Last week, the Town of Huntington announced the Long Island Power Authority agreed to provide an additional $3 million
to the town if a settlement were to go through. The money is in addition to the proposed settlement for the Northport Power Station tax certiorari case, according to a town press release.
After an Aug. 10 town public forum held at Heckscher Park, LIPA agreed to extend the deadline for the town to accept the latest settlement proposal on the Northport Power Station tax certiorari litigation to Thursday, Sept. 3, when the town will hold a public hearing via Zoom on the issue.
After the hearing, the board will vote on the settlement. According to town and LIPA officials, the additional $3 million is to reduce the impact of COVID-19 on Huntington residents.
“We recognize the challenge of the pandemic on the town’s finances and have accommodated their request for additional assistance in the first three years of the settlement,” LIPA officials said in an email statement. “The Northport-East Northport school board voted overwhelmingly to settle this long-standing litigation, and we believe we have made a fair offer for the town to move forward.”
Town Supervisor Chad Lupinacci (R) said in the release that the $3 million in additional payments will be made by LIPA to the town of $1 million per year in 2021 through 2023.
“While we were fortunate to be in a strong financial position when COVID-19 hit, the long-term impacts of this unprecedented economic crisis on our local economy and future government operations are not fully known,” the supervisor said.
Councilman Mark Cuthbertson (D) said he would continue to analyze the settlement “but any money that will go to the taxpayers is certainly a welcome development.”
Councilwoman Joan Cergol (D) said the money will soften any financial impacts of COVID-19 “and is certainly worthy of consideration in helping to protect and preserve vital town services and programs that our residents depend on and deserve, especially during these, and continuing difficult times.”
The proposed deal would reduce LIPA’s annual tax bill on the Northport power plant from $86 million to $46 million by 2027.
The public hearing will start at 6 p.m. on Sept. 3. Public comment may be submitted ahead of the forum at huntingtonny.gov/lipa-forum. The forum will livestream on Optimum 18, FIOS 38 and at huntingtonny.gov/featured-programs, where residents may sign up to speak during the forum.
The Town Board’s vote on the LIPA proposal will take place immediately after the public forum ends, and in addition to being livestreamed on Optimum and FIOS, it can be viewed at huntingtonny.gov/meetings.
District Lawyer Defends Agreement, Outlines Cost for Taxpayers
Northport power plant. File photo
After a webinar where a lawyer for the Northport-East Northport school district discussed the LIPA tax case and proposed settlement, the school board voted to accept an agreement that would reduce Long Island Power Authority’s annual tax bill on the Northport power plant at a July 20 board meeting.
In a 6-1 vote, with board president David Badanes being the only “no,” board members reiterated that they wanted to avoid the possibility of losing the tax case and be stuck having to pay years of back taxes.
The approved deal would reduce LIPA’s annual tax bill on the Northport power plant from $86 million to $46 million by 2027.
During a July 15 webinar, Northport parents and community members were provided figures and a detailed overview of the agreement.
John Gross, a lawyer for the school district, defended the proposal while fielding questions from both the public and trustee members. He detailed the tax impact on residents.
“Now we get to the difficult part,” the lawyer said. “I don’t want to mince words. There will be an impact on how much taxes are paid. The efforts of the school board through this attempted settlement is to minimize that as much as possible.”
Gross said owners of a $500,000 house paying $10,861 in taxes would see their tax bill increase to $13,741 in the seventh year of the agreement. Annual increases for residents would go from an additional $288 a year in the first year to $556 a year by year seven. Those increases don’t include LIPA’s payments to the school district, totaling $14.5 million, nor any reduction to the school district’s costs and programs which would reduce taxpayers annual payments.
Gross discussed the implications if the district were to lose the current tax reduction case.
“If there is no settlement and LIPA is successful and able to achieve 75 percent reduction in assessed evaluation, that taxpayer [of a $500,000 home] would immediately have to pay $3,723, in addition to the refund liability that could range from $12,000 to $13,000,” the lawyer said. “[A reduction of] 90 percent would be utterly horrendous.”
The district and LIPA could extend its agreement for an additional five years beyond 2027-28, when its contract with the Northport plant ends. If there is no extension, the payments would cease, according to Gross.
Critics of the deal have called for more transparency, public input and a delay to the approval of the settlement.
Huntington Town Councilman Eugene Cook (R) at a news conference earlier in the day July 15 called for a public forum to allow residents to voice their opinions. He plans to offer a resolution that would set a public meeting Sept. 16 — which would be more than a month after the Aug 11 deadline set by LIPA to approve the deal.
Cook was joined in support by fellow Councilman Ed Smyth (R) and Tom Kehoe, Northport Village trustee. Both Cook and Smyth detailed a previously promoted plan for the town to condemn the plant and take it over through eminent domain.
“We don’t need your permission to take it, we’ll pay you 154 million pounds and take it,” Smyth said, alluding to British-based energy company, National Grid.
Kehoe reiterated the need for a public meeting and said the Northport plant has been “a burden on the people of this district for many, many years.”
