LIPA, Island Park school district agree to settle lawsuit over tax challenges

LIPA and the Island Park School District on Thursday said they have reached an agreement in principle to settle a lawsuit challenging LIPA’s efforts to reduce its tax payments on a power plant in the district.

LIPA declined to release terms of the settlement other than to say it was a “one-time payment.” Officials at a protest outside the Long Island Power Authority's headquarters Thursday said the settlement involved a $9 million payment to the district, with $7.5 million of that coming from LIPA. 

Vincent Randazzo, superintendent of the Island Park School District, confirmed the district and LIPA have "a framework for a deal," to settle the case, but he didn't provide further details. He called on the governor and the State Legislature to help the district fill in large revenue gaps that will result from the broader tax settlement of LIPA's tax challenges.

The Nassau County Legislature on Monday is set to vote on that settlement, which would lower property taxes LIPA pays for the E.F. Barrett power station in Island Park and a second, smaller station in Glenwood Landing. Under that settlement, reached with Nassau County Executive Bruce Blakeman, LIPA's $59 million in annual taxes for the two properties will gradually be reduced by 46.5% over five years.

LIPA pays about $38 million a year on taxes for the Island Park-based E.F. Barrett power plant, which is about half the school district's budget.

LIPA previously reached an agreement to settle a similar suit by the North Shore School District, where LIPA pays around $21 million a year even though a large power plant in Glenwood Landing was demolished nearly a decade ago. Terms of that settlement weren't disclosed, but sources have said it involved a $3.2 million payment to the district. 

LIPA in a statement called the latest settlement “a fair compromise that will allow for continued low taxes for the host communities, protect Nassau County residents from hundreds of millions of dollars of tax refund liability, and continue the transition to a clean and sustainable energy future for all Long Island residents.”

But residents and public officials who attended the rally at LIPA's headquarters Thursday said the tax reduction would devastate the Island Park community and cause residents' taxes to soar. 

Town of Hempstead councilman Anthony D'Esposito called on Gov. Kathy Hochul and the State Legislature to come up with a legislative fix for the revenue deficit. "It's time for them to put pen to paper and figure out a way to help the Island Park community," he said, adding, "It's not a day to point fingers but to put our hand out and ask for help."

Island Park Mayor Michael McGinty noted the community is still reeling from recovering from the devastation of Superstorm Sandy and the COVID-19 pandemic and "we need LIPA to do the right thing." 

Former U.S. Sen. Alfonse D’Amato, who is working pro bono with Huntington lawyer Lawrence Kelly to intervene in the larger LIPA tax case, said affidavits and Public Authorities Control Board minutes filed as part of his motion show LIPA skirted the law by failing to get PACB approval of its National Grid power contracts. Courts have previously rejected such arguments. 

"They promised they would not levy taxes on these power plants," D'Amato said, calling it a "moral" issue that LIPA has breached. He attacked LIPA chief Tom Falcone as "power driven," and, in an interview with Newsday, urged Hochul to intervene. 

“It’s great that she gave over $500 million for a Buffalo stadium, how about trying to help the people of Island Park?” he said, adding that a more reasonable settlement with LIPA would be to spread the reduction of LIPA tax payments over 20 years rather than five, as LIPA has offered.

Like residents from other taxing districts with power plants that have come into greater disuse in recent years, Island Park residents face the prospect of paying a greater share of their school and library taxes as LIPA seeks to rein in the hundreds of millions it pays each year in property taxes on the power stations. Most of the plants are owned by National Grid.

In settling a similar suit in Northport, LIPA agreed to pay $14.5 million to lessen the burden of tax payments there, which will reduce by 46.5% over seven years. The Northport plant is Long Island’s largest. Similar settlements took place over the Port Jefferson power station.

If not settled, LIPA’s tax challenge over the E.F. Barrett power plant and Glenwood Landing station is headed to trial May 31. 

Jessica Koenig, director of the Island Park Public Library, noted that LIPA’s annual taxes earmarked for the library of around $600,000 constitute around 40% of the library’s $1.5 million annual budget.

“We’ve never been at the table,” she said of the settlement negotiations, despite utility promises to include the library in any settlement. “We didn’t have the money for litigation. We’re hoping they would make us a pity payment.”

By Mark Harrington

mark.harrington@newsday.comMHarringtonNews

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