The Power Plant Revenue Issue
This website is intended for the families and residents of Port Jefferson to address the definitive financial challenge that lies ahead of us. The district has monitored the situation closely and the following includes facts about the history, most recent updates, our position and all other information you need to know about PJUFSD’s most critical issue.
Board of Education Will Not Pursue Appeal of Court Decision
The Port Jefferson Board of Education approved a motion at their meeting
on Tuesday night, March 26, 2019, to rescind the appeal of the State
Supreme Court Short Form Order. The decision by Justice Emerson on
August 15, 2018 had dismissed all of Port Jefferson School District’s
pending causes of action against the Long Island Power Authority (LIPA).
Since that time, the Town of Brookhaven entered into an agreement with
LIPA on December 14, 2018 regarding property tax assessment of the plant
which indirectly impacts the District.
Although the District believes the State Supreme Court decision was in
error, the Town’s settlement and the ongoing cost of contesting the
decision were main considerations in the Board’s decision. The Port
Jefferson School District is ready to move forward and meet the fiscal
challenges in the post Town-LIPA settlement era.
Draft 2019-20 School District Budget Based on Town/LIPA Settlement
The Port Jefferson School District presented the first draft of the 2019-20 school budget, which is the first school budget in the post Town of Brookhaven and Long Island Power Authority property tax reassessment settlement. Presentations were made at the January 22 Board of Education Work Session and the January 24 School-Community Connection session (see attachments). Additional presentations and discussions will be held throughout the budget development process.
Through meetings, emails, letters, and phone calls with Brookhaven Town officials, school leaders learned how the details of the Town’s settlement would impact the school district. The Town of Brookhaven and LIPA property tax reassessment settlement represents a 50 percent reduction in the Port Jefferson’s main power plant’s assessment over a nine-year glide path beginning in 2018-19. As a result, 2019-20 represents the first and second years for the district and a six percent reduction in LIPA’s assessment.
The first draft of the school budget stays within the estimated tax levy cap. It represents one of the lowest increases in the property tax levy since the tax levy cap was enacted in the 2013-14 school year. The estimated cap for the 2019-20 school year is 1.18 percent. The draft budget represents a budget reduction of approximately -$230,000.
Information about the targeted reductions will be shared as we progress through budget development. The district is prepared for the challenge of scrutinizing discretionary spending as we continue to provide an outstanding educational program for students.
Town of Brookhaven/LIPA Settlement - Dec. 20 Update
The Port Jefferson School District has been made aware of a settlement in the tax assessment case between the Town of Brookhaven and the Long Island Power Authority (LIPA).
We have been in discussions with Town of Brookhaven officials to learn more about the specific details of the settlement and how it impacts the District. The timing of the Town’s settlement is helpful because the District is at the front end of our budget development process for the 2019-20 school year. When we have a more complete picture of the agreement that was reached, we will share that information with our school-community.
Now that a settlement has been reached, we can begin moving forward with informed decisions based on real facts and less speculation. A change was expected and looming over the community and school district for quite a few years. The District will work tirelessly to make the adjustments necessary to continue our responsibility of educating the children of our community. We have confidence that we’ll be able to meet this challenge successfully as long as we work together.
LIPA Update – Oct. 9
The Port Jefferson School District’s Board of Education has voted to move forward with an appeal of New York State Supreme Court Justice Elizabeth Emerson’s decision to dismiss the district’s third-party litigation against LIPA. This suit was brought to enforce a promise given by LIPA not to reduce our tax revenue while also giving us a voice in a matter that has a significant impact on the school district. The decision against the district removed our right to have a voice in the negotiations.
Please be assured that the district’s decision to begin the appeal process was made after considerable deliberation. Weighing all options and past efforts, the Board unanimously decided that it was incumbent upon the district to continue to fight to have a voice in this matter to ensure that the voices of Port Jefferson residents were properly heard.
The district will work to finalize its appeal over the next six months, after which LIPA will be afforded a chance to prepare counterarguments. According to our legal team, this process could take more than a year to complete. The Board does have the option of withdrawing from the appeal process if they so choose.
Perspective on the LIPA Challenge Facing Port Jefferson
September 13, 2018
Legal actions taken by the Town, Village and School District to generate an equitable solution to the LIPA tax assessment challenges are intended to protect its residents and children against exorbitant property tax increases; especially in a very short interval of time. The Mayor and the Village of Port Jefferson Trustees, the Supervisor and the Brookhaven Town Council, and the Superintendent and the Port Jefferson Board of Education are all pursuing what they believe is best for their constituents.
