County okays hydro tax settlement

By DAVID HULSE

MONTICELLO, NY — Meeting in a special session of the full board July 8, the Sullivan County Legislature agreed to tentative terms a $7 million property tax appeal settlement of the bankrupt, Mirant Corporation, owners of the Mongaup River hydroelectric facilities.

Mirant, which purchased the former Orange and Rockland power facilities from Consolidated Edison in 1999, had challenged tax assessments from 2000 through 2004.

The appeal included several hydroelectric generating facilities along the chain reservoirs that begins with Toronto Reservoir and ends at the Rio Dam. It impacts the towns of Bethel, Forestburgh and Lumberland, the Monticello and Eldred Central School districts.

County Attorney Sam Yasgur said the three towns had already agreed to the terms prior to the county action.

Portions of about $6.3 million in county, school and town taxes levied between 2001 and 2004 will now be refunded or credited.

The settlement agreed to by the legislature includes a schedule of percentage refunds of Mirant’s tax payments from 2000 through 2004. By those terms, the 2000 levy is untouched, a 33 1/3 refund of taxes would be made for 2001 taxes, and 66 2/3 would be refunded for 2002. Yasgur said 2003 taxes were not paid after the bankruptcy filing. A 66 2/3 reduction would be granted for 2003, this year and the following two years. “It was the opinion of all the municipalities that this was the best procedure to follow… We were looking at the costs of not settling,” Yasgur said.

“A $75 million assessment will be reduced to $25 million in the next three years,” he summarized.

In fact, Mirant’s proposal was termed as a gift by several local officials who confirmed that a property appraisal, done on the municipalities’ behalf, had produced appraised values even lower than the proposed settlement.

Prior to the settlement, the case had been scheduled for trial in Sullivan County Court at the end of this month.

Attorneys for the municipalities had won the approval for a local trial from a Texas federal bankruptcy court. The settlement proposal must now go before that court for final approval.

The issue arose with Mirant’s reported $17 million purchase of the system as part of a larger agreement. The properties then were assessed at some $50 million.

Lumberland tax rolls included some $32 million of the total and about 20 percent of the town’s total assessed value. The facilities were assessed according to a formula used for utilities, which had not changed hands in the past and whose profits were government regulated.

Mirant argued that the purchase price should determine the assessed value. They appealed the assessments and were supported by the New York State Division of Real Property Services.

The state decision skewed Lumberland’s equalization rate in the Eldred Central School District for several years, prompting an imbalance of taxes levied in the district’s other primary town, Highland.

Lumberland Supervisor John LiGreci said the town will bond $525,000 over 20 years to pay its portion of the settlement refunds. LiGreci said that the town has amassed a surplus from money budgeted for legal fees for the case in recent years and will now roll over that money to make the bond payments without new taxes.

“The tough part,” he said, “will be making up a $7 million loss in the town’s tax base.” LiGreci estimated that the settlement would prompt a two percent increase in town property taxes next January. He estimated that the settlement would have a more serious impact on the Eldred School District.

Eldred Central School District Superintendent Ivan Katz and Business Manager Dan Grecco were vacationing and unavailable for comment on Monday. Board of education vice-president Bob Burrow said he had not received final numbers on the tax impact for the school and would not make any estimate.

“It’s going to be hard, monumental, epic…really big,” board member Andrew Boyar said last week.