The Long Island Power Authority and Nassau County reached a tentative agreement on Nov. 22 in a settlement over LIPA’s property tax challenges in Glenwood Landing and Island Park, which, once finalized, will likely cause an increase in school taxes.
The agreement would reduce taxes by 50 percent over the next seven years at LIPA’s Glenwood Landing and Island Park plants, with a four-year extension should LIPA’s power purchase contract with National Grid be extended.
Since an increasing portion of Long Islanders’ electricity bills fund property taxes on aging power plants, which are dispersed to school districts and local governments, that issue also had to be addressed in the settlement. The agreement would ensure that town and county governments receive $128 million from LIPA through 2027, while school districts get $208 million from electric customers to fund programs. But LIPA would waive $250 million in back taxes for which it should have been reimbursed from past over-assessments.
“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 County Supreme Court judge still must approve the agreement, and the County Legislature is expected to vote on it this month, Falcone said.
In announcing the settlement terms, County Executive Laura Curran pointed to the county savings in back taxes that LIPA has paid as the main motivation for the agreement.
“This settlement is in the best interest of Nassau County residents,” Curran 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, owned by National Grid, totaled $181 million in 2018: $84 million for Northport, $42 million for Barrett, $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 in mediation 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 Glenwood Landing plant was demolished because it was inefficient, beginning in 2013. At the time, several community members rallied on social media to stop the building from being torn down. Karin Barnaby, of Sea Cliff, started an online petition to save the plant, suggesting that it be repurposed as a space for community recreation.
Although the petition received 962 signatures, the building was razed by 2015. Barnaby described the current site as an eyesore, with a seemingly purposeless steel beam structure, high-tension wires and random poles sticking out of the Shore Road property. Not only is it ugly, she said, but it blocks residents from enjoying the waterfront.
Dr. Peter Giarrizzo, the North Shore Central School District superintendent, said the $17.3 million that the Glenwood Landing plant property pays in taxes per year will be converted into a payment in lieu of taxes starting in the 2020-21 school year. Over the next seven years, the value of that PILOT will gradually decrease before finishing at $8.6 million in 2026-27.
Giarrizzo said it is important to note that the taxes will not change for a few years. “I don’t anticipate any spiking in taxes,” he said. “I don’t have an immediate crisis, and I certainly don’t have a plan to cut program or reduce staff. I’ve got a few years to plan how to start to bridge those gaps.”
The district does not know the exact impact that the agreement could have on taxpayers, Giarrizzo said, although it would result in a loss of revenue to the district and impact future budgeting. The district runs on a pair of budgets — one for revenue and one for expenses. At the end of any school year, the revenue budget must meet the expenses budget for the district to remain fiscally sound. If revenue does not match expenses, the district must cut expenses, raise taxes or find other revenue sources.
A LIPA representative could not be reached for comment.
Giarrizo said that the referendum on a $39.9 million school bond set for next Tuesday was tax-neutral, meaning that residents would not see a property-tax increase if it were to pass.
Still, George Pombar, president of the Glen Head-Glenwood Civic Council and a former member of the North Shore Board of Education, said he worried that LIPA’s tax cuts could result in significant increases in residents’ school taxes. “Their taxes are going to be re-duced, our taxes are going to be raised,” Pombar said. “It’s as simple as that.”