The Port Jefferson School District is not a tax assessing entity like the Town of Brookhaven or the Village of Port Jefferson, although it does receive school tax revenue collected by the Town. Despite this fact, the District was criticized by some residents for not being more active in the LIPA legal battle back in 2010. After a few years of contributing to the Village’s research studies and legal fees to challenge LIPA’s claims, the District began its own course of action. The District’s legal battle is based on the premise that it has a vested interest in the tax assessment challenge because, although it does not assess or receive taxes directly, it can be significantly impacted financially should the court rule in favor of LIPA.
Please know, that the District fully understands that the decision about engaging legal counsel is one to be made with great care, as it always carries a financial implication while never guaranteeing a verdict in one’s favor. Therefore, as a District, we needed to consider if not being involved in a legal battle to protect those with whom we are entrusted is actually more costly than risking a court ruling that may not be in our favor. It was the District’s decision, after carefully weighing all options, that it was our obligation to our taxpayers to fight for our right to take part in the negotiation process – to at least attempt to allow our voices to be heard during the litigation process. With the support and encouragement of our residents, we worked to advocate for this chance instead of idling sitting by and waiting for a decision – one in which we had no input – to be made.
We are disappointed that Justice Emerson did not rule in our favor in August with regard to our pursuit of having a third party interest in the legal issue with LIPA. On a positive note, our legal action may have contributed to a delay in the process of reaching a tax assessment settlement. This delay could very well have saved our district millions of dollars from the point we initiated legal action. This setback does not define how this lawsuit may influence the ultimate outcome of the Town’s negotiations with LIPA and may help to contribute to a more equitable resolution in the long-term.
The Port Jefferson Board of Education is discussing whether or not to appeal the recent Judge’s decision.
We have heard rumors that there may be a resolution to the LIPA issue this school year and that revenue from property taxes may not continue in its present form in the future. However, the details of which are not clear nor are they finalized. But the reality is, no matter what the resolution is, the status quo we are accustomed to in Port Jefferson is bound to be altered.
As a School District, the real challenge for us moving forward will be to balance the impact of any reduction in LIPA’s assessment between our responsibility to maintain an outstanding educational program for the children of our community and our concern for the financial impact on our community residents’ property taxes. We believe the impact should be shared.
We have a deep sense of belief in our district and in our community. We are strong and resilient. We can handle adversity and emerge stronger and wiser as a result. We are committed to working together to persevere and continue to provide an outstanding education to the children of the Port Jefferson school community.
The Infrastructure
National Grid (a UK-based corporation) owns the power plant located in Port Jefferson harbor. It has a power supply agreement with LIPA (the Long Island Power Authority) that expires in May 2013. This means that any power National Grid chooses to produce at the plant is ‘under contract’ for distribution to the Long Island electrical grid until then. After the power supply agreement expires, the future of the plant as a producer of energy is in question.
National Grid has no obligation to generate power at the site. As an older, less efficient plant, significant questions remain regarding whether an investment would be made by National Grid to 'repower' the plant, once again making it a significant part of LIPA's energy infrastructure. All of Port Jefferson's public agencies support this concept, noting that we are a willing host community that offers significant advantages in contrast to creating new power plants in other parts of Long Island, thereby further despoiling the environment, along with financially destabilizing Port Jefferson.
The Financial Challenge
National Grid has challenged the Brookhaven Town assessment of the plant. In essence, this means that it believes the plant is worth a significant amount less than the Town has assessed it for, which means it is trying to lower its annual tax bill by a substantial amount. If successful – and no decision has been made to date by the Brookhaven Town Assessor – it would reduce tax payments to the Town of Brookhaven, the Village of Port Jefferson, the Port Jefferson Schools, the Port Jefferson Library, and the Port Jefferson Fire Department by enormous amounts. That's because the current assessment of the plant results in a tax bill that provides for, in the case of the school district, nearly half of the annual school budget!
The District's Position
We are in full alignment with our Village leaders and residents in the concept that the current plant should be 'repowered' to produce cleaner energy, thereby providing Long Island part of what it needs (in terms of increased power capacity for the future). This would also preserve a substantial, historic revenue stream to our community. For more information detailing the issue, please refer to the Questions and Answers section of this webpage.
