Nassau presses battle against huge property tax refunds

Nassau is trying for the third time to overturn decades of court decisions that found the county must refund hundreds of millions of dollars in property taxes paid by utility companies in town garbage districts.

The state's highest court has twice affirmed that Nassau must pay the refunds because of the "county guaranty" requiring Nassau to indemnify schools, town and special districts for erroneously imposed property taxes. But late Friday, the county filed a motion arguing that the refunds represent unconstitutional gifts to garbage district residents.

Rivkin Radler, a Uniondale law firm representing Nassau, contends the guaranty violates a clause in the New York State constitution prohibiting municipalities from giving or loaning money to any individual, private corporation or private undertaking.

County Executive Edward Mangano, who worked for Rivkin Radler before he took office in January 2010, hired the firm later that year to represent Nassau in the complex utility tax litigation.

New York Telephone Company originally filed suit against North Hempstead and the county's other two towns, Hempstead and Oyster Bay, in the mid-1990s and its arguments were continued by successor Verizon. Other utilities filed similar complaints -- that the towns improperly taxed them on property that didn't use sanitation services -- resulting in dozens of motions and counter-motions through the years. The county recently increased Rivkin Radler's contract to $1.875 million.

The towns successfully countersued Nassau to pay the refunds.

Nassau first argued that the guaranty did not apply to special districts and then contended that paying the refunds would cause "fiscal chaos." The state Appellate Division rejected both arguments, and in September the Court of Appeals again declined to hear the county's appeal.

County officials have estimated the cost of repaying the utility taxes at $300 million.

After the September decision, Verizon attached $31 million in Town of Hempstead bank accounts and about $3 million in Oyster Bay accounts, town spokesmen said. A state court judge stayed enforcement of the judgments against the towns; appellate Judge Anthony Marano then affirmed the stays until Dec. 31, a court spokesman said.

In Nassau's latest motion, filed against North Hempstead, Rivkin Radler attorney William Savino argued that property owners in special garbage districts paid less than they should have for refuse collection because utilities paid for unneeded sanitation services. The residents would have paid higher taxes if not for the utility payments, he wrote.

"If the county is required to reimburse the town and thereby satisfy the property owners' legal obligation and thereby pay what the property owners rightfully owed, the county would be making a gift to the property owners -- a gift of the difference between what they should have paid and what they did pay," he wrote in legal papers filed in State Supreme Court in Mineola.

Maureen T. Liccione, an attorney representing North Hempstead, said, "The town hopes that the county will rethink the strategy of litigating the same cases over and over so that we can work together to resolve these issues in the interests of all Nassau residents and taxpayers.

Attorneys for Verizon did not return a request for comment Monday. A Mangano spokesman also did not comment.

Rivkin Radler also had argued after the September decision that the county should not be required to pay up to 9 percent interest on the refunds, as required in state law. Those arguments are pending.