Directors of the Niagara County Industrial Development Agency approved a modification Wednesday in the payment-in-lieu-of-taxes (PILOT) agreement with bondholders of AES Somerset and an abatement of the mortgage recording tax.
IDA Chairman Henry M. Sloma said the modifications were requested by the Town of Somerset, Barker School District and Niagara County in an effort to preserve 115 jobs with an annual payroll of $15.4 million at the coal-fired electric generating plant on the shore of Lake Ontario.
The new agreement reduces the bondholders' payments to the town, school district and county from the current $14.3 million a year to just under $10.5 million next year, $6.7 million in 2014 and $5.12 million in 2015. Union workers at the plant also have agreed to wage and benefit concessions.
The bondholders are made up of about 20 institutional investors that lent money to the former AES Corp. in 1999 to finance its purchase of the plant. AES Eastern Energy, the company's New York subsidiary, declared bankruptcy Dec. 30 when it was unable to make interest payments on the borrowed money. Thus, the plant came under the control of the bondholders.
"AES Somerset has been an economic anchor in our community for years and if the plant were to close it would have devastating economic impacts," Sloma said. "We as a community could not allow that to happen."
The plant has been the largest county taxpayer.
The bondholders plan to invest about $70 million in the plant and to operate it until the new PILOT agreement ends in 2015.