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Tax break for AES is unlikely to change Deal's signing blunts Legislature's action

Unless it is overturned by a lawsuit, AES Corp.'s tax break on its Somerset power plant is a done deal.

So it's all over but the political brawling.

The Niagara County Legislature did vote narrowly to ask the county Industrial Development Agency to rescind the deal, but it has already been signed, the Legislature learned Tuesday night.

A resolution calling for negotiations on a better deal passed unanimously, but AES President Kevin D. Pierce said he likes the deal and will not go along with any changes.

Minority Leader Dennis F. Virtuoso, D-Niagara Falls, said he will introduce a resolution to create a board of inquiry with subpoena power to investigate a deal he termed "awful shady."

He also offered a motion to fire IDA Chairman Henry M. Sloma, one of the Republicans' most dependable funding sources, but it was tabled, 12-7. An effort to add the firing to another resolution was defeated by the same vote. Virtuoso called the Republicans "cowards."

Legislator Gerald K. Farnham, R-Lockport, said the Republicans wanted more time to consider the matter, and tabling Virtuoso's motion does that.

"Maybe I want to remove more members," Farnham said.

"I'm not aware of anybody in my caucus who isn't willing to consider Mr. Virtuoso's resolution," said Majority Leader Richard E. Updegrove, R-Lockport.

"The only reason you guys won't vote on this is because you guys want him to hand in his resignation, and you're cowards for not voting on this," Virtuoso shouted to a roar of applause.

A resolution sponsored by Legislator Michael E. Hill, R-Hartland, asking for the deal to be rescinded passed, 10-8, after a Democratic version from Legislator Harry J. Apolito of Lockport failed in a 9-9 tie. Farnham switched his vote to pass Hill's measure. Legislator Malcolm A. Needler, R-North Tonawanda, abstained.

Hill and Legislator John Syracuse, R-Newfane, voted with the five Democrats in favor of firing Sloma.

"You voters in Niagara County, speak your mind in November. Do what you've got to do," Hill told a crowd of about 50 that stuck around for the vote.

"I've been in the Legislature 16 years, and tonight is one of the most embarrassing nights I've ever seen on the floor of the Legislature. We have an agreement that's going to raise taxes on everyone who owns a house in this county," Virtuoso said. "I'm not going to tell you this deal was corrupt, but it's awful shady."

"Politicians who are pretty high" pushed for the deal, Virtuoso said, but he would not name names.

Sloma and IDA attorney Mark J. Gabriele did not return calls seeking comment.

The tax break paperwork was signed by the IDA and the AES on Friday.

The 12-year payment-in-lieu-of-taxes, or PILOT, plan calls for AES to pay a total of $192.6 million to the county, the Town of Somerset and the Barker Central School District.

However, that figure is $43.4 million less than AES would pay if it were taxed on the plant's current assessed value. The figure, calculated by county Real Property Tax Services Director William F. Budde Jr., assumes that tax rates -- and the plant's assessment -- would never change during the 12 years.

The tax break will take effect with the 2007-08 school taxes and the 2008 town and county taxes.

County Attorney Claude A. Joerg said the papers represent a binding contract that could be changed only by mutual consent of the IDA and the AES.

Pierce said the company will drop its lawsuits against Somerset, contending that it has been overassessed and seeking refunds on past taxes.

"Of course, we're going to wait until it's free and clear and all legal challenges are past," Pierce said.

The Barker Board of Education and the Somerset Town Board have voted to sue the IDA over the deal, which was approved by the IDA board Oct. 27.

The agreement had to close by Feb. 28 to be in force in time to be included on the Somerset tax rolls which will be used to calculate next year's taxes.

Pierce said work on the documents had been going on since October, but he acknowledged, "We were trying to get it done by [Tuesday]."

During a news conference, Pierce trumpeted the deal as "the beginning of a new day for Niagara County, where we reject cynicism and the politics of fear."

He said the company intends to invest $20 million in a Lake Ontario port, where it will make shipping available to other companies, and $60 million to $70 million in a wind power project on its Lake Road property.

Asked if those investments were dependent on the PILOT, Pierce said, "I'm not saying that. It's been in the pipeline. The PILOT gives us stability on taxes. With the taxes going up, it would have been hard to make the investment."

"AES is not struggling. In fact, the company is thriving. But it's critically important we ensure the company has a long future in Niagara County," Robert Connolly, business manager of Laborers Local 91, said in the news conference. "We are very grateful that our workers will have this opportunity."

Pierce said AES will present a $1,000 scholarship to every Barker graduate who wants to go to college, starting in 2008.

"I do object to the over $40 million in taxes that it's going to cost this county," said Edwina Luksch of Newfane. "When do we taxpayers get a break?"

"We believe the agreement is more than fair to the taxing entities," said John Benoit, chairman of the Niagara USA Chamber, who spoke in the news conference. "[Somerset and Barker] taxes are still going to be significantly lower than everybody else's in Niagara County."

Robert Gilsinan, president of the Barker Teachers Union, said the revenue shortfall may cause the loss of 25 full-time jobs at the school, as well as extracurricular activities.

Barker School Superintendent Steven J. LaRock said, "It's more like 30 [jobs]."

"Forty percent of our elementary students are on free or reduced-price lunches," Gilsinan said. "People have the misconception that because we do well on taxes that we're a wealthy community."


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