Riverhead Town is considering bringing a lawsuit to compel the Long Island Power Authority to remit payments in lieu of taxes totaling more than $5 million on LIPA’s transmission and distribution properties in Riverhead.
LIPA says it is ready and willing to make the payments in lieu of taxes, known as “PILOT” payments, but is demanding a consolidated invoice from the Town of Riverhead containing, for each parcel, the assessed value and the applicable tax rates for all taxing jurisdictions within the township.
Riverhead, on the advice of outside legal counsel, had been unwilling to generate the consolidated invoices.
The stalemate has resulted in the town and the various taxing districts — including two school districts and four fire districts — not receiving PILOTs for the 2021-2022 tax year.
Riverhead Town is the only town in Suffolk that has not issued consolidated invoices and received PILOT monies from the power authority.
[See prior coverage: Riverhead Town, school and fire districts are owed millions in payments in lieu of taxes from LIPA —which LIPA has been trying to pay (July 20, 2022)]
After the president of the Riverhead Fire Districts Council complained to the town board, board members decided the town should pursue issuing the consolidated invoices LIPA seeks and asked its outside counsel to draft agreements for each of the taxing districts to sign, authorizing the town to issue the consolidated PILOT invoices, collect the payments and distribute them.
Special counsel Scott DeSimone met with the town board by video conference during its work session yesterday to update the board on where this effort stands.
DeSimone said yesterday he prepared the PILOT invoices and agreements between the town and each of the taxing districts and sent them to the districts, as requested.
“But everybody has to be on board,” DeSimone told the board.
“I had a phone conversation with the attorney for both the Riverhead and Shoreham-Wading River school districts, who was unwilling, it seemed, to suggest to his clients that they should sign it,” DeSimone said. “So we will give them two weeks to return the documents,” he said.
DeSimone suggested suing LIPA to compel payment of individual PILOT invoices for each taxing jurisdiction. He described how last year he prepared individual PILOT invoices for each taxing district in the Town of Riverhead and sent the invoices to each district with a cover letter providing instructions for sending the invoices to LIPA for payment.
“The problem is not with the districts — it’s LIPA refusing to pay. They’re saying they’re willing to pay but they’re not,” he said.
“We’ve done everything we can possibly do…We have given them every single piece of single piece of information that they need… and they refuse..” DeSimone said.
DeSimone said LIPA has no right to make the demand it’s made for a consolidated invoice. The statute doesn’t require it, he told the board.
“So this is with LIPA, it’s not with the town,” DeSimone said. “They refused to pay and the next step should be for this town to commence litigation against LIPA to capture that money.”
A lawsuit can be brought jointly by the town and each taxing jurisdiction.
“And I have no problem — I’m sure the town attorney would have no problem leading that litigation on behalf of the school district and the other taxing districts,” DeSimone said.
Jamesport Fire District Commissioner Chuck Thomas, who serves as president of the Riverhead Fire Districts Council, expressed concern about getting caught up in the same standoff again next year.
DeSimone said if the town and the districts bring the lawsuit, this problem won’t happen again, because, he predicted “there’s no court— I do not think there’s a court — that’s not going to issue an order compelling them to make these payments.”
Supervisor Yvette Aguiar asked Town Attorney Erik Howard to have a conversation with DeSimone about the potential litigation and report back to the board.
Riverhead is already caught up in litigation between LIPA and the County of Suffolk over how other towns have dealt with state laws that established the nonprofit power authority (1998) and required it to make PILOT payments and then limited its PILOT payment increases to 2% per year.
DeSimone is representing the Riverhead Town in that lawsuit.
See prior coverage
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