and phase in a reduction of its taxes over nine years, at which point it would pay 50 percent of its current taxes. For years, the three taxing bodies — spurred on by the host school districts, which have no liability for the refunds — banded together in resistance.
Then last year, Edward Romaine, the canny Republican Brookhaven supervisor, took the deal. The taxes on the Port Jefferson plant will be reduced from $33 million to $17 million over nine years, and
the threat of a potential $200 million refund is gone.
Romaine did the right thing. Nassau is close to settling as well.
Huntington, which is now fighting LIPA in court, needs to follow suit.
Town Supervisor Chad Lupinacci, all but invisible for the past year as he flounders in the job and deals with personal troubles, needs to step up and lead. The town board is stupidly chasing its own tail, terrified of grassroots agitators from the Northport-East Northport school district aggressively demanding that the town fight on in a case that is not going well
A bill proposed in the State Senate to bar LIPA and National Grid from garnering overpayment refunds won’t pass and would be unenforceable even if it became law.
The argument that the Northport plant is not overassessed is a loser. The hope that LIPA can be held to a promise not to challenge assessments has been dashed in court. The dream that the state will arrive with cash to fund the shortfall is unrealistic.
Northport has hosted a big, ugly and polluting plant for five decades, but it was compensated by having the rest of Long Island pay a good chunk of its school taxes. For 2018-19, the plant paid the school district $53 million, or 38 percent of its local tax levy. There was never a guarantee it would go on forever. The judge is signaling that Huntington should deal.
If LIPA wins in court, Huntington will be devastated by a $650 million bill and the Northport-East Northport school district and its residents will take a financial pounding. Residential and commercial LIPA ratepayers will demand that LIPA refund the money they overpaid.
Now is the time for the town to put an offer on the table and start negotiating.
Otherwise, the economic tornado that hit northern Rockland County in 2006 will touch down next in the Town of Huntington.