Riverhead Town prepares ‘temporary resolution’ to collect money from LIPA; special counsel says town should commence litigation

Riverhead Town officials outlined a “temporary resolution” aimed at getting the Long Island Power Authority to pay about $5.3 million in payments in lieu of taxes (PILOTs) it owes to local taxing jurisdictions and special districts, such as fire and school districts.

Those districts have been unable to receive money they say they are owed this year because LIPA has been at odds with the town on how to distribute the funding.

The temporary solution the town discussed at Thursday’s work session is for the town to collect the money for the 2021-2022 year and then distribute it to the special districts. Since the proposal only address that single year, the town and LIPA would need to still come up with an agreement for future years.

Suffolk County, and all of its encompassing towns, is still in the midst of a lawsuit it filed against LIPA in 2017 that left LIPA facing about $70 million in tax liens. That case is still in appeal.

“Fire districts need their money,” Supervisor Yvette Aguiar said. “They have every right to be here and to ask for it. Finally, we’re getting it resolved. … I’m glad there’s a temporary resolution.”

The Town board heard from special counsel, Scott DeSimone, via Zoom at the work session.

“We’ve done everything we can possibly do, I think, for the taxing jurisdictions to assist them in capturing these payments,” he said. “The problem is with LIPA who refuses to pay.”

Mr. DeSimone began his comments by saying that the discussion should be done in executive session rather than in a public setting “because our litigation position and strategy is very much intertwined into this conversation.” He suggested it would be in the town’s interest to commence litigation against LIPA to force them to pay the town.

Mr. DeSimone said dating back to December he had prepared invoices for each of the taxing jurisdictions, including a cover letter and a single invoice. Those was sent with instructions for the districts to then send to LIPA to request the money.

“I put it in a nice little bow,” he said.

He said some districts sent it as outlined while others didn’t, and then LIPA refused to pay.

He said he prepared letters, bills and agreement again once councilmembers requested help with securing the money owed. He said all the districts needed to be on board, and not all of them were. An attorney for both Riverhead and Shoreham-Wading River school districts was “unwilling, it seemed, to suggest to his clients that they should sign it,” Mr. DeSimone said.

Charles Thomas, the chair of the Jamesport Fire District, said at a meeting on this subject in July that he was speaking on behalf of the five fire districts in Riverhead Town.

“We did what we were supposed to do,” he said in terms of planning for a PILOT payment as opposed to a direct tax payment. “We did it right and now we’re looking for the money.”

At Thursday’s meeting, he said they only concern the district had on the temporary solution was the “one-time only clause.”

“There is a possibility that we could be standing here again this time next year and if we don’t have the power of the town behind us, we’re helpless,” he said. He asked if the Town Board would continue to help them.

Ms. Aguiar said the board would “absolutely” be behind them.

Thomas Falcone, the chief executive officer of LIPA, sent a May 26 letter to Ms. Aguiar seeking to discuss LIPA’s desire to pay PILOTs for the 2021-2022 tax year.

“As you known, LIPA operates on a non-for-project basis and the LIPA Act establishes that these parcels are not subject to property taxes, but are subject to PILOTs, with certain limitations,” he wrote. 

“Despite numerous conversation and letters, out respective attorneys have been unable to agree upon a process to allow LIPA to make its PILOT’s for the current year.” 

Mr. Falcone wrote a second letter to the town on June 29.

“We are aware of several taxing jurisdictions that are concerned about budgetary impacts as a result of the town’s position,” he wrote.

“For LIPA to make this payment, we need a bill or bills from the Town on behalf of the applicable taxing jurisdiction that contain the assessed value and tax rates for each parcel so that LIPA can make a payment in accordance with the LIPA Reform Act.”

He said that in the alternative, LIPA is prepared to pay the same amount of PILOTs it paid in 2020-2021.