Huntington Town Supervisor Chad Lupinacci (R) has recently stated that “LIPA’s latest settlement proposal is, by far, the best offer presented to the town to date.”
A ruling on the tax case is expected to come from the state Supreme Court in Riverhead sometime this summer.
When the Town of Huntington’s planning board originally authorized in 1965 a site plan for the Northport power plant’s first generating unit on the shores of the Long Island Sound, the impact on the greater safety, health and general welfare of the community was an overarching concern. In fact, the town’s approval stipulated that plant operators were required to submit emissions reports to the town, which were subject to regular review by town officials.
Today, the plant has expanded to four units, and while the town is still searching for records, officials do not know the last time the plant submitted an emission report from on-site monitors for a review. Town attorney Nick Ciappetta said the town is reviewing whether or not it has monitoring authority. The EPA and DEC, he said, have jurisdiction over plant emissions.
Some lawmakers firmly disagree, and State Sen. Jim Gaughran (D-Northport) is calling for action.
“The town has had more power than it’s realized,” he said. “It should take whatever action it needs to take.”
Gaughran said he regularly drives past the plant and smells foul odors. Last year, he requested a state health investigation after learning that graduates of Northport High School Class of 2016 were diagnosed with leukemia and lymphoma, after community members said they want to know if the plant’s emissions are a factor.
State health department investigators have now expanded their study to look at cancer rates in a broader population to look for patterns. (See story on Page A3) With that investigation underway, Gaughran finds it prudent to take steps to better protect the community.
Town Council member Joan Cergol agrees.
“If the Town, in its rezone of the property, or any of its agencies or boards in the 1960s imposed conditions on LILCO to protect the health and safety of Huntington residents, then it stands to reason that its successors should be bound by the same,” she said.
It is unclear what action if in any will be taken, but some are saying additional precautions would be prudent.
Danielle DeSimone is one several young adults diagnosed with leukemia from the Northport High School Class of 2016, who received a bone marrow transplant and is now in remission. She said she would absolutely support any policies that would better protect the public’s health.
“May no more families be faced with this burden unnecessarily,” she said in an email.
As the state’s health investigation continues, and as the town bears the additional burden of fighting LIPA and National Grid, spending $4.2 million to date, many people are looking at the plant with a discerning eye.
According to the DEC, the Northport Power Plant emissions are in severe violation of state and federal the air pollution standards for nitrous oxide and VOCs, which contribute to ozone. When inhaled, ozone chemicals react chemically with many biological molecules in the respiratory tract, the EPA reports, leading to adverse health effects.
It’s difficult to know whether or not a specific environmental toxin will cause a particular individual to develop cancer or other diseases, according to a 2003 report “Cancer and the Environment” published by the U.S. Department of Health and Human Services.
But significant sources of VOCs are chemical plants, gasoline pumps, oil-based paints, autobody shops, and print shops. Nitrogen oxides result primarily from high temperature combustion. Significant sources are power plants, industrial furnaces and boilers, and motor vehicles, according to the state Department of Environmental Conservation Permit Review Report from February 2019.
In response to inquiries,National Grid spokesperson Wendy Ladd said, “we submit our emissions report to the EPA and NY DEC.”
The DEC states that ozone is a regional air pollutant and most human and economic activity in the NYC metro area contribute in some way to ozone exceedences.
“If the DEC finds any facility poses an imminent threat to public health or the environment, the agency works to address the situation immediately,” said DEC spokesman Kevin Frazier.
Correction: An earlier version of this story reported that the Town Attorney Nicholas Ciappetta said that the town had no authority over emissions monitoring. The town is actually still reviewing the matter. (updated 1/29/2020)
At the Long Island Power Authority’s July 24 board meeting, Larry Kelly, a trial attorney, described at a public comment session how LIPA in 2006 and 2007 instituted what he called “the largest tax fraud” he’s seen in his 35 years as a lawyer, according to Huntington Town councilman, Eugene Cook (R).
Cook has independently asked New York State’s Public Service Commission Chairman John Rhodes in a letter dated Aug. 6 to review and “forcibly address” the issues.
According to Cook, Kelly alleged that LIPA used the tax system to extend tax exemptions and reductions to Caithness power plant, which was awarded a contract to build a new 350-megawatt power plant in Yaphank, and then used those low taxes to argue in court that National Grid’s four aging power plants on Long Island were overassessed.
“I also request the PSC review LIPA’s ‘unclean hands’ in the Northport filings, and the impact that should have on LIPA’s continued operations,” Cook’s four-page letter concluded. The letter was sent on a town letterhead, but was not signed by other town board members, the supervisor or the town attorney.
Councilman Eugene Cook
The term “unclean hands” is a legal defense which essentially references a legal doctrine that states a plaintiff is unable to pursue tax equity through the courts if the plaintiff has acted unethically in relation to the subject of its complaint.
The allegations are surfacing just weeks after closing arguments were presented July 30 in LIPA’s tax certiorari case with the Town of Huntington for the year 2014. It is unclear how the allegation could potentially impact the outcome of the case as post-trial deliberations continue. The unclean hands defense was not part of the town’s defense, according to the Town Attorney Nick Ciappetta, who offered no public comment on the allegations.
