Opinion ID: 2015169
Heading Depth: 1
Heading Rank: 3

Heading: PILOT Refunds

Text: The remaining major issue to be addressed is whether LIPA is precluded from seeking refunds on past PILOTs for the taxable years following the Shoreham acquisition. Because the first year PILOT is equal to one hundred percent of the taxes and assessments which would have been received by [the defendant] taxing jurisdictions [had the takeover not occurred] (Public Authorities Law § 1020-q [1] [emphasis supplied]), and the PILOTS for subsequent years are calculated off of that initial figure ( id. ), a reduction in Shoreham's assessed valuation for the first PILOT year would reduce the taxes that would have been received but for the takeover and, thus, directly reduce the statutorily required PILOT payments. The defendants rely on Public Authorities Law § 1020-q (3) to support their position that LIPA is precluded from seeking refunds on past PILOTs through challenges to assessed valuations of the Shoreham plant. Section 1020-q (3) provides that no local governmental taxing jurisdiction shall be liable to [LIPA] or any other entity for a refund of property taxes originally assessed against the Shoreham plant. That section also bars recovery of any refund from any such taxing jurisdiction of taxes previously paid, which refund may have become due as a result of a judicial determination that the Shoreham plant assessment was excessive, unequal or unlawful for any of the years from [1976] to the effective date of this title. Finally, section 1020-q (3) directs that LIPA was to discontinue and abandon all proceedings, brought by its predecessor in interest, which seek the repayment of all or part of the taxes assessed against the Shoreham plant. In Matter of Long Is. Light. Co. v Assessor of Town of Brookhaven (154 AD2d 188), the Appellate Division held that Public Authorities Law § 1020-q (3) was unconstitutional to the extent that it purported to bar LILCO (as any other entity) from enforcing its right to tax refunds for overassessments of Shoreham in pending tax certiorari proceedings. Defendants are correct in noting that, as a State governmental entity, LIPA does not enjoy the constitutional protection afforded a privately owned utility such as LILCO. Nonetheless, we agree with the courts below that Public Authorities Law § 1020-q (3) should not be read as completely immunizing the various taxing jurisdictions from refund liability for PILOT overpayments based upon inflated assessed valuations of Shoreham following enactment of the LIPA Act. The plain language of Public Authorities Law § 1020-q (3) does not prohibit an action by LIPA to recover PILOT overpayments ( cf. , Public Authorities Law § 1020-f [a] [LIPA has authority to sue and be sued]). Section 1020-q (3) bespeaks of a legislative intent limited to relieving the local taxing jurisdictions from the drastic impact of substantial refund liability for past taxes and assessments challenged by LILCO, not PILOTs prospectively imposed following LIPA's acquisition of the Shoreham plant. Thus, section 1020-q (3) prevents refund liability for property taxes originally assessed (emphasis supplied) against the Shoreham plant, or for refund[s] of taxes  based upon a judicial determination of overassessed evaluation for any of the years from [1976] to the effective date of this title [January 15, 1987] (emphasis supplied). Similarly, LIPA is only directed to discontinue the prior tax certiorari proceedings of its predecessor in interest, which can only refer to challenges to taxes assessed while LILCO (LIPA's predecessor in interest) was the owner of the Shoreham plant, not proceedings challenging the level of PILOTs imposed after LIPA acquired the plant. While section 1020-q looks backward to taxes previously assessed, defendants' liability for PILOT refunds was, as of the effective date of the Act, wholly prospective. Thus, the plain language of Public Authorities Law § 1020-q (3) limits its application to proceedings to recover taxes overpaid during a specific period of time. Our limited reading of section 1020-q (3) is consistent with the legislative history of the LIPA Act. As previously noted, the Assembly sponsoring memorandum expressed conviction that, at the time of passage of the LIPA Act, taxes were already of inordinate and inequitable size (Mem of Assembly Sponsor, Bill Jacket, L 1986, ch 517, at 13). In the Assembly debates on the proposed LIPA legislation, the then current taxes and assessments on Shoreham were characterized as a windfall which no longer should be allowed (Member of Assembly Harenberg, Assembly Floor Debates, July 1, 1986, at 369). It would be entirely inconsistent with this view of the inflated status of taxes and assessments on the Shoreham plant at the time of enactment of the LIPA statute to ascribe to the Legislature an intent to permit the local taxing jurisdictions to increase the size of payments in lieu of such taxes and assessments, totally insulated from judicial review by a LIPA challenge to assessed valuations and a demand for refunds of PILOT overpayments based thereon. In light of the plain language of the statute and this legislative history, the defendants' position on this issue, which would in effect leave LIPA at the discretion of local assessors in determining the magnitude of PILOTS after a Shoreham takeover, cannot prevail. [2] Thus, we leave undisturbed the determination of the courts below on the refund issue. Accordingly, the judgment appealed from and the order of the Appellate Division brought up for review should be modified, without costs, in accordance with the opinion herein and, as so modified, affirmed. Judgment appealed from and order of the Appellate Division brought up for review modified, etc.