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Furor flares over tax deal for Niagara power plant

Henry M. Sloma said Wednesday he has no plans to resign as chairman of the Niagara County Industrial Development Agency, a statement issued a day after an angry Niagara County Legislature came within three votes of firing him and some members predicted his imminent departure.

Sloma signed papers Friday to lock in a 12-year tax break for the county's largest property taxpayer. Lawmakers learned of it an hour before Tuesday's meeting, where they voted to ask that the deal be rescinded, a request that now appears to be moot.

Also Wednesday, Legislator Renae Kimble, D-Niagara Falls, announced she will introduce a resolution to ask the state attorney general's office to investigate how AES Corp. obtained the payment-in-lieu-of-taxes agreement, known as a PILOT.

A day earlier, Minority Leader Dennis F. Virtuoso, D-Niagara Falls, said he would introduce a measure to establish a Legislature board of inquiry, which would have subpoena power and can compel testimony under oath.

Those were the main developments as political fallout from the controversial tax breaks splattered across the county Wednesday.

Also Wednesday, State Sen. George D. Maziarz, R-Newfane, said he will introduce a bill today to provide the Barker Central School District with additional state aid to make up for as much as $830,000 of the revenue it will lose as a result of the tax breaks for AES.

Democrats accused Legislator Michael A. Hill, R-Hartland, an avowed opponent of the deal, of actually supporting it and introducing a resolution against it merely to appease his constituents. Hill adamantly denied the charge.

Mark J. Gabriele, the development agency's attorney, disclosed additional terms of the deal, including a clause he and Sloma say will protect the taxing entities if AES were to run into financial problems.

The agreement between the agency and AES reduces the tax bill on the Somerset power plant to $17.3 million next year from more than $19 million this year, with further reductions to $15.8 million by 2011.

The company pledged to pay $192.6 million to the county, Barker schools and the Town of Somerset during the 12-year period of the deal. But opponents point out that is $43.4 million less than it would pay under the current rate.

Under the deal, the school district will lose $1.35 million in revenue next year, and the loss would grow to $2.2 million a year by 2011.

The county loss of $796,000 next year would rise to $1.3 million by 2011, equivalent to a 2 percent tax increase on all other properties. The town's loss would start at $216,000 a year and grow to $354,000.

By a 12-7 vote Tuesday, the Legislature defeated a motion to fire Sloma, but Virtuoso predicted the chairman would quit within two weeks. Reached by phone Wednesday and asked if he will step down, Sloma laughed and said, "Not at this moment."

He declined to comment on the motion to fire him. Asked if he thought the agency had anything to fear from an investigation, he said. "Absolutely not. Certainly it's a public agency and anybody can take a look at it."

Kimble wants State Attorney General Andrew M. Cuomo to take on that task.

"Here you have a deal that creates absolutely no jobs in an area that can't afford it," Kimble said. "Something smells. . . . Politics is at the bottom of this."

Virtuoso claimed that a politician had threatened him and Legislator Harry J. Apolito, D-Lockport, for opposing the tax breaks.

He implied it was Maziarz, who Wednesday denied threatening anyone. "Virtuoso is attempting to politicize this thing, and that's sad. We should all be working together," Maziarz said.

But Kimble said that was one more thing for Cuomo to probe. She said her resolution doesn't supersede Virtuoso's for a board of inquiry.

Daniel Rivera, chairman of the Niagara County Democratic Party, called the WLVL-AM Radio program "Dialog" Wednesday to accuse Hill of trying to fake out his constituents, and then called print reporters to make sure they hadn't missed it.

Legislator Sean J. O'Connor, D-Niagara Falls, said that, before Tuesday's meeting, he had made a comment to Hill about the size of the crowd. He said Hill told him, "I think it's a good thing. It's a good agreement, but I have to do it [introduce an resolution against the tax breaks] because it affects the people in my district."

"I said to him, 'A good thing?' and then he just kind of walked away," O'Connor said.

Hill said he meant that the large crowd was a good thing. "I never said it was a good deal. I never said I was putting in the resolution to cover myself," said Hill, who voted to fire Sloma and whose resolution against the deal narrowly passed.

Gabriele said a second set of papers will protect the taxing entities if AES defaults on its payments. Normally, agency policy requires a "PILOT mortgage," but Gabriele said it didn't want its claims to be secondary to those of the mortgage holders on the power plant if AES were to fail.

"We're looking for a line of credit security equal to the first year's PILOT payment," Gabriele said. Posting that money would make sure the entities are paid, and the agency would then revoke the tax breaks if AES defaulted, Gabriele said.

Maziarz, meanwhile, said he will introduce a bill to shorten the lag, normally three years, in changing school aid for a district that loses a substantial amount of assessed valuation. If it passes, he said, Barker will get additional aid next year instead of having to wait three years.

"It's very formula-driven, and we don't know what formula the governor's going to propose," Maziarz said. "Using last year's formula, it would increase the state aid to Barker by $830,000."


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