Kelly, a Bayport resident who ran for a New York State Supreme Court judgeship in the 2018 election, is unaffiliated with Huntington’s case, but said his obligation as a trial lawyer is to act as a steward of the law.
LIPA did not respond to email requests for comment on the public allegations.
A LIPA press release dated Jan. 25, 2006, stated that the Caithness plant in Yaphank would include a $139 million payment in lieu of taxes agreement with $100 million over 20 years going to Bellport’s South Country school district.
LIPA’s 2019 Property Tax Reduction pamphlet, which is publicly available and published on its website, highlights the value of Caithness plant in contrast to the Port Jefferson, Northport and three other plants. On page 14 of the report, LIPA stated that in 2016 Caithness paid $9.7 million annually in taxes, while the Northport plant paid “eight times” as much in taxes, or $81 million, and Port Jefferson paid “three times” as much in taxes, or $33 million.
The report also stated on page 14 that LIPA reimburses National Grid under its contract more than it earns in power revenue, a sum that factors in property taxes.
“Those losses, the amount by which costs exceed the value of power, are paid by all 1.1 million electric customers,” the report said. It indicated that LIPA’s goal for filing tax challenges in 2010 against Nassau County, the Town of Huntington, the Town of Brookhaven and the Village of Port Jefferson “in an attempt to obtain a fair tax assessment on the four legacy plants.”
In a telephone interview, Kelly referred to a Feb. 15, 2012 meeting with the Town of Brookhaven Industrial Development Agency, which recorded a Caithness representative explaining that “LIPA pays the PILOT to Caithness who then makes the PILOT payment to the IDA, and then they get a check back from New York State which is then returned to LIPA.”
The minutes further stated, “This is the only power plant on Long Island that the ratepayers are not paying any real property taxes net out of pocket for the first 10 years, resulting in a saving of $80 million.”
Kelly and Cook, in presenting the allegations publicly and to the commission, claimed that Bellport’s school district, South Country, which Cook said in his letter is comprised of 40 percent minority populations, were shortchanged tax revenue that could have funded school programs. Representatives from the South Country school district did not respond to email and telephone inquiries about their tax revenue from Caithness.
The Public Service Commission has said that it has received and is reviewing the letter from Cook. It offered no other response to questions related to its potential response.
One year ago, the Town of Huntington’s board members considered eminent domain proceedings for the Northport power plant as a potential outcome to LIPA’s tax lawsuit against the Town of Huntington.
A newly released report on the topic, prepared by the town attorney and several other town departments, now suggests the legal obstacles just may be too great for the town to overcome.
“Let’s take it, let’s take it now.”
— Eugene Cook
The report notes that eminent domain proceedings would render the powerplant property exempt from taxes, a situation that would result in the loss of $55 million in taxes to the Northport-East Northport school district.
Town Supervisor Chad Lupinacci (R) found this aspect of the situation to be unacceptable.
“After reading the thorough report prepared by the town attorney, it is my position that eminent domain of the Northport power plant would not be feasible and would actually harm the Northport-East Northport school district, as well as taxpayers in the Town of Huntington, by making the property tax-exempt,” he said.
Some board members, however, still support the idea of establishing a municipal utility through eminent domain proceedings.
“Let’s take it, let’s take it now,” Councilman Eugene Cook (I) said in a telephone interview. “We can lower taxes; we can reduce energy costs.”
Cook estimates that the plant will likely be used for another 20 to 30 years, and he said that it may become a more important part of the state’s energy plan when Indian Point nuclear power plant closes next year. He’s undeterred by the report.
The detailed legal and financial challenges outlined in the report cite a range of laws, legal opinions and case law to support its findings.
“There is no doubt that General Municipal Law Section 360 authorizes municipalities to own and operate a power-generating facility,” the report states. “However, the grant of authority in Section 360 is limited.”
A main sticking point: The town can generate electricity for itself and its residents. But using only a fraction of the energy that it generates — and selling the rest to a public utility — is legally questionable. The report based this conclusion on a 1989 legal opinion of New York State’s attorney general, which reportedly states that a municipality cannot own and operate a power plant for the sole purpose of selling power to a public utility.
Using the current situation as an example, the report indicates the Town of Huntington would use approximately 15 percent of the energy generated by the Northport power plant, leaving a surplus of 85 percent. The courts would need to determine whether or not the arrangement would be legally acceptable, as stated in the report.
Power of the LIPA statute
Town attorney Nick Ciappetta said the town does not need permission to file eminent domain proceedings to acquire the Northport plant, but he added it’s unclear in LIPA’s Power Supply Agreement with National Grid if the town can step into National Grid’s shoes.
Additionally, the LIPA agreement may also prohibit a local municipality from owning, condemning and operating a power plant in any part of the former LILCO’s service area.
“My focus is on passing legislation that would protect taxpayers across Long Island from LIPA’s nonsensical attempts to destroy communities.”
