Nassau County, Oyster Bay propose property tax settlement

Nassau County and Oyster Bay have agreed to settle a 15-year-old legal dispute over erroneous property tax assessments in town garbage districts, with Oyster Bay accepting 30 percent less than it wanted, officials said Monday.

The proposed settlement calls for the county to pay the town $26.779 million in return for Oyster Bay dropping an estimated $38 million to $40 million in claims against Nassau.

County Comptroller George Maragos said the deal reimburses Oyster Bay for tax refunds it made to utility companies in town garbage districts, but excludes 9 percent in interest that has accrued annually.

The tentative settlement was approved by county legislative committees Monday — the deadline set by Standard & Poor’s for Oyster Bay to submit its audited financial statements or lose its credit rating.

Town and county officials said the proposed accord had nothing to do with the S&P deadline.

Oyster Bay Supervisor John Venditto said the town had submitted the statements covering the 2014 budget year on Friday. The settlement wasn’t mentioned, he said, because the county payments would not begin until this year.

“Whenever two parties settle a disputed claim, they both walk away a little bit happy and a little bit sad,” Venditto said. Given the “vagaries” of litigation, he explained, “we agreed a 70-30 split would be fair. You make a judgment call.”

County Attorney Carnell Foskey termed the settlement “a very good deal for the county. . . . This brings almost 15 years of litigation to conclusion.”

But Oyster Bay Town Councilman John Pinto said, “It should all come back to the town because it’s the residents’ money. It’s still a $13 million loss to the town.”

Oyster Bay has been withholding $44 million in property taxes due the county since the end of February as it argued for reimbursement of garbage district refunds. The settlement, which still must be approved by the county legislature, calls for the town to remit the taxes in 30 days. Within that period, Venditto said, Nassau would pay the town $13 million and remit the remainder by the end of the first quarter of 2017.

Oyster Bay finance director Rob Darienzo said the settlement proceeds would be used to pay off the town’s short-term debt. He said the town will not have to issue short-term tax anticipation notes next year because of the county payments.

The dispute over utility taxes began in 1994 when the former New York Telephone Company successfully challenged the assessments placed by the county on its poles, wires and other equipment. Utility companies in town garbage districts filed suit beginning in 2001, also arguing successfully that its equipment should not be taxed.

The state’s highest court has twice ruled that the county must pay the cost of tax refunds due to erroneous assessments, but the county has continued to fight reimbursement.

County officials said the settlement could set a precedent for Nassau’s other two towns, which have a total of $145 million in garbage district tax refund claims against the county.

But North Hempstead Town Attorney Elizabeth Botwin said, “We have a judgment requiring Nassau County to pay us in full and we will not settle for less.”

Hempstead Town spokesman Michael Deery said, “Individual parties settle for all sorts of reasons. We don’t believe this settlement would have any bearing on our litigation.”

With Ted Phillips