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Mostly Cloudy Tax hammer: Island Park business owners worry as LIPA decision looms
As deadlines loom in the Long Island Power Authority’s bid to have the property taxes reduced on its aging power plants across Long Island — including the E.F. Barrett plant in Island Park — local business owners brace for potentially dramatic tax increases as a decision in the court case draws nearer.
“It could really devastate this whole town,” said Glenn Ingoglia, a local attorney and a former president of the Island Park Chamber of Commerce. Lingering damage and vacant storefronts as a result of Hurricane Sandy, he said, presented business opportunities for newcomers seeking cheaper properties in the area, but Ingoglia added that knowledge of the impending LIPA case could scare them away, hurting the local economy. “Those setting up a business will think twice before coming here,” he explained, “because they’re coming into a tax increase.”
In 2010, LIPA — which pays almost $200 million per year in taxes across the Island — sued to have those tax bills reduced. In Island Park, where payments on the Barrett plant account for nearly half of the tax revenue collected by the school district, LIPA is seeking a 90 percent reduction. Eight years later, a trial, along with a possible settlement, is scheduled for June.
What this means for Island Park is a possible 70 percent increase in school taxes — or, according to some estimates, an average of $3,000 per bill, the “worst-case scenario,” Bob Cohen, an attorney for the Island Park School District, said at a school board meeting last month. But district officials aren’t backing down with a settlement just yet, he said.
“We feel good about our decision, but we’ll see what happens,” Cohen said of the district’s choice to fight the tax grievance effort. At the meeting, he told concerned parents and residents that the chances that LIPA will succeed are 50-50 at this point, but added that because Island Park was being heard with several other Long Island municipalities — the North Shore School District in Nassau County, the East Northport and Port Jefferson districts in Suffolk County, as well as the Town of Brookhaven, the Village of Port Jefferson and the Town of Huntington — “There is strength in numbers.”
Earlier this month, however, the Town of Brookhaven dropped out, deciding to settle. Island Park is open to this option, Cohen explained, but if the municipalities lose, he said, an appeal is also possible. “We are pursuing the school district’s rights vigorously,” Cohen added. The case is currently awaiting summary judgment to determine whether one side’s argument is strong enough to win outright.
Cohen noted that business development would surely be hurt by the reduction LIPA is seeking, and said that businesses are somewhat at the utility’s mercy.
Ingoglia encouraged residents and business owners to spread awareness of the issue, and to ask their elected officials to support a tax alleviation program. He said that a grant or relief from the state is possible as well, but concerns must be stressed to officials. “That’s what they can do,” he said. “Put it in the laps of their elected officials. We’re giving them a solution, and if it doesn’t happen, then they need to answer to that.”
“Any increase [in taxes] is going to have a significant effect on business property owners and residential property investors, tenants and homeowners,” said Michael Scully, a real estate broker and the president of the Island Park Chamber of Commerce. “Property owners will be looking to pass on some of these rising costs to tenants and customers,” he added, mentioning that although nothing is certain yet, it is frightening for a neighborhood still rebuilding after Sandy. “This will be a challenging time for our community.”
“It will definitely change our business model, that’s for sure,” said Jeff Kalibat, owner of K & K Outboard, on Long Beach Road. He said he believed the school board should have a game plan for softening the blow once a decision is made. “That’s probably more in our control than what happens in the court,” Kalibat added.
“It’s certainly not a good thing for the businesses — it is already a struggle for them in Island Park,” said Josephine Natalello, owner of Jack’s Pizza, on Long Beach Road. “People are going to start running for the hills.” Natalello said she has signed petitions and helped spread awareness about the issue in Island Park. She accepted that taxes would go up. “I just hope they don’t go too crazy,” she said. “And that they would have it in their heart to give us a break. Every little bit helps.”