— Jim Gaughran
“A municipality located within LILCO’s former service area may not establish a public utility service to provide gas or electric power without LIPA’s agreement,” the report states, citing a 1999 attorney general legal opinion.
LIPA spokesman Sid Nathan did not respond to phone calls or questions submitted via email regarding the Northport power plant, but in a May 9, 2018, Times of Huntington-Northport report on the eminent domain proposal, the utility’s spokesperson said that LIPA’s annual $80 million in property taxes for the Northport power plant exceeds its revenue, potentially rendering the decision not in the public’s interest.
If the town board majority remains interested in pursuing the eminent domain option, the next step, as described in the report, would be for the town to hire an accounting firm to analyze the public benefit of operating the power station.
Financial challenges
The Northport board of education weighed in on the loss and determined that it would have to dramatically reduce staff at all levels, eliminate proposed capital improvements, eliminate extra-curricular and academic offerings and significantly increase class size, among other measures.
“Assuming that the town’s operation of the power plant results in a net profit, there does not appear to be a legal mechanism to make the school district whole,” the report states.
This past spring NY State Sen. Jim Gaughran (D-Northport) introduced legislation (§4452a)that aims to supplement school districts and government entities impacted by LIPA’s tax suit with additional state funds. The bills, though, still require support from the state legislature and Gov. Andrew Cuomo (D).
“I stand fully behind the Town of Huntington in their lawsuit with LIPA and I have led the fight in Albany to protect taxpayers threatened by LIPA’s wreckless lawsuits, introducing and passing bills that would do just that,” Gaughran said. “My focus is on passing legislation that would protect taxpayers across Long Island from LIPA’s nonsensical attempts to destroy communities.”
If Gaughran’s bills pass and the board votes to move forward, the report also notes a majority of town voters would still need to approve a public referendum to acquire the power plant.
“This would be a tall order as the power plant lies exclusively within the confines of the Northport-East Northport school district and voters outside of that school district might deem such an acquisition too provincial and/or not in their best interests,” the report states.
Paul Darrigo, a Northport resident who has garnered more than 4,500 supporters through a Facebook campaign Concerned Taxpayers Against LIPA, said he is not yet prepared to comment on the complex idea of taking over the power plant through eminent domain.
The deal, if it gets the green light from board members, the courts and the community, would also be dependent upon the town’s ability to borrow money or issue bonds to finance a municipal utility. If it all worked out, the project would “at a minimum,” reportedly double the town’s outstanding debt.
The Northport power plant, the largest power generating station on Long Island, is owned by National Grid, a multinational business located in the United Kingdom. The plant and its four generating units and support facilities sit on 275 acres along Long Island’s North Shore. The town estimates the value of the property at $3.4 billion and receives $84 million in taxes. The plant burns both oil and gas and is regarded as a major air polluter. Both the American Lung Association and New York State Department of Environmental Conservation have found its ozone emissions, a powerful respiratory irritant, to be a serious public health concern.
When Samantha Marill stepped up to the microphone at a town hall meeting March 16 in the Northport High School auditorium, the crowd of more than 500 local residents fell silent as she spoke.
“Four of my classmates have been diagnosed with leukemia,” she said. “I attended this high school and I’d like to know if emissions from the Northport power plant are a factor.”
Marill said that she and her classmates graduated Northport High School in 2016.
“This is an alarmingly high number,” she said.“Most schools do not even have one student diagnosed.”
The situation Marill describes is statistically abnormal. Leukemia, a cancer of the blood cells, strikes mostly older adults. Suffolk County, overall, does have a higher leukemia incidence rate for 2011-15 than state averages, according to New York State Department of Health spokesperson Jill Montag. But more than half of the people diagnosed with the disease are in excess of 65 years old.
“None of my classmates should be fighting for their lives so soon after graduating.”
— Samantha Marill
The statewide annual average for leukemia diagnoses for ages 20 to 24 totals 18, as reported in New York’s most recent cancer registry, which excludes New York City.
It would be expected that two people between the ages of 20 and 24 would be diagnosed with leukemia, according to the state’s statistics, in a population of 100,000. In the Northport-East Northport School district, where an estimated 36,000 people live, one case would be rare.
“None of my classmates should be fighting for their lives so soon after graduating,” Marill said. A fifth high school friend, she said, was diagnosed with sarcoma, another rare type of cancer that affects connective tissues.
It’s difficult to know whether or not a specific environmental toxin will cause a particular individual to develop cancer, according to the U.S. Department of Health and Human Services 2003 report titled “Cancer and the Environment.”
But Marill was one of two people to raise health concerns about the Northport power plant at that meeting. Christine Ballow said that she drives past the plant’s stacks daily, coming and going from her home on Eaton’s Neck. Her two neighbors, she said, suffer from another rare blood disease called Wegener’s granulomatosis. The disease effects the lungs, throat, sinuses, kidneys and blood vessels. The Mayo Clinic, a nonprofit academic health center, reports on its website that the disease is not contagious or hereditary. Its causes are unknown.
