Town, School District Upheld on Right to Sue LIPA Over Assessment Challenge

This story was posted by Pam Robinson. It was written by Leah Bush.

A State Supreme Court judge recently upheld the Town of Huntington and Northport-East Northport School District's right to sue LIPA and National Grid over the tax assessment challenge on the Northport Power Plant.

Justice Elizabeth Hazlitt Emerson of the Suffolk County Supreme Court for Commercial Division upheld the Town and school district's rights to sue for breach of contract, to seek an injunction prohibiting any further action on LIPA and National Grid’s suits; and to award the Town and School District damages for the expenses incurred in fighting those suits, including the costs of hiring outside counsel and experts. 
Emerson's decision denied LIPA's request to dismiss the companion suits, filed in 2011, citing a 1997 agreement between then LIPA Chairman Richard Kessel and Town Supervisor Frank Petrone in which Kessel stated LIPA would not challenge its tax assessment unless LIPA and National Grid were unfairly singled out.          

“It is undisputed that the assessments for the properties in question had not been increased disproportionately to the assessments for any other properties in the Town of Huntington,” Emerson wrote. 

LIPA’s challenge contends that the Northport plant is worth less than eleven percent of the value reflected by its current assessment, on which LIPA plays a total of roughly $70-million in property taxes. 

Should LIPA prevail, the Town said residents would experience tax increases of up to 10 percent in addition to serious increases in county and police district portions of tax bills.

“On behalf of town taxpayers, and especially those who live in the Northport-East Northport School District, I thank Justice Emerson for recognizing that LIPA and National Grid’s failure to live up to its end of a bargain is a matter that should be considered by the courts,” Petrone said. “We will continue to fight an assessment challenge that, if successful, could have a devastating effect on property owners.”  

Property taxes on the Northport power plant, which are estimated to be over $70 million, provide tremendous support to the Northport school, library, and fire districts. The Northport-East Northport School and Library Districts may face a 50 percent tax increase if LIPA's tax assessment is granted.

“The Court recognizes that the School District’s claims against LIPA and National Grid for their failure to honor their obligations under the Power Supply Agreement have merit,” said Stephen Waldenburg, President of the Northport-East Northport Board of Education. 

Petrone and Councilman Marc Cuthbertson said they believe Justice Emerson’s decisions strengthen the Town’s hand in discussions with state officials over including dropping the assessment challenge as part of the pending legislation to restructure LIPA.

“The assessment challenge is the last gasp of a dying authority that has not served Long Island well over the years,” Cuthbertson said. “While we are working with our local delegation to have the assessment issue included in the LIPA restructuring legislation, we will continue to pursue our legal remedies to stop this improper attempt to dig into the pockets of Huntington taxpayers.”

LIPA representatives could not be reached for comment, although they have maintained that savings from a reassessment would be passed onto LIPA customers. They said Friday they plan to appeal Emerson's decision.

"The case does not address the continuing property tax payments being made by LIPA customers going forward under a new Power Supply Agreement," wrote LIPA spokesperson Elizabeth Flugler. "LIPA strongly believes the legacy LILCO power plants are over-assessed and will continue to pursue reasonable taxation on behalf of its 1.1 million electric customers."

The town claims that since the LIPA plant is owned by National Grid, a privately-owned company, the benefits would go primarily to its shareholders.