School district joins tax lawsuit against LIPA

School district joins tax lawsuit against LIPA

Port Jefferson is fighting to keep property tax revenue flowing from the power plant and to prevent restrictions from being lifted on peaker unit output. File photo by Lee Lutz

The Port Jefferson school district has climbed aboard a lawsuit against the Long Island Power Authority that challenges the utility’s efforts to reduce its property taxes at North Shore power plants.

LIPA has been working for the last several years to significantly reduce taxes at the aging Port Jefferson and Northport plants, saying the facilities are grossly over-assessed and force the utility to pay more in property taxes than it should. But the school board voted on Nov. 24 to join a lawsuit filed by the Town of Huntington and the Northport-East Northport school district that disputes LIPA’s legal right to file its tax challenges, claiming they are a breach of contract.

That argument stems from a 1997 letter from former LIPA Chairman Richard Kessel, in which Kessel said the utility would not file property tax challenges in the future “on any of their respective properties at any time in the future unless a municipality abusively increases its assessment rate.”

The “respective properties” referenced include the Port Jefferson and Northport power plants, which are owned and operated by energy company National Grid. That company sells the energy it produces to the Long Island utility.

In Port Jefferson, the power plant’s property taxes provide much support to the school district, accounting for almost half of its budget, making the potential loss of that revenue a serious issue for the district.

The Port Jefferson Village government is in a similar position, funding about one-third of its budget with power plant taxes. Smaller stakeholders include the Port Jefferson fire and library districts and the Town of Brookhaven.

In an announcement posted on its website last week, the Port Jefferson school district said, “Our decision to join this lawsuit is a necessary step to protect the resources of our school district and the financial stability of our taxpayers.”

Before the Port Jefferson school district joined the lawsuit, LIPA had filed a motion to dismiss it, but New York State’s highest court denied that motion earlier this year and allowed the case to move forward.

At that time, a LIPA spokesperson said the utility does not comment on ongoing litigation.

After the utility’s motion to dismiss was denied — representing a small victory for those fighting LIPA’s tax challenges — Port Jefferson Village filed a separate lawsuit in September that alleges the same breach of contract as the schools’ lawsuit. Village Attorney Brian Egan requested that court action on LIPA’s tax challenges, which are still pending in the court system, be delayed until the new lawsuits are resolved.

If the plaintiffs win their arguments, the pending tax challenges would be thrown out.

According to Egan, however, the lawsuits are now facing a new motion to dismiss, this time from National Grid.