The Times of Huntington has dug into some of the issues and contacted state officials to learn how the public’s health concerns, past and present, are addressed.
Here’s what we found:
• New York State Department of Health and the U. S. Department of Health and Human Services investigated complaints about the Northport power plant in 2009.
•The 2009 report’s conclusion: “It is unlikely that people who live and utilize facilities around the Northport power plant will come in contact with chemicals originating at the Northport power plant site while touching soil or breathing dust at the [soccer fields], or by drinking groundwater that is outside of the Northport power plant property, and that in these ways operations at the Northport power plant are not expected to harm people’s health.”
• The only public health action recommended in 2009 was that the grass surface on the plant’s public soccer fields be maintained to ensure that the potential for exposure to arsenic and cadmium are minimized.
• That same report stated that contamination concerns date back to the late 1970s, saying: “There have also been many complaints about oil and soot emissions from the plant’s four smokestacks; some exceedances of air guidelines may have occurred, although no data on air emissions was reviewed that could confirm this.”
• Leukemia risk factors, which are listed on the state health department website, include exposures to ionizing radiation, smoking, rare viruses and blood disorders. Long-term exposure to benzene and ethylene oxide, typically in the workplace, are also a known cause of the disease.
• Suffolk County Water Authority reports by email that it tests its wells for benzene, but has never in 25 years identified the chemical’s presence in county waters.
• The Northport power plant is considered a Major Oil Storage Facility, an official term.The 2009 report confirmed that the facility’s groundwater is subject to regular monitoring and reports that no significant petroleum products and material have contaminated the area. The water authority has confirmed by email that it has no record of significant contamination since 2009.
To address residents’ cancer concerns, New York State created in 1981 the Cancer Surveillance Program. It currently indicates no cancer cluster for leukemia near the Northport power plant, according to Montag. The program data, she said, shows one case of leukemia diagnosed between 2011-15 in the area that contains the plant.
“While the community has not requested an investigation for this area, interested community members are welcome to contact the Department of Health at 518-473-7817 or [email protected] to discuss their concerns and provide detailed information,” she said.
The American Lung Association doesn’t track cancer or Wegener’s disease, but it does monitor air quality. It reports Suffolk County is repeatedly one of the most polluted counties in the state, and is assigned an “F” rating for its ozone emissions.
“Basically, the plant is required to meet modified emission standards from those applied to plants that are newly built,” said Jennifer Solomon, media person with the American Lung Association. “The power plant can emit thousands of tons of nitrogen oxides, a pollutant that is an essential contributor to ozone smog. Ozone is a powerful respiratory irritant and causes breathing problems for children, seniors and for those with chronic lung diseases, sometimes sending people to their doctors or even the emergency room.”
Graph from New York State DEC.
LIPA’s tax lawsuit against the Town of Huntington has pushed the community to a tipping point.
LIPA spokesperson Sid Nathan directed questions about Northport power plant health concerns to National Grid, which owns the Northport power plant.
National Grid has not responded to phone and email requests for comment.
“In response to constituents very serious concerns raised during my town hall meeting on LIPA, I am requesting that the state immediately look into these community health concerns,” Gaughran said. “I am requesting a meeting with the relevant state agencies to ensure that the health of our residents is of the utmost concern.”
As for Marill, a junior at SUNY Potsdam, she’s declared a major in environmental science. She wants to study environmental law.
“It’s wild to think that we could shut the plant down but, ideally, I would like to see it closed,” Marill said.“We need clean sources of energy.”
Be the Match
Every three minutes someone is diagnosed with a blood cancer, according to the National Cancer Institute’s Surveillance, Epidemiology, and End Results Program. For patients with blood cancers like leukemia and lymphoma, and other life-threatening diseases, a cure exists. Be The Match is a community of donors, volunteers, health care professionals and researchers who deliver cures by helping patients get the life-saving blood stem cell transplants they need. Some 70 percent of patients do not have a fully matched donor in their family — they depend on Be The Match to find an unrelated donor. To join, people need to meet age and health guidelines and be willing to donate to any patient in need. Registration involves completing a health history form and giving a swab of cheek cells. Join the Be The Match Registry online at www.bethematch.org, or by phone at 1-800-MARROW (627769)-2.
Residents file into Northport High School to speak out over LIPA's power plant. Photo by Donna Deedy
By Donna Deedy
More than 500 residents joined forces in the Northport High School auditorium March 16 to challenge the Long Island Power Authority. The quasi-governmental agency is seeking through the courts a 90 percent reduction in the approximately $82 million in annual property taxes it pays to the Town of Huntington for the Northport power plant.
A number of Northport residents were galvanized to take action. Paul Darrigo, a local commercial banker with Capital One, launched a new Facebook page, Concerned Taxpayers Against LIPA.
“We now have 1,200 members and are still growing at a rate of 15 members per hour,” Darrigo said.
LIPA states in its report, “2019 Fair Property Taxes for Electric Customers,” that New York charges more of the cost of government on utilities than other states. As a result, the not-for-profit entity alleges that it’s overassessed for its aging assets.
