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After years of decreasing value and uncertainty about the Cayuga Power Plant's future, the plant shut down for good at the end of last year.  The closing is bad news for Lansing property taxpayers, but it may not be as bad as you think.  School officials say that careful planning will help keep taxes from spiraling upward, and a New York State program specifically designed to provide relief to communities whose power plants have closed may mitigate taxes in the short run.  It also means that under the state tax cap calculation the Lansing Central School District may collect up to $425,000 more from property taxes than it otherwise could have.

"Though we know we can pull from the tax base at a higher level, we don't plan to go up to that tax cap," said Lansing School Superintendent Chris Pettograsso at Monday's Board Of Education meeting. "We will be looking at all of our resources, looking at what our needs are, where we may be able to make reductions that would not hurt our student population. Where can you be more efficient? Do we are trying to really look at the program in that manner."

School officials were careful to stress that Monday's preliminary presentation on how Governor Andrew Cuomo's executive budget and the closing of the power plant could impact next school year's budget is tentative.  They stressed that even though they can tax more, it doesn't mean they will tax to the maximum allowed. They said that as actual numbers come in and the state budget is passed by the Legislature they will have a better idea of the actual impact.  But the taxable value of the power plant is sure to go down, and is not expected to rise to its highest value from a decade ago even if the plan to convert the property to a data center is successful.

School Business Administrator Kate Heath said that now that the plant has closed Cayuga Operating company will probably not be renewing the Payment In Lieu Of Taxes (PILOT) agreement it had with Tompkins County.  A PILOT agreement is a tool used to plan for future tax obligations for businesses and future revenue for taxing authorities.  It sets a property's value for an amount of time into the future.  Revenue from PILOT agreements also figures into the tax cap calculation.  The Cayuga Power Plant's agreed-upon value plummeted from $160 million in the 2009-10 school year to $20 million today.  Now that the PILOT agreement is finished and the plant is no longer generating electricity the plant and its surrounding property will be assessed at some value that has yet to be determined, and taxed as part of the regular property tax roll.

Heath presented an illustration of the tax cap calculation for next school year's budget showing that the tax levy cap could rise $420,413 (2.15%) if the PILOT remained in effect.  But it may rise up to $845,413 (4.31%) with the plant back on the tax rolls.  She said that since the inception of the tax cap the district has chosen to keep its levy at or below the tax cap so that taxpayers can be eligible for New York State tax relief checks that are only available to taxpayers in districts who have kept their levies under the cap.

"It means we can collect more in taxes and still be under the cap, but it shifts the burden to the entire tax base," Heath said.

She presented a chart showing the impact of PILOTs over the past three years.  While the power plant's school revenue decrease from $725,059 in 2017-18 to $417,606 in 2019-20 represented the most significant PILOT loss, other PILOTs went from $377,866 to $246,050 in the same period, largely to a downward adjustment to the Shops at Ithaca Mall PILOT.

Total PILOT revenue for the Lansing schools was  $1,102,925 in 2017-18, and will be $281,355 in 2020-21, representing an approimately $400,000 bump down from the current school year.  In the 2020-21 school year the power plant PILOT will be $0, assuming the company and the County agree to end it. Other PILOTs will rise to $281,355.  But that power plant tax revenue jump from $417,606 to zero is deceiving, because the plant property will have some value to be determined.  That value is moved from the PILOT to the general tax assessment.  So the zero isn't really zero, but will certainly be less than $417,606.

Tompkins County Director of Assessment Jay Franklin says he is still compiling data to determine the value of the plant property, but it is too early to tell what that number might look like..

"I don’t have a preconceived notion as to where the value might come in at," he says. "I’m still compiling data in order to value this property. I will have a value by May 1 for the 2020 Tentative Assessment Roll."
 
