NY State Senate Bill 2019-S5201

Senate Bill S5201

2019-2020 Legislative Session

Prohibits the Long Island power authority from bringing a tax certiorari challenge against a municipality

download bill text pdf

Archive: Last Bill Status - In Senate Committee Energy And Telecommunications Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 08, 2020	referred to energy and telecommunications
Apr 16, 2019	referred to energy and telecommunications

2019-S5201 (ACTIVE) - Details

Current Committee:: Senate Energy And Telecommunications
Law Section:: Public Authorities Law
Laws Affected:: Amd §1020-f, Pub Auth L

2019-S5201 (ACTIVE) - Summary

Prohibits the Long Island power authority from bringing a tax certiorari challenge against a municipality.

2019-S5201 (ACTIVE) - Sponsor Memo

                                
 
BILL NUMBER: S5201

SPONSOR: FLANAGAN
 
TITLE OF BILL:  An act to amend the public authorities law, in
relation to prohibiting the Long Island power authority from bringing a
tax certiorari challenge against a municipality; and providing for the
repeal of certain provisions upon expiration thereof

 
PURPOSE:

To prohibit LIPA from challenging the tax assessments levied against its
electric generating facilities, and making such prohibition retroactive
so as to enforce LIPA's repeated promises not to challenge its tax
assessments in the future.

 
SUMMARY OF PROVISIONS:

Section 1: Section 1 provides the legislative intent explaining the
background of LIPA's unwarranted tax certiorari challenges on its four
"legacy" power plants.

Section 2: Section 2 amends LIPA's enabling statute to expressly prohib-
it LIPA from challenging its tax assessments through a tax certiorari
challenge at any time, including prior to this legislation becoming law.

Section 3: Section 3 sets forth an immediate effective date; provided
however, such law shall have been deemed to have been in full force and
effect as of January 1, 2009.

 
JUSTIFICATION:

When the state granted the Long Island Power Authority (LIPA) the
authority to take over the Long Island Lighting Company (LILCO) in 2008,
LILCO had outstanding tax certiorari claims against several respective
municipalities. Should those tax certiorari claims be successful, it
would cause severe and lasting financial harm to the municipalities and
school districts in which they were located. As a result, LIPA made
repeated promises, including in writing, to elected officials, munici-
palities, school districts, and the public at large that it would drop
all of the then-existing LILCO tax certiorari challenges and would not
challenge its tax assessments in the future unless a municipality
"abusively" increased its taxes.

For nearly a decade LIPA adhered to that commitment, however, in 2010,
LIPA brought tax certiorari challenges against the county of Nassau, the
towns of Brookhaven and Huntington, and the village of Port Jefferson
("Assessing Municipalities"). According to LIPA, the cumulative "back
taxes" it is owed from each of the Assessing Municipalities totals over
$1 billion. Should LIPA prevail at trial, the back taxes owed from each
respective municipality would be owed to it immediately, drastically
increasing taxes on all residents of the municipality. Additionally,
LIPA believes its plants in the Assessing Municipalities are over
assessed by as much as 90%. If LIPA succeeds in its argument, that dras-
tic reduction in the value of its plants could cripple the budgets of
the school districts in which the plants are located within.

The respective litigations have been going on for the better part of a
decade--litigation that LIPA promised it would not bring. This legis-
lation will codify LIPA cannot challenge its tax assessments, and nulli-
fy the current litigations that LIPA initiated, unless and until a muni-
cipality abusively increases its taxes.

 
LEGISLATIVE HISTORY:

2019: New bill.

 
FISCAL IMPLICATIONS:

None to the state.

 
EFFECTIVE DATE:
This act shall take effect immediately, and shall be deemed to have been
in full force and effect since January 1, 2009.