“I am advocating for the governor to support my two initiatives to provide Long Island residents with $139 million in state aid to communities impacted by tax certiorari issues.”
— Jim Gaughran
“The plant’s units were built in 1967 and 1976 and its technology is outdated,” LIPA spokesman Sid Nathan said. The plant operates at 12 percent capacity today compared to 54 percent capacity in 1999, a 78 percent decline.
The tax reductions LIPA seeks will reportedly be used to reduce customers’ electric bills.
Gordian Raacke, executive director of nonprofit advocacy group Renewable Energy Long Island, stated by email that he agreed.
“All LIPA customers pay more than would be the case if the properties were assessed at fair value,” he said.
But many Town of Huntington residents aren’t buying into what they call more empty promises.
If LIPA’s case is successful, as the agency has been in previous cases, critics say it could inflict a major economic blow to the community. Northport schools would annually loose an estimated $49 million out of some $54 million it receives from LIPA, according to district’s attorney John Gross.
To compensate for the loss, the Town of Huntington states on its website that residents would be forced to pay higher property taxes.
New York State Sen. Jim Gaughran (D-Northport) organized the town hall meeting to answer questions and to let the community know that he aims to seek funding to soften the blow if LIPA’s case prevails. His legislative bills, however, would require the approval of state lawmakers and Gov. Andrew Cuomo (D). The state senator said he’s working to build consensus in Albany, but urges citizens to contact elected officials at all levels of government to encourage cooperation in the battle.
“I am advocating for the governor to support my two initiatives to provide Long Island residents with $139 million in state aid to communities impacted by tax certiorari issues,” he said. “I am fully supportive of the town and school district in continuing their fight against LIPA.”
The situation raises questions about how education is funded in New York state. However, many community members question why National Grid and PSEG aren’t bearing tax liabilities when shareholders are earning dividends. National Grid, a business based in the United Kingdom, owns the Northport plant and operates under contract to LIPA; PSEG Long Island manages transmission and distribution for LIPA.
Gaughran said that he’s looking into reforms that ensure the public’s interest is properly represented.
“Local communities should not be bankrupt by runaway authorities like LIPA,” he said.
“I love this place, but if I can’t afford to pay my bills what good is it.”
— Joseph Sabia
Northport resident Michael Marcantonio was among people who spoke during the meeting. Now a lawyer specializing in mergers and acquisitions, corporate governance and hostile takeovers, the Northport High School graduate blames the problem on the government’s practice of using public funds to bail out shareholder-owned businesses. LIPA, he explained to the crowd, was formed when officials used the public’s money to buy all the debt and some of the assets of the Long Island Lighting Company after it mismanaged the Shoreham nuclear project, which
ultimately failed.
“This is what corruption looks like,” Marcantonio said. “Do not trust LIPA, they are robbing us, and we need to fight this.” The Northport resident ran for the state’s 12th Assembly District in 2018, largely on the LIPA issue, but he was forced to drop out due to a court decision over him voting locally in 2012 and 2014 while a student at Duke University Law School in North Carolina.
Newspaper reports from 1998 show that the now defunct Bear Stearns, the investment firm involved in the subprime mortgage crisis, served as the state’s financial adviser for the LILCO bailout, before quitting to successfully bid and broker the deal’s bond offering. At $7 billion, it became the largest public offering for municipal bonds in U.S. history.
The LILCO deal was originally promoted publicly as a 20 percent rate reduction plan, as reported in the May 28, 1998 New York Times article titled “The End of LILCO, as Long Island has come to know it.” Long Island ratepayers reportedly paid the highest electricity bills in the nation at the time. As details began to surface, critics found the scheme entailed delaying interest payments on the debt and permanently saddled ratepayers with 33 years of liability.
Nicole Gelinas, a senior fellow at the think-tank Manhattan Institute wrote a 2013 op-ed piece in Newsday titled “Long Islanders are still paying for three bailouts.” The policy analyst explained that Long Islanders need to understand the past mistakes related to the bailouts to prevent similar situations in the future.
LIPA restructured part of its debt in 2013. That plan, as reported in Newsday, aimed to reduce the cost of debt, instead of paying it down.
LIPA reports today that customers pay 10 percent in debt reduction and another 10 percent goes in interest. An additional 15 percent of a LIPA bill pays taxes and other fees. LIPA’s report does not specify what those other fees are.
“Do not trust LIPA, they are robbing us, and we need to fight this.”
— Michael Marcantonio
Business leaders, who also spoke at the meeting, urged others to join the Northport Chamber of Commerce. School board members passed out red business cards instructing residents to visit STOP LIPA NOW on Facebook and get involved.
LIPA states in its report that it ensures it’s working on all customers behalf to lower tax bills on its power plants and other equipment to reflect their fair value. It estimates the plant tax valuation at $200 to $500 million. Huntington assessed the value on the tax code at $3.4 billion.
The plant sits on some 244 waterfront acres near Asharoken, which LIPA estimates is worth “roughly $50 million.”
“We are confident that the court will agree that the Northport power plant is accurately assessed,” said Nick Ciappetta, Town of Huntington attorney.