Recent Events
Statement From the Port Jefferson School District - August 2018
Earlier this week, the New York State Supreme Court ruled against the Port Jefferson School District’s claim that LIPA breached its promises to never seek a reduction of the assessed valuation of the Port Jefferson power plant. This decision, which follows a nearly four year process, now allows LIPA to go to trial against the Town Of Brookhaven, the assessing authority, and seek dramatic reductions in the taxes it pays to the school district for the plant. While this decision is not the outcome the district was hoping for, we vow to continue to explore our options as we work to protect our school district's financial future and the needs of our community. The district will work to keep the community apprised of any updates on the matter.
- April 2018, as a result of the potential deal between the Town of Brookhaven and LIPA, the district announced the following:
Update on Budget Process – April 11
At last night’s meeting, the Port Jefferson Board of Education tabled a
motion to adopt a proposed 2018-19 school budget and a proposed
contingent budget. If passed, the proposed budget plan would be put
before voters this May. This decision was based on the recently
announced tentative settlement agreement that the Town of Brookhaven is
negotiating with LIPA.
As many in the community are aware, the Town announced last week that
they were close to a deal on the lawsuit it was facing that challenged
LIPA’s assessed value and alleged repayment of back taxes. Despite our
best outreach efforts, the district has been unable to receive the
details of this tentative settlement – in particular, what it would mean
financially for the Port Jefferson School District for the 2018-19
school year. As such, the Board felt it was necessary to refrain from
taking action on a proposed budget until the details of this agreement
are made available.
We are hopeful that the parameters of these deals will be made available
to the district prior to the required April 20 proposed budget
adoption.
- April 2018 update, below are two articles published regarding a potential deal between the Town of Brookhaven and LIPA.
-- Newsday Op-Ed Response - April 6, 2018
-- https://www.newsday.com/long-island/suffolk/brookhaven-romaine-state-town-1.17844215?pts=404345
- In September 2015, The Village of Port Jefferson approved a lawsuit to
block LIPA from appealing a property tax assessment of the Port
Jefferson Power Plant. For more information, click here
- Under the 2015-16 state budget, LIPA officials have been tasked with
conducting feasibility studies to determine the cost and environmental
logistics related to overhauling older power plants in Port Jefferson,
Island Park and Northport . For more information, click below:
http://www.newsday.com/long-island/caithness-ii-and-supports-make-push-to-build-power-plant-in-yaphank-1.10115282
http://www.newsday.com/business/lipa-again-to-study-overhaul-of-port-jefferson-island-park-and-northport-power-plants-1.10160296
http://www.newsday.com/business/lipa-again-to-study-overhaul-of-port-jefferson-island-park-and-northport-power-plants-1.10160296
- In March 2015, Caithness Long Island officials commenced a new push to
revive a 750-megawatt plant, called Caithness II in Yaphank. PSEG,
however, is standing by its claim that a large power plant on Long
Island is not needed. For more information, click here.
- In July, 2014 PSEG Long Island determined that the proposed
Caithness II power plant in Yaphank does not need to be built because
Long Island has enough power to serve customers over the next five
years. It is believed that if Caithness II is built, it will replace the
Port Jefferson power station, For more information, click here
- On March 14, 2013, comptroller Thomas DiNapoli signed off on the
15-year power supply agreement between National Grid and the Long Island
Power Authority. This is progress towards the potential repowering of
the Port Jefferson power plant. At this time the agreement has been
approved by the state attorney general and is still waiting on approval
from the Federal Energy Regulatory Commission. For further reading,
please see the Port Times Record
article:http://www.northshoreoflongisland.com/Articles-News-i-2013-04-04-95689.112114-sub-Powerful-step-forward-for-Port-Jefferson.html
- On Nov. 16, 2012, FERC (the Federal Energy Regulatory Commission)
denied a complaint by the Village (which was joined by the school
district) against National Grid regarding its business practices and
lack of investment in repowering the Port Jefferson plant. This has no
practical impact on the current situation, other than further raising
awareness of the matter.
- In a follow-up communication on their website, LIPA has stated that
this new power supply agreement DOES NOT prevent or alter the current
tax assessment challenges. In other words, the new agreement DOES NOT
change the current status of the assessment challenge and its looming
financial impact.
- On Oct. 2, 2012, LIPA announced that it had created a new power
supply agreement with National Grid, which calls for a feasibility study
for the potential repowering of Port Jefferson and other older plants
on Long Island. This is a 'good news' development, but DOES NOT compel
National Grid to repower the plant.