‘In a holding pattern’: Island Park schools update public on LIPA injunction case

The E.F. Barrett power plant, in Island Park, is owned and operated by the Long Island Power Authority, which argues that the plant is over-assessed for tax purposes by nearly 90 percent.

Christina Daly/Herald

"It sounds like the writing is on the wall for us."”

Laura Hassett, Island Park resident

LIPA’s tax certiorari case in a nutshell

Since 2010, the Long Island Power Authority has sought to reduce the property taxes on four National Grid-owned power plants, in Island Park, Glenwood Landing, Northport and Port Jefferson.

LIPA officials have argued that the property taxes on these plants are over-assessed by at least 90 percent, and are challenging Nassau County, the Town of Brookhaven, the Town of Huntington and the Village of Port Jefferson to reduce the values. All of these municipalities are responsible for setting the values of their assessments.

LIPA currently pays $196 million in property taxes on the plants — $42.6 million for the E.F. Barrett plant in Island Park, according to reports by the utility. By comparison, LIPA argues, the tax payments on 28 of its other Long Island power plants add up to $16 million.

In response to LIPA’s effort, several municipalities and school districts potentially affected by the grievances, including the Island Park School District, joined in a lawsuit seeking an injunction that would prevent LIPA from seeking to reduce 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 nonprofit utility. That agreement, the districts said, said that LIPA would not grieve its taxes on the plants when it took over Long Island Lighting Company in 1998.

LIPA, however, argued that no such agreement existed.

–Peter Belfiore

A Suffolk County judge recently ruled against the Northport-East Northport and Port Jefferson school districts after they sought injunctions to stop the Long Island Power Authority from reducing its property taxes on its power plants within their districts.

At the same time, the judge warned that the court might rule against other plaintiffs in the case, including the Island Park School District, which also filed for an injunction, for the same reason.

Despite the ruling, the Island Park Board of Education said it would continue seeking the injunction. If the power authority were to succeed in reducing property taxes on the E.F. Barrett Power Plant, Island Park homeowners’ taxes could rise drastically, school officials said.

Suffolk Supreme Court Justice Elizabeth Emerson ruled in favor of LIPA, the Long Island Lighting Company and National Grid on Aug. 15. In doing so, Emerson, in effect, allowed LIPA to move forward with its property-tax challenges on its plants in Northport and Port Jefferson. The school districts might appeal.

Emerson heard the districts’ cases side by side with Island Park’s. She has not yet ruled on Island Park’s arguments.

The districts argued that they had reached an agreement with former LIPA Chairman Richard Kessel in 1998, requiring the power authority to pay property taxes on its plants. Emerson ruled, however, that the agreement was not legally binding, adding that there was nothing in any agreement that would prevent LIPA from challenging its taxes.

“They were gratuitous promises for which there was no consideration,” the judge said, according to court documents. “They, therefore, did not contractually bind LIPA.”

“The court’s decision affirms our customers’ right to pay reasonable taxes on the power plants,” said Sid Nathan, the LIPA communications director. “We remain committed to reaching a fair settlement for both the local communities and our 1.1 million customers to put an unsustainable situation back on a sustainable path.”

“If, and when, [Emerson] issues a similar decision, Island Park’s case will also be over, unless the district files an appeal,” the Island Park School District announced in a statement posted to its website. “The Board of Education and the superintendent are reviewing the decision with counsel and will evaluate the pros and cons of bringing an appeal once the judge issues a decision in our case.”

The Island Park school board informed residents of Emerson’s ruling at an Aug. 20 meeting, at which the district’s attorney, Robert Cohen, explained Island Park’s possible next steps.

“If the court issues the same decision in our case, it could have a devastating financial impact on the district and its taxpayers,” said Lauren Schnitzer, co-counsel to Cohen in the district’s lawsuit. “We will continue to discuss these critically important concerns, including whether to appeal, with the Board of Education.”

Superintendent Dr. Rosmarie Bovino reaffirmed the district’s statement, but declined to comment further.

“We’re just waiting — we’re in a holding pattern,” Board President Jack Vobis said, but he added that he recognized Island Park’s fate would likely mirror Northport-East Northport’s and Port Jefferson’s.

The ruling “took us kind of by surprise,” Vobis said. The district potentially will enter mediation with LIPA, he said, “to work something out, make some kind of deal.” Island Park will likely hold a mediation session with LIPA sometime in September, according to Vobis. In the meantime, he said, Island Park officials are awaiting word from the court on the injunction claim.

“Although it seems like it’s inevitable, we really can’t do anything until that happens,” he said.

Resident Laura Hassett said at the meeting that she worries that the district does not seem to have a “backup plan” to aid taxpayers whose bills would rise if the district were to lose in court.

“It sounds like the writing is on the wall for us,” Hassett said. “This is going to mimic the other decisions. That’s the feeling I got.” She added that the board said it would take an incremental approach to addressing any loss of tax revenue from LIPA.

“How are low-income families going to handle something like this?” she said.

Another resident, Richard Schurin, an attorney, said, “We ought not to be so negative,” adding that he believed the district stood a “good chance” on appeal.”

Correction: A previous version of this article misstated Ms. Schnitzer's name. It's Lauren Schnitzer, not Laura.