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Tax deal for Huntley power plant spawns new dispute

Another dispute has arisen over the 2009 agreement to settle property tax assessment grievances filed on behalf of the Huntley Generating Station in the Town of Tonawanda.

It centers on whether the payment-in-lieu-of-taxes portion of the agreement between the company and the Erie County Industrial Development Agency has taken effect. Under a 20-year schedule, annual payments by the power plant, owned by NRG Energy Inc., would be divided among the Kenmore-Town of Tonawanda School District, the Town of Tonawanda and Erie County.

It was expected to take effect this year. The development agency typically would have filed an application form for the property tax exemption, known as a 412 (a), with the town assessor's office.

But the power plant wanted the option of filing for the exemption in 2010 or 2011, and the company was responsible for doing so, according to development agency officials who worked on the agreement.

The deadline was March 1. The application for the exemption didn't arrive until May 23.

"Our position is that we're unable to put that into effect for this year," Town Assessor Paul H. Wolf Jr. said.

NRG Energy maintains otherwise.

"The previously negotiated and signed PILOT agreement was in effect and was always intended by all parties to be in effect no later than March 1, 2011," said David Gaier, spokesman for NRG's Northeast Region. "The 412 (a) document merely reconfirmed notice to the tax assessor that the parties had signed the agreement in 2009 with an effective date no later than March 1, 2011.

"We believe that the filing deadline doesn't affect the validity of the agreement," he added.

But the town assessor isn't the only one who thinks it does.

"[The] notice to the assessor is the point at which it's taken off the roll," said John C. Cappellino, director of business development at the development agency.

When the tentative assessment roll came out April 28, the Huntley property remained on it.

The company filed a grievance with the town Board of Assessment Review, seeking a reduction of the assessment and demanding that the property be listed as exempt as of March 1. The board did neither, and the roll became final July 1.

That left the company on the hook for more than $15 million in property taxes, beginning with a school tax bill of more than $7 million for the coming school year. Huntley, however, receives real property tax credits through the Empire Zone Program.

In late July, the company filed an Article 7 petition challenging the assessment. That includes $193 million for the generating plant, plus $1.39 million for another parcel of slightly more than 116 acres -- identified in property records as the fly ash station.

The petition will go before a State Supreme Court judge Sept. 22.

The Ken-Ton School District was to receive roughly half of the first-year PILOT payment, which totals slightly more than $6 million. Since the district's budget was adopted back in May, officials recently made adjustments because of the PILOT dispute; the property tax rate for upcoming school tax bills wasn't affected.

The Town of Tonawanda adopts its annual budget by late November, while Erie County enacts its spending plan by early December.

Attempts to reach a resolution have included a recent meeting of the parties involved in the dispute.

"I think we are hopeful there's some way to work it out," said Cappellino, of the development agency.

"It was and remains our intention that the original PILOT agreement, and the payments that NRG would make to the three tax jurisdictions under that agreement, be honored by all parties," said Gaier, the NRG spokesman.

email: jhabuda@buffnews.com

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