The Long Island Power Authority and Nassau County reached a tentative agreement on Friday in a settlement over LIPA’s property tax challenges in Island Park and Glenwood Landing, which, once finalized, would cause an increase in school taxes.
The proposal would slash LIPA’s tax payments on the E.F. Barrett Generation Station in half over seven years, while leaving room for an extension of the plant contracts at the lowest tax level for the remaining years.
“Rather than go to court and seek a fair tax bill . . . what we tried to do was see if there was some room with Nassau County to find something that would get to a more sustainable tax bill,” LIPA CEO Thomas Falcone said. “These taxes are so high, and we want to get to a tax bill that might require future use for the site, but we want to give the community time to adjust.”
A Nassau Supreme Court judge still must approve the agreement, and the Nassau County Legislature is expected to vote on it in December, Falcone said.
The Barrett plant was built in 1956, and Falcone said it has been overassessed and overtaxed for 25 years. In 2017, its taxes totaled more than $42 million, and it was the 11th-highest-taxed plant in the United States. The plant powers 300,000 homes, but is antiquated and runs at 24 percent of its capacity, he said.
Falcone said that LIPA hopes to modernize the facility, but would not put more funding into it at the rate it was being taxed. The agreement with the county would see a 50 percent tax reduction at the Barrett and Glenwood plants over the next seven years with a four-year expansion of the tax agreement should LIPA’s power purchase contract with National Grid be extended. Under the settlement, LIPA would waive $250 million in back taxes that it is owed from past over-assessments, maintain $208 million in funding to school districts and $128 million in funding to the government through 2027.
In announcing the settlement terms, County Executive Laura Curran pointed to the county saving in back taxes as the main motivation for the agreement.
“This settlement is in the best interest of Nassau County residents,” she said. “It safeguards us from paying hundreds of millions of dollars of tax refunds. The facts support the claim that these plants have been over-assessed. This common-sense agreement protects our taxpayers from costly litigation, which would have resulted not only in substantial refund payments, but also devastating tax hikes to the affected school districts.”
LIPA’s taxes for four major power stations, which are owned by National Grid, amounted to $181 million last year: $84 million a year for Northport, $42 million for the Barrett plant, $32 million for Port Jefferson and $23 million for the Glenwood Landing property, which no longer houses a plant. LIPA has been fighting for a tax reduction since 2010.
LIPA has already signed a tax-challenge settlement with the Town of Brookhaven over taxes on the Port Jefferson power station, and it is now mediating over a lawsuit it filed to challenge the taxes of the Northport power station. LIPA and the Town of Huntington await a judge’s decision on one year of challenged taxes after a trial earlier this year.
The agreement also calls for the creation of a Community Advisory Board, which will comprise residents and elected officials, who will discuss the future of the plant and how to upgrade it. LIPA officials released estimates of the impact the decision would have on the community, but noted that they were subject to change. Island Park and Oceanside residents would not see an increase in their school taxes until the 2021-22 school year. The average Island Park resident pays $4,729 in school taxes annually and would see an increase to $4,945 in 2021-22, and a spike to $7,246 by 2026-27. For Oceanside, the average school taxes would jump from $8,302 to $8,600 in 2020-21 to $9,331 by 2026-27. Falcone said it could have cost Island Park residents up to $300 per month had LIPA taken the case to court.
“The tax bills have grown to an unsustainable level at these aging plants that are increasing year after year,” he said. “We want to bring the tax bill to a reasonable level for new investments and change at the sites.”
Island Park Superintendent Dr. Rosmarie Bovino said Curran briefed her about the agreement on Friday, but that she would receive a more in-depth briefing in person on Monday.
“I was told the community will not be impacted for 2020,” she said. “However, I need to know what the effect of this settlement will be in 2021 and thereafter. I have a 2020-21 school budget to put together, and I must consider the impact of this settlement on our revenue stream and the bearing this will have on our property owners.”
Island Park previously joined several municipalities and school districts potentially affected by the grievances, seeking an injunction that would prevent LIPA from reducing its property taxes on the grounds that a written and verbal agreement had been made among then Gov. George Pataki, members of the LIPA board and the taxing entities that the utility would not grieve its taxes on the plants when it took over Long Island Lighting Company in 1998. LIPA argued, however, that no such agreement existed, and the case is being heard in Suffolk County Supreme Court.
Members of the Island Park community also teamed with Northport residents to host a rally against the tax challenge in April. In August 2018, a Suffolk County judge ruled against the Northport-East Northport and Port Jefferson school districts after they sought injunctions to stop the LIPA from reducing its property taxes on its power plants within their districts.
Bovino said she would have more information after Monday’s meeting, which took place after the Herald went to press. “We look forward to receiving more details regarding the structuring of the settlement to determine the potential effect on our anticipated revenue stream beginning the next tax year and thereafter,” she said.
Jerel Cokley, the assistant superintendent for business for the Oceanside School District, said that he was awaiting more details. “Meetings will be scheduled by the Nassau county executive’s office with district administration in the near future to go over the specific implications that this settlement will fiscally have on the taxpayers of Oceanside School District,” he said.