Nassau legislature OKs LIPA power plant tax challenge settlement

The Nassau County Legislature, in a sometimes heated session Monday, voted 10 to 8 to approve a settlement of the Long Island Power Authority's decadelong tax challenge of two power stations in the county, capping LIPA's main quest to cut big plant taxes nearly in half.

The settlement, which had the blessing of Nassau County Executive Bruce Blakeman, would lower the combined $59 million in taxes LIPA pays for the Island Park and Glenwood Landing power stations by 46.5% over the next five years. It still must be approved by a judge in state Supreme Court, where a trial was scheduled to begin in late May. 

LIPA earlier this month reached agreements to settle two separate suits by the Island Park and North Shore school districts for one-time payments of $9 million and $3.2 million, respectively, sources have said.

The legislature's presiding officer, Richard Nicolello, who voted in favor of the measure, cited the potential liability to the county from the tax challenges of upward of $1 billion and noted the county's own assessment for the two plants were in some cases lower than LIPA's. That made the case virtually unwinnable, while the potential impact was "devastating and immediate," he said.

"We can rail about LIPA, none of us like LIPA," he said. "But our residents are smart. They don't want to pay another billion dollars in county taxes and get nothing for it."   

In all, LIPA says taxes and related payments cost ratepayers $702 million a year, comprising 19% of ratepayer bills. Around $179 million is for the four biggest power stations owned by National Grid. LIPA pays another $51 million for all other power plants and $302 for payments in lieu of taxes for other properties. 

The settlement vote survived an unsuccessful motion to table by Legis. Denise Ford (R-Long Beach) after former U.S. Sen. Alfonse D'Amato urged the board to delay it pending a hearing on his recently filed motion to intervene in the case for the Village of Island Park. (Ford noted that an Island Park resident with current taxes of $4,827 will see them increase to $7,549 by the final year of the settlement.) 

D'Amato called LIPA's $9 million settlement offer to the Island Park School District "blackmail," and said all LIPA contracts enacted without Public Authorities Control Board approval were "illegal." The PACB argument has previously been rejected by a Suffolk Supreme Court judge. 

"I'm asking you to do the right thing," D'Amato urged the legislature. "Put this thing over for three weeks. Let LIPA know we don't march to their drum. We follow the law." 

LIPA chief Tom Falcone, in an interview with Newsday, noted that arguments similar to D'Amato's have "all been heard" and rejected, adding, "There's no requirement that the PACB has to approve litigation or a tax settlement." 

"I understand his [D'Amato's] desire to advocate for the community and certainly respect it," Falcone said. "This is one situation where not everybody is going to walk away pleased, but we are trying to do the best we can in a very difficult circumstance."

Falcone called the utility's 12-year quest to lower plant taxes "a long journey," but noted the plants have been "overassessed for a long time." 

LIPA has previously reached similar settlements with Huntington and Brookhaven towns over taxes for the Northport and Port Jefferson power stations. But settlement of the biggest cases won't affect the dozens of tax cases filed by LIPA and National Grid, which owns power plants and the gas distribution system, over smaller properties across Long Island. While the amounts in many of those cases involved tens or hundreds of thousands of dollars, they are numerous enough to have a material collective impact, particularly on smaller municipalities.

The figures had little weight with Island Park community members, including Richard Schurin, who pointed to years of work by residents to urge legislators to work out a better deal. "You all failed," he said. "It was a failure. We didn't get the help … And everyone in this community is going to pay hundreds if not thousands of dollars more … and many of them can't afford it." 

Lawmakers say the State Legislature has appropriated money to help school districts deal with the pending loss of power plant tax base, including $1.8 million for Island Park in the past two years. Sen. Todd Kaminsky (D-Long Beach), said enactment of the settlement will put Island Park and nearby schools impacted by it in a "different category." 

Kaminsky said it's also "incumbent on LIPA to show ratepayers what is happening to all of the dollars it is saving through the tax settlements." 

"Communities are going to be damaged by this," Kaminsky said. "We know certain folks are going to be hurt, and LIPA better show how ratepayers are going to be helped." 

Kyle Strober, executive director of the Association for a Better Long Island, which has long advocated for the tax challenges by LIPA, said that with the settlements now complete, "phase two begins, working with LIPA to ensure that these tax savings are used to reduce the burden for ratepayers."

Said LIPA's Falcone, "If we save a dollar, it automatically goes to the customer … It's certainly better to be saving money on taxes than to have that bill going up." 

By Mark Harrington

mark.harrington@newsday.comMHarringtonNews

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