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IDA Approves Revised Payment In Lieu of Taxes Agreement for AES Cayuga

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> IDA Approves Revised Payment In Lieu of Taxes Agreement for AES Cayuga

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IDA Approves Revised Payment In Lieu of Taxes Agreement for AES Cayuga

Wednesday, February 24, 2010
The County Industrial Development Agency today approved a revised 20-year Payment In Lieu of Taxes (PILOT) agreement between the IDA and Lansing's AES Cayuga power generating facility. The revision decreases the plant's valuation from that negotiated in the initial agreement finalized a year ago, reflecting market factors that caused rapid decline in the plant's financial condition and constituted an extraordinary situation under terms of the agreement.

The revision, approved by a 6-1 vote, endorses the value and phasing plan recommended by IDA and utility negotiating teams, which over five years decreases the plant's valuation from the current $160 million for 2009 to $100 million in 2013, instead of increasing value during that period from $160 million to $255 million.

The AES issue has been the focus of much community discussion and comment over the past several weeks, and both IDA Chair Martha Robertson and AES plant manager Jerry Goodenough expressed appreciation for the effort devoted to this issue and the public comments received. Robertson said that the IDA will carefully consider all comments and suggestions to improve the valuation process, when the agency reopens the negotiations later this year to review validity of the $100 million dollar figure.

IDA member Jeff Furman, who dissented in the vote, expressed concern about both the process used to reach the agreement and the result. He maintained that the Lansing School District, most affected by the valuation change, was not fully involved in negotiations (an assertion with which Chair Robertson disagreed), and he suggested that IDA negotiators could have sought more outside expertise on valuation, considering the millions of dollars at stake. Furman also questioned the valuation schedule and phasing, including a sharp decline in value at the beginning of the five-year period. He suggested that perhaps the County could step in to assume a greater financial burden in initial years, to ease the financial burden on the school district, then be reimbursed later. Asked to comment, County Assessment Director Jay Franklin stated that through the PILOT AES Cayuga is paying its fair share to all taxing jurisdictions.

Both IDA members Larry Baum and County Legislator Nathan Shinagawa observed that the agency must keep informed on the business of the generating facility, the volatile market factors affecting coal-fired power generation, and prospects for the industry looking 20 to 30 years ahead.

In other actions, the IDA, by unanimous vote, authorized scheduling of a public hearing on an application for tax abatements, under the City of Ithaca Downtown Density program submitted by the Ithalthai project. The project, planned by Ithaca restauranteur Sunit Chutintaranond, would rehabilitate and renovate the former Plantations building on the Ithaca Commons to house a first-floor restaurant, with low- and moderate-income apartments, office space, and a banquet facility on the upper floors. The developer seeks a total of $200,000 in tax abatements over ten years. Ithaca Mayor Carolyn Peterson and Downtown Ithaca Alliance executive director Gary Ferguson were among several who expressed enthusiastic support of the Ithalthai project, as one ideally suited for tax abatement, which would benefit the City's downtown core, and is consistent with City and County comprehensive plans and goals of the City's Urban Renewal Agency.

The IDA, also without dissent, authorized a title action with Emerson Power Transmission, whose Ithaca plant will close later this year. The action is the first step in the process to recapture about $500,000 in property taxes lost in the first six years of a ten-year tax abatement agreement, awarded in 2003.