"We're willing to continue to negotiate in good faith, but if LIPA is unwilling to provide us with the information our lawyers have requested or make a fair settlement offer, we are ready to fight this in the courtroom." ~ Frank Petrone and Mark Cuthbertson
At a Glance
LIPA's in court asking for a 90% reduction in taxes on the Northport Power Plant, but says it would settle for 60%.A tax cut for LIPA means a tax increase for all Huntington homeowners and businesses.In Northport-East Northport School District that would mean residential and business tax increases from somewhere between 35% to 50%.Frank Petrone and Mark Cuthbertson are unalterably opposed to this settlement and will continue to fight this out with LIPA.
Background: The 1,500 megawatt Northport Power Plant constructed by LIPA's predecessor LILCO in the 1960s and early 1970s produces about 25% percent of the electricity LIPA's 1.1 million customers purchase each year. The Northport Plant’s assessment translates to market value of approximately $3.4 billion. Based on that LIPA's county, town, school and special district taxes this year were $74 million of which $49 million goes to the Northport-East Northport School District or about one-third of the school district's annual budget.
LIPA's Assessment Challenge (Tax Certioriari Action): In 2010, LIPA began a challenge to Huntington's assessment of the Northport Plant, seeking a 90% reduction in the assessed value of the plant. If successful, LIPA's annual tax property payments would drop by more than $65 million. The Northport-East Northport School would lose $45-million in annual property tax revenues that residents and local business in the district would have to make up, an increase of roughly 50%.
LIPA Settlement Offer: LIPA's settlement offer is to cap payments at 2013 levels ($74-million) and then reduce its obligation by $4.36 million a year every year for 10 years, beginning in the 2014-2015 tax year. The $43.6 million loss equates to a total reduction of nearly 60% of LIPA's tax liability. The impact on school district taxpayers is a tax increase of roughly 35%.
LIPA is in effect claiming that its Northport Plant is worth about one-tenth of its assessed value, but LIPA refuses to provide the Town or its lawyers with the technical information on which its claim is based. LIPA, in effect, is forcing us into court to get that information under court order in a process known as discovery.
We have two lines of attack. The first is our agreement with former LIPA Chairman Richard Kessel confirmed in writing that LIPA would make no challenge to the Northport plant’s assessment if Huntington did not increase the power plant’s assessment. Huntington kept its word and we can prove it.
The second is the standard of replacement cost used by New York courts in utility tax proceedings. LIPA’s most recently completed power plant (the Caithness gas-fired plant in Yaphank) cost about $1.4 billion or about $4 million per megawatt for 350-megawatts. Northport has four times (4x) the generating capacity of Caithness and, even subtracting for depreciation, our legal experts tell us that LIPA has low-balled its estimate and that when we have their calculations in hand we’ll be able to prove it.