2019-S5201 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   5201
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                              April 16, 2019
                                ___________
 
 Introduced  by Sen. FLANAGAN -- read twice and ordered printed, and when
   printed to be committed to the Committee on  Energy  and  Telecommuni-
   cations
 
 AN  ACT  to amend the public authorities law, in relation to prohibiting
   the Long Island power authority from bringing a tax  certiorari  chal-
   lenge  against a municipality; and providing for the repeal of certain
   provisions upon expiration thereof
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Legislative intent. The legislature finds and declares that
 the  Long  Island  power  authority  ("LIPA")  took over the Long Island
 lighting company ("LILCO") in 1998. As part of that takeover,  represen-
 tatives  from  both  LILCO and LIPA made repeated public representations
 that LIPA would drop all outstanding tax certiorari challenges previous-
 ly initiated by LILCO, and would not challenge the  assessments  on  its
 four  "legacy"  power plants ("plants") in the future. For over a decade
 LIPA adhered to its commitment.   In 2010, however,  LIPA  brought  suit
 against  the  county  of Nassau, the towns of Brookhaven and Huntington,
 and the village of  Port  Jefferson  ("the  assessing  municipalities"),
 alleging  that  the assessing municipalities have over valued the plants
 thereby seeking a reduction in their assessed value and a  repayment  of
 the over-taxes they paid.
   The  legislature  further  finds  that according to LIPA, if these tax
 certiorari challenges  are  successful  against  the  assessing  munici-
 palities,  in  addition to a significant reduction in the assessed value
 of each plant going forward, the  "back-taxes"  owed  to  it  would  be:
 $500,000,000  from  Huntington;  $200,000,000  from  Nassau  County; and
 $300,000,000 from Brookhaven/Port Jefferson. That refund would be  borne
 by  all  taxpayers  across the respective municipality, and would be due
 immediately. If the assessing municipalities lose at trial, in order  to
 refund  that exorbitant amount of money would require a massive increase
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD11137-01-9

 S. 5201                             2
 
 in property taxes for residents in the respective municipality. In addi-
 tion, the drastic reduction in the value of each plant would immediately
 wipe out a significant amount of school taxes generated by such plant to
 the  school  district  in  which the respective plant is located. In the
 Northport-East Northport school district, if the  Northport  plant  were
 found  to  be  valued  at  what LIPA alleges its value to be, the school
 district would immediately lose one-third of its tax base.
   Therefore, the legislature finds LIPA made a number of promises to the
 Long Island community,  federal,  state  and  local  elected  officials,
 school  districts, and taxpayers in the assessing municipalities that it
 would not challenge its taxes. That  promise  was  relied  upon  by  the
 community  and  upheld  by  LIPA  for years. LIPA broke that promise and
 therefore the legislature finds it necessary to codify  in  statute  the
 promises  LIPA  agreed  to  before significant financial harm is brought
 upon the assessing municipalities.
   § 2. Section 1020-f of the public authorities law is amended by adding
 a new subdivision (a-1) to read as follows:
   (A-1) 1. NOTWITHSTANDING SUBDIVISION (A) OF THIS SECTION, THE AUTHORI-
 TY SHALL NOT AND IS PROHIBITED FROM BRINGING A TAX CERTIORARI  CHALLENGE
 AGAINST ANY MUNICIPALITY IN WHICH ONE OR MORE OF ITS ELECTRIC GENERATING
 FACILITIES  ARE LOCATED, UNLESS THE MUNICIPALITY ABUSIVELY INCREASES THE
 ASSESSMENT ON THE AUTHORITY'S PROPERTY IN WHICH SUCH ELECTRIC GENERATING
 FACILITY IS LOCATED.
   2. ANY TAX CERTIORARI CHALLENGES THE AUTHORITY, OR ITS PREDECESSOR  IN
 INTEREST,  INITIATED  PRIOR  TO OR AFTER THE ENACTMENT OF THE CHAPTER OF
 THE LAWS OF TWO THOUSAND NINETEEN THAT ADDED  THIS  SUBDIVISION  AGAINST
 ANY  MUNICIPALITY  THAT  WAS  NOT  THE  RESULT  OF AN ABUSIVE ASSESSMENT
 INCREASE ARE DEEMED VOID AND NON-JUSTICIABLE.
   § 3. This act shall take effect immediately; provided, that  this  act
 shall be deemed to have been in full force and effect on and after Janu-
 ary  1,  2009; provided further, that any memorandum of understanding or
 settlement agreement previously entered into between a municipality  and
 the  authority  as  a  result of a tax certiorari challenge reducing the
 assessed value of one of the authority's electric generating  facilities
 shall be deemed void; and provided further, that paragraph 2 of subdivi-
 sion  (a-1)  of  section  1020-f  of the public authorities law added by
 section two of this act shall expire and be  deemed  repealed  one  year
 after the effective date of this act.

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