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Legislature can't probe tax break given AES Joerg rules that it lacks legal authority

Niagara County Attorney Claude A. Joerg ruled Tuesday that the County Legislature lacks the legal authority to investigate the circumstances surrounding the granting of a tax break to AES Corp.
His ruling seemingly torpedoes a plan by Legislature Minority Leader Dennis F. Virtuoso to introduce a resolution to create a board of inquiry into the AES tax break, granted by the Niagara County Industrial Development Agency Oct. 27 and signed Jan. 12.

"Well, if we can't do it, we can't do it," said Virtuoso, D-Niagara Falls. "That's discouraging, but we're still going to go ahead with Renae's resolution."
That's Legislator Renae Kimble, D-Niagara Falls, who said Tuesday she will go ahead with a resolution for the Feb. 6 Legislature meeting asking the state attorney general and comptroller to probe the AES payment-in-lieu-of-taxes, or PILOT, arrangement.
In a statement relying heavily on past opinions issued by the state attorney general's office, Joerg said the IDA is a separate entity from county government and thus the Legislature's power to convene a board of inquiry doesn't apply to it.
A board of inquiry is a Legislature committee empowered to issue subpoenas and compel testimony under oath. But the provision of state law that authorizes such a board also says it can be used only on "subject matter within its jurisdiction."
Even though the County Legislature appoints the IDA board members, the IDA itself was created and is governed by state laws, Joerg said.
"We have no ability to control the IDA. We just don't," Joerg said. "It's beyond our jurisdiction."
The Niagara County IDA is not part of the county budget, even though its executive director, Samuel M. Ferraro, is also county economic development commissioner and his salary is paid jointly by the county and the IDA.
The IDA granted AES a 12-year tax break on its Somerset power plant, the county's largest property taxpayer. AES will pay $192.6 million over the next 12 years, but if it were taxed at the current rate, it would pay $43.4 million more than that to the county, the Town of Somerset and the Barker Central School District.
The school district sued the IDA and AES Monday, claiming the deal was illegal. Barker School Superintendent Steven J. LaRock has estimated that 30 district employees would have to be paid off because of the lost revenue. The tax break begins with the 2007-08 school year.
Kimble said Joerg's ruling gives her "all the more reason" to pursue her resolution asking for a state investigation.
"Since we can't do that internally, we have to call in the outside agencies," she said.
Meanwhile, Majority Leader Richard E. Updegrove also submitted a resolution for Feb. 6. His would call for hiring an outside lawyer to review the PILOT agreement.
"The purpose of the resolution is to seek a review of the authority of the IDA to grant the PILOT," Updegrove said. "It's not a reflection on the county attorney's office. For something of this nature, it makes sense to get an opinion from someone outside of government, someone who is a specialist in things of this nature."
The original version of his resolution supported the Barker lawsuit and called for the county to sue the IDA if the outside lawyer's review turned up any causes of action the school district had missed. But Updegrove, R-Lockport, said he wrote that before Barker actually sued and listed the county as a co-defendant with AES and the IDA.


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