For people like Northport resident Joseph Sabia, the situation has become unbearable.
“I love this place, but if I can’t afford to pay my bills what good is it,” he said.
The original article had the wrong first name for Sen. James Gaughran. We regret the error.
The Town of Huntington and Long Island Power Authority have finally made their opening statements in a court trial that has been more than eight years in the making.
Huntington town officials, LIPA and National Grid are presenting their arguments over the proper tax-assessed value of the Northport Power Station beginning Feb. 25 before Justice Elizabeth Emerson at Suffolk County Supreme Court in Riverhead.
LIPA filed its tax certiorari case over the assessed property tax valuation of the Northport plant in 2010 seeking to reduce its annual taxes by 90 percent, in addition to repayment of all taxes it claims to have overpaid since 2010 — currently more than $550 million.
“It doesn’t differ all that much from when you grieve your property taxes, but this is on a much bigger scale.”
— Nick Ciappetta
Huntington Town Attorney Nick Ciappetta said all parties have agreed to start with the bench trial, decided solely by Emerson, by challenging the taxes paid on the plant in 2014.
“Even though they have filed petitions to challenge every year beginning in 2011, they have to file petitions individually for each year,” the town attorney said.
Ciappetta said that the burden of proof to demonstrate that the Town of Huntington tax assessor’s assessed value of the plant was incorrect lies with the utility company. LIPA will need to provide documents and expert testimony that convinces the judge that Huntington was in error, according to the town attorney.
“It doesn’t differ all that much from when you grieve your property taxes, but this is on a much bigger scale,” Ciappetta said.
LIPA started the trial with its opening statement and by calling on two expert witnesses for testimony Feb. 25. The Huntington town attorney said he expected the utility company to call on two additional expert witnesses to the stand to testify on its behalf before the town responds.
“We feel good about our position and that LIPA will not be able to sustain their burden,” Ciappetta said. “They have an appraisal that makes the plant seem as if it is worthless. That plant is vital to Long Island’s power grid.”
The Huntington town attorney said the town’s legal arguments will highlight how the Northport Power Station is unique given its “ideal location” and several factors, including its ability to operate based on either gas or oil, and is believed to be fundamental to meeting electrical demands during severe weather events.
“We feel good about our position and that LIPA will not be able to sustain their burden.”
— Nick Ciappetta
The trial is open to the public and any who wish to observe the proceedings or listen to the arguments are welcome to the Riverhead court room, located at 1 Court St.
LIPA did not respond to request for comment on the ongoing court proceedings.
Ciappetta previously stated although the Town of Brookhaven settled its case with LIPA earlier this year, he does not believe that agreement will have any impact on Huntington’s case.
While six months of mediation between the town, LIPA and National Grid under their hired third-party arbitrator attorney Marty Scheinman has not yet resulted in a settlement, it remains a probable outcome according to Ciappetta.
“There’s always the possibility it will settle,” he said.
The court trial proceedings, if not wrapped up this week, will continue in April.
Town of Huntington officials made the decision Tuesday to take Long Island Power Authority’s proclaimed value of the Northport Power Station at $193 million as an invitation to investigate purchasing the facility.
Huntington town board approved a resolution offered by Councilman Gene Cook (I) to authorize the town attorney’s office to formally research into its legal options in utilizing eminent domain to take ownership of the Northport plant by a 4-1 vote.
“It’s for the people, to look out for the future of the Town of Huntington,” he said. “I have done a lot of research and I believe it’s the right thing to do.”
“It’s for the people, to look out for the future of the Town of Huntington.”
— Gene Cook
The councilman first raised the possibility of turning to eminent domain back in May, days after LIPA submitted documents to Suffolk County Supreme Court in its pending tax certiorari lawsuit against the town, which disputes the current annual tax-assessed value of the plant at about $80 million. The utility company has alleged the structure only has a fair market value of $193,680,000 as of July 1, 2013, based on a market value report from Tarrytown-based Tulis Wilkes Huff & Geiger.
“I looked at that appraisal not as a fair evaluation, but an invitation for the town to explore condemnation of the plant,” Councilman Ed Smyth (R) said. “The price is so ridiculously low that it would be negligent of us to not explore the possibility of acquiring the plant.”
Smyth said that he believes the Northport Power Station, which is actually owned by National Grid, is underutilized by LIPA, perhaps intentionally to devalue it given the ongoing tax certiorari lawsuit.
Cook had previously stated he believes the Northport facility is one of the largest power plants in the Northeast and will become more valuable with future improvements. He said his research shows the facility has the potential to operate and generate electric for another 15 to 30 years, up to a maximum of 40 years before closing down. Cook previously estimated the power station could produce as much as $5 billion in revenue per year for the town.
“The price is so ridiculously low that it would be negligent of us to not explore the possibility of acquiring the plant.”
— Ed Smyth
“What I like if the town buys it now at this rate is, when the plant is closed, we could shut it down and give the property back to the people for reaction or environmental uses,” he said.