When the plant still hoped to convert from coal to natural gas Assemblywoman Barbara Lifton came out against the plan, but she did advocate for tax relief for communities with closing power plants.  Partially because of her efforts the Electric Generation Facility Cessation Mitigation Program (EGFCMP) was passed into law.  The program provides a buffer of a few years to partially mitigate the tax loss from closed plants.  During the decade in which the plant value decreased local officials lobbied hard to include communities where a plant was not closed, but was decreasing significantly in value.  These efforts were rebuffed by the state.  But now that the Cayuga Power Plant is entirely closed, Lansing may be eligible for this relief.

The Lansing School District is not the only taxing authority that has benefited by power plant tax revenue over the years.  Any taxing district, such as the Town of Lansing and Tompkins County, that the plant is located in is impacted by the plant closing, and thus may be eligible for EGFCMP monies.

The program is administered by Empire State Development in consultation with the New York State Energy Research and Development Authority, and the Department of Public Service.  In order to be eligible the community must lose 20% or more in tax revenue as a direct result of an electric generation facility ceasing operation within its jurisdiction.   Heath explained that eligible communities may receive up to 80% in the first year, then 70%, providing a step-down approach that eases property taxpayers into making up the lost revenue.  Eventually property taxpayers will be on the hook for the lost revenue, but the program makes potential annual tax rises more bearable.

"The Town of Lansing and the County are doing the same thing, so we'll be working together to apply for those," she said. "We apply separately, but a lot of the information is the same and that's a fund via the Empire State Development that will offset our tax revenue loss up to 80%, but we have to be able to put a value on what that loss is. So we can't apply for it until we know the exact numbers on what that loss will look like. But that is something that we're looking for and looking at for next year."

Heath said that more relief may come from tax reserves the district funded as it planned for the impending plant closing, and noted that new developments in Lansing are helping to fill the assessment gap caused by the plant's decreased value.  And reserves such as Lansing's Employee Benefit Accrued Liability Reserves (EBALR), Employees’ Retirement System (ERS), and Teacher's Retirement System (TRS) will help reduce expenses that must be paid for from the 2020-2021 tax levy.

"We have our EBALR reserve, we have our ERS and TRS reserve and we have unemployment reserves," she said. "Next year it will be the year that we really look to utilize those to stabilize the tax increase for our taxpayers. And we do need to look at our assessed values for the entire district. We'll have better estimates on that on March 1st we have had new developments. Perhaps we'll have a larger tax base to carry that burden and the power plant does go back on the tax rolls. We just don't know what, what value yet."

Lansing Supervisor Ed LaVigne said Wednesday that the Town has been working on attracting new developments and businesses to make up for lost power plant revenues, and affirmed that the Town will also be seeking relief from the EGFCMP fund.

"We are working with the different taxing entities -- the County and the fire district and the library and the school district on how we put this application together," he said. "We'll find out what the assessed value is now that the plant has been totally decommissioned. We've worked very hard to get new businesses in to help with our tax base. And from there we hope that the increased interest of businesses in Lansing and increased construction will add to that tax base so that the impact will be minimal if not nothing."

In short, the bad news for Lansing property taxpayers is that revenue from an operational power plant has vanished, and taking the plant from a PILOT agreement to the tax rolls allows the taxing authorities to tax more than it otherwise would have been able to if keeping its tax levy at or below the tax cap.  Also in the bad column is that property owners take on more tax burden when PILOTs are reduced.  The good news is that state relief cold help reduce taxpayers' burden in the short run, and Lansing's tax assessment has been rising.  Within that good news is the bad news that some of the rise has been from reassessed existing properties, but the good news that there has been a lot of new building in the town.  And that the state relief is transitional, meaning it postpones the pain of higher taxes over a period of years.  Possibly the best news in the good news column is that school officials have been carefully planning for the inevitable plant closing for several years.

"I think the good thing is that our district has to planning for this for years," said School Board president Christine Iacobucci. "It's not like we didn't know it was going to come. At one point in the history of the last decade the money we were going to be losing from the Gap Elimination was way more than what we were going to be losing because of the PILOT. So I think that we'll be okay."

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