Published: August 18, 2009 12:33 am      

SOMERSET: AES, town closer to agreement on taxes

SOMERSET — SOMERSET— Recent tax talks between AES Somerset and the town have been promising, Supervisor Richard Meyers said Monday, and a settlement might be reached within a month.

Because AES Somerset’s payment-in-lieu of taxes agreement was overturned in May by the state Appellate Court, there has been uncertainty as to how much the coal-burning power plant on Lake Ontario should be assessed in taxes. The Town of Somerset, Niagara County and the Barker School District are all affected by the court’s ruling. AES is the biggest taxpayer in the county and, according to AES, it pays $50,000 in taxes a day.

“We’ve come to basic agreement with AES,” Meyers said. “We’ll want to see how it will fit into the three taxing jurisdictions.”

Councilman Randall Wayner, Town Attorney Arthur Herdzik and Meyers met with Kevin Pierce and Karen Pavlock of AES management and the AES attorney on Aug. 3 and 7.

“I would categorize the meetings as open, businesslike and amiable,” Wayner said. The Barker School District has been kept abreast of the negotiations and was invited to the Aug. 7 meeting.

“They’ve been on board all along and knew the numbers we’re talking about,” Wayner said of the school board. “We made sure the number we came to would help support the school.”

Under the tentative agreement, the town would be getting about the same amount of money it got through the PILOT, which had been orchestrated by the Niagara County Industrial Development Agency, according to Wayner.

“The IDA will become involved at some time; right now, we’re talking to the county,” Wayner said. Attorney Mark Gabriele represented the IDA at the second session, but the agency is not involved at this time. The IDA’s role would be to formalize the agreement.

“It will work out about the same, and past litigation would go away,” Wayner said. “At this point of the process, we have unanimous endorsement from every member of the (town) board.”

AES had appealed the decision of the state Supreme Court’s Appellate Division, Fourth Judicial Department, which invalidated the 12-year, $43 million tax break.

Under the tentative agreement, the town would not have to pay any refunds to AES, and AES would not have to pay any back taxes to the town. If the deal is finalized, AES gets tax certainty and the town would get regular revenue. Because AES appealed, the parties are still operating under the old tax agreement.

I just hope everything goes along well,” Wayner said. “One of first things AES said is, let’s focus on our business and stay out of court. That’s exactly the way school feels. It wants to focus on our kids. All three have a common goal, and there was a high level of cooperation.”

The town and the school board want to stay out of court and avoid further costly litigation. “We want to work out something that does not create the devastation the lawsuit did have,” Pierce said earlier. “It’s distasteful for everyone in that right now, when you’re not making much money, the last thing we want to do is take on an added expense of legal fees, of going to court.”

There have been many twists and turns in the case. After the PILOT was killed, State Supreme Court Justice Richard C. Kloch’s ruled on June 11 that the power company doesn’t have to pay the new tax bills it received from the Town of Somerset and the Barker Central School District.

“Nobody wants to go back there. It’s so counter-productive.” Wayner said. “It’s not a done deal until everyone has signed off. I’m very optimistic we’ll get it done.”

Contact reporter Bill Wolcott at 439-9222, ext. 6246.