Councilman Mark Cuthbertson (D) was the lone vote against an official resolution requesting the town attorney’s office to conduct research into the possibility of eminent domain. He called the legislation an unnecessary act of “grandstanding,” stating any board member could have simply verbally requested the town attorney to look into the matter.
“We are creating false hope this is a viable option, if it really were an option our lawyers would have suggested it a long time ago,” he said. “It is not a possibility to operate the LIPA plant as municipal power authority.”
The councilman also stated that under New York State General Municipal Law, if the town were to take over daily operation of the power station it would not pay any taxes to the Northport-East Northport School District — which currently receives approximately $56 million annually from the utility company.
If the town were to initiate the process of obtaining the power plan via eminent domain, it would not resolve the town’s lawsuit with LIPA. In addition to seeking a 90 percent reduction of taxes on the power plant, LIPA is asking for the town to reimburse it for alleged overpayment of taxes each year since it filed the claim in 2010 — totaling more than $500 million.
“We are creating false hope this is a viable option, if it really were an option our lawyers would have suggested it a long time ago.”
— Mark Cuthbertson
Sid Nathan, spokesman for LIPA, said the company had no comment as it is continuing negotiations at this time.
Huntington, Northport-East Northport school district, LIPA and National Grid all agreed to sit down with neutral third-party mediator, Port Washington-based attorney Marty Scheinman, in nonbinding arbitration this July to see if all parties could reach a potential settlement agreement over the tax-assessed value of the Northport plant. The trial on the tax certiorari case is scheduled to continue in February 2019, according to Cook.
Tom Kehoe, deputy mayor for the Village of Northport, commended Cook and the town board for their decision to move forward with investigating the legal potential of utilizing eminent domain to take over the plant.
“Whether it ever gets to the point of the town acquiring it through eminent domain, it’s another piece of the puzzle that will put a little pressure on the utility and LIPA to come to an agreement that’s good for all of us,” Kehoe said.
Huntington’s elected officials are calling for changes to the structure of Long Island Power Authority despite being engaged in mediation with the utility company.
Huntington Town Board unanimously decided to send a message urging New York State Gov. Andrew Cuomo (D) and the state Legislature to enact the Long Island Power Authority Ratepayers Protection Act at its Nov. 8 meeting. The legislation, if passed, would require eight out of the utility company’s nine board members to be elected by public vote, among other changes.
“It is in the best interest of Town of Huntington residents to have a LIPA board that is elected by and answers to the ratepayers.
— Nick Ciappetta
“It is in the best interest of Town of Huntington residents to have a LIPA board that is elected by and answers to the ratepayers,” Town Attorney Nick Ciappetta said.
The bills were first introduced to the state Legislature in February 2017 by Sen. Kenneth LaValle (R-Port Jefferson) and Assemblyman Fred Thiele Jr. (D-Sag Harbor), co-sponsored by a coalition including state Assemblyman Andrew Raia (R-East Northport).
“I’ve been calling for the election of LIPA trustees forever, ever since there was a LIPA,” Raia said. “The best way to control our electric rates is to make LIPA trustees elected.”
Currently, LIPA’s nine-member board of trustees consists of five individuals appointed by the governor, two selected by the president or majority leader of the state Senate, and two chosen by the speaker of the Assembly.
The proposed ratepayers protection act calls for the state Legislature to create eight districts roughly equal in population based on the last U.S. Census, by May 1, 2019. A resident of each district would be elected to LIPA’s board to serve a two-year term as trustee, with the first elections to be held in December 2019. Candidates on the ballot would not be chosen by the political parties. Those elected to the board would not be paid, but could be reimbursed from the state for their related expenses, according to the draft of the bill.
In addition, proposed legislation would require LIPA to hold public hearings before making future rate changes, give residents 30 days advance notice of the hearing, and hold the event in the county it affects — Suffolk or Nassau. It would prohibit the utility company from increasing its rates to offset any losses from energy conservation efforts.
“It would make LIPA a whole lot more accountable than they are now,” Raia said. “Without a doubt.”
“The best way to control our electric rates is to make LIPA trustees elected.”
— Andrew Raia
The legislation, despite being proposed in 2017, has not made it out of committee to a vote before either the state Assembly or Senate, according to the Legislature’s website.
No action can currently be taken on the legislation, though, as the state Assembly’s 2018 session ended in June. There are no plans to reconvene before year’s end, according to Raia, particularly with midterm elections flipping the state Senate to Democratic control. The bill cannot be enacted by Cuomo without getting the legislative body’s approval. Raia said he suspects Huntington’s elected officials are hoping the governor will consider working it into his 2019 budget, which is currently
being drafted in Albany.
“I’m not the biggest fan of putting policy into the state budget, but many times it’s the only way to get things done,” he said.
Huntington Town officials had no further comment on the timing of the message. Mediation pertaining to the value of the Northport Power Station between the town, Northport-East Northport school district, LIPA and National Grid is ongoing, according to Ciappetta, as he anticipates the next mediation session before the end of November. The tax certiorari lawsuit’s next date in court is Dec. 5.
