Niagara County has agreed to reduce the payments in lieu of taxes made by a co-generation power plant in North Tonawanda, costing the county $182,000 in potential revenue this year.
However, the City of North Tonawanda and its school district are not affected by the deal, in which the assessment on the Oxbow Power Corp. plant was lowered only for the purposes of calculating its payment to the county.
When the Erie Avenue plant opened in 1993, the city and school district signed a 15-year payment-in-lieu-of-taxes -- or PILOT -- deal that listed a definite dollar amount each year. But the county's deal was based on a percentage of what the property tax bill would be on the plant's current assessed value.
Oxbow filed a lawsuit last year to reduce its assessment from $45,858,996 to a flat $25 million. In an out-of-court settlement made in the last month, the county agreed to Oxbow's figure.
"The court has agreed with a stipulation to settle this matter on a value of $25 million," said county Real Property Tax Services Director William F. Budde Jr.
"The property is worth substantially less than the assessment," said Bruce S. Zeftel of the Buffalo firm of Saperston & Day, Oxbow's attorney.
Budde said the county originally granted Oxbow a 10-year tax break. For the first five years of the agreement, which began in 1994, Oxbow paid the county nothing at all.
Then Oxbow began to pay on a gradually increasing scale. It was to be taxed on 20 percent of full value, then 40 percent, 60 percent, 80 percent, and finally, 100 percent.
For 2000, Oxbow paid the county $191,067. That amount was calculated by applying last year's county tax rate for North Tonawanda to 40 percent of the $45.8 million assessment, adjusted for the city's equalization rate.
Budde said if there had been no lawsuit, Oxbow would have paid the county $295,500 this year, based on 60 percent of full value. But with the settlement and the reduced assessment, Oxbow will pay the county only $113,500. That's a $182,000 loss for the county.
"That's one way to interpret it," Budde said. "If you look at the cash loss, it's $77,567." That's the difference between what Oxbow paid in 2000 and what it will pay this year.
It doesn't affect the city or the school district, since the flat payments Oxbow agreed to will continue through 2008 and are not dependent on whatever the assessed value is.
City Treasurer Leslie J. Stolzenfels said those payments are gradually increasing. The city will receive $74,000 this year, and the payment will rise to $111,750 by the end of the abatement in 2008.
The school district pockets $222,000 this year and will see that rise to $335,250 by 2008.