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Niagara County, school leaders to fight AES tax break

LOCKPORT -- The controversy over whether Niagara County's largest property taxpayer should receive a break has reached a full boil.

Four resolutions are on Tuesday's County Legislature agenda regarding the payment-in-lieu-of-taxes, or PILOT, agreement that the county Industrial Development Agency gave AES Corp. Oct. 27 for its coal-burning power plant on Lake Road in Somerset.

Two of the resolutions ask the IDA to rescind the PILOT; the other two seek negotiations aimed at revising the deal.

Meanwhile, the Barker Central School District, which has the most to lose from the tax break, sent out 2,100 letters to district residents in late December, urging them to contact legislators in opposition to the PILOT.

Last week, AES fired back with a multimedia advertising campaign, including direct mailings to county homeowners, defending the PILOT.

"The fact is that even with a PILOT in place, AES will pay taxes of $189 million over the 12-year life of the agreement," the company's mailing to homeowners said. Actually, the correct amount of the payments is $192.6 million.

But opponents prefer to dwell on the fact that if there were no PILOT, AES would pay nearly $236 million over the next 12 years, assuming neither the assessed value of the plant nor the tax rates ever changed during that period.

The revenue loss of almost $43.4 million -- a figure updated last week after the new county tax rates were applied to the calculations by the county Real Property Tax Services Department -- is the political football now being booted around the county.

Legislators Harry J. Apolito, D-Lockport, and Michael E. Hill, R-Hartland, both placed measures on Tuesday's agenda to seek cancellation of the PILOT, although the Legislature lacks the legal authority to veto any IDA action.

Apolito's resolution "strongly urges" the IDA to rescind the PILOT. Hill, whose district includes a portion of the Barker School District, uses tougher language. He "demands" the PILOT be rescinded and reminds the IDA board that they serve "at the will of this Legislature."

Hill, a first-term legislator, said if he can round up 10 votes in the 19-member Legislature to pass his first resolution, he will follow up with a second to fire the whole nine-member IDA board.

"I'm going to give this board the opportunity to do the right thing," said Hill, who said this issue marks the first serious disagreement he has had with his colleagues in the Republican-controlled majority caucus.

Asked if the IDA would rescind the PILOT if the Legislature asks it to, IDA Chairman Henry M. Sloma said, "I don't want to speculate on what my board might do based on something the Legislature might do."

Resolutions calling for talks were introduced by Legislature Chairman Clyde L. Burmaster and Minority Leader Dennis F. Virtuoso. Burmaster, R-Ransomville, wants to see attorneys for the IDA, AES, and the Barker schools meet by Jan. 26.
Virtuoso, D-Niagara Falls, wants to create a 10-member committee and give it 30 days to "come to a compromise PILOT agreement." The Legislature, the town, the school, the IDA and AES each would have two members on the committee.

Sloma said he would like to see negotiations but not necessarily with the IDA involved.

AES President Kevin D. Pierce could not be reached to comment Saturday, but in previous interviews he has said AES likes the PILOT the way it is.

Somerset Supervisor Richard J. Meyers said he has received no response to his suggestion that the town and AES work out a deal to freeze the plant's assessment at an agreed-upon level once the PILOT is canceled.

Barker School Superintendent Steven J. LaRock said, "If it involves the attorneys, I'd direct our attorney to take part [in talks]. I'm very interested to see if there are ways to solve this short of litigation."

The Barker School Board has authorized a lawsuit against the IDA, and the Somerset Town Board passed a similar resolution last week. Meyers voted for it but said he would go to court only in support of the school district.

"I would like to see the PILOT at least put on hold to see if we can come up with something better," Meyers said.

Sloma noted that in August 2003, State Supreme Court Justice Richard C. Kloch Sr., imposing a settlement in an AES lawsuit challenging the plant's assessment, called on Somerset and AES to work out a deal that the IDA could embody in a future PILOT agreement. However, early in 2004 the IDA board tabled the idea, and AES and Somerset reached no agreement.

Instead, the town raised the plant's assessment, and in July 2004, AES sued the town again, a case that's still pending. AES was supposed to drop the lawsuit in exchange for the PILOT deal Sloma worked out in October, but that hasn't happened yet.

Sloma warned that the court could order refunds of past taxes if it finds the plant was overassessed. New York State Electric and Gas Corp., the former owners of the Somerset plant, won such a judgment and in January 2005, the County Legislature, the town and the Barker School Board had to borrow money to refund $6.5 million.

e-mail: tprohaska@buffnews.com

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