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Residents Speak Up On LIPA Suit 

John Gross, legal counsel for the Northport-East Northport School District, presents a “LIPA Update” at Monday night’s Board of Education meeting in front of an audience of more than 200 people.

Residents were out in force at Monday night’s Northport-East Northport Board of Education meeting, worried they are not being well represented as the school district goes up against the Long Island Power Authority (LIPA) in an attempt to derail a reassessment on the Northport power plant.

Citing concerns over a lack of communication with the public and a potential conflict of interest, more than 200 residents flooded the William J. Brosnan School for a formal update on the LIPA case. Attorneys from the district’s legal counsel, Hauppauge-based Ingerman Smith, tried tirelessly to alleviate confusion over the board’s intentions in court.

While the school district filed its own breach of contract suit against LIPA, tandem to one filed by the Town of Huntington in response to LIPA’s tax certiorari requesting a 90-percent reduction on the $3-billion plant, some residents wondered if they should hire their own legal counsel to represent a larger group of taxpayers, given that a successful endeavor by LIPA would have dire consequences to the tax base.

Taxes paid on the Northport power plant currently represent 37 percent of the school district’s budget. A current settlement offer on the table would result in the school’s annual tax base being reduced by $2.9 million starting in 2015-2016, and taxes paid by LIPA would reduce by over $4 million every year for 10 years leading to an overall loss of $43,618,531. LIPA’s annual real estate tax payments of $74,442,383 would diminish to an annual contribution of $30,823,852.

“It would be very impactful on the district because money is not lost, it’s shifted. The impact is not a loss of tax revenue but a shift of taxing to the taxpayers and residents,” the school district’s attorney, John Gross, said.

Other residents were skeptical over whether or not the school district and the Town of Huntington have conflicting interests in court. And some, like Paul Darrigo, encouraged a more open communication stream between the district and residents.

“This is a critical period… I’m outraged at the apathy that’s gone on in the community [until tonight], but people are energized now and we should give people as much information as possible,” Darrigo said.

Board of Education President Stephen Waldenburg, however, said the board is the strongest advocate for the community.

“It’s not like the board is just sitting here on our hands. We’ve hired very competent attorneys to fight this,” Waldenburg said.

The district is currently in a bit of a holding pattern as school and Town of Huntington officials consider the settlement offer, made in June, which would “discontinue its demand for refund of past paid taxes and phase down the tax payments” over a 10-year period starting in the 2015-2016 tax year. The school district and town have until Oct. 20 to accept LIPA’s offer and withdraw their lawsuits. If not, costly litigation would proceed until a decision is made in court.

Gross and colleague Carrie Anne Tondo suggested the district hold off on bringing out the proverbial big guns.

“This magical four-month period is really, to me, a decision of if we litigate or don’t,” Gross said.

According to Gross, the offer, conveyed in a letter to the Town of Huntington through Gov. Cuomo’s office, suggests an approximate assessment reduction of 59 percent, but Gross is unaware of how LIPA and the governor’s office arrived at that number.

“The letter…is expressed in a curious way. Instead of expressing the phase in as a reduction in assessment, it’s a reduction in tax revenue,” Gross said.

The school district’s legal counsel said that while the district did not receive Cuomo’s letter, the district is working with the town to resolve the multiple lawsuits against LIPA. Should either one of the parties withdraw its lawsuit, the settlement offer would go into effect.

In 1998 Richard Kessel, then-CEO of LIPA’s predecessor, LILCO, entered into a power supply agreement (PSA) in which they agreed not to challenge the assessment of the Northport plant until June 2013. In 2010, however, LIPA challenged the town’s assessment of the plant in court, violating the 15-year contract signed by Kessel.

According to the attorneys, the school district’s lawsuit is independent of the town’s tax certiorari case since school districts do not have standing in tax certiorari proceedings. However, the district has jurisdiction to sue for breach of contract, as the district is an “intended third-party beneficiary” of the power supply agreement (PSA).

The school district tried to file a lawsuit on behalf of the individual taxpayers who would be burdened with skyrocketing tax rates to make up for the deficit created by LIPA’s decreasing payments, but a judge dismissed Waldenburg’s attempt. The judge said “nothing more than an ordinary business relationship existed between the plaintiffs and the defendants. Moreover, these causes of action are not based on circumstances extraneous to the PSA, and the alleged misrepresentation is merely an expression of future expectation, which is not actionable.”

There seems to also be an issue of trust for at least one resident. Jim Hoops, of Northport, filed an open meetings law challenge against the school board for holding private executive session meetings with local senators and government officials.

Waldenburg said Hoops’ claims are unwarranted, as the meetings held were “totally proper” and were done so with everyone’s best interests in mind. Hoops did not return requests for comment by press time.

“The gentleman was implying things were discussed when he couldn’t possibly know that since he wasn’t in the room,” Waldenburg said.

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