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Lansing school officials told the Board of Education Monday that AES Cayuga will be contributing more in property taxes beginning next year.  The money will come as a result of an agreement between the power company and Tompkins County.  Superintendent Stephen Grimm said that the agreement has been negotiated by Tompkins County Administrator Stephen Whicher, who he noted has significant assessment experience.

'This agreement is extremely beneficial to the school district," said school Business Administrator Mary June King.  "It is leading to a reassessment of the value of AES Cayuga at two years, then again at five years, ten years, and fifteen years.  The tax rate will be based on our tax rate every year.  We will receive the same tax rate from AES Cayuga as we receive from all of the other citizens of the district."

The agreement removes AES Cayuga from the assessment roles and places it into a 20 year PILOT (Payment In Lieu Of Taxes) program.  Whicher reportedly determined that the power plant was dramatically under assessed.  The agreement raises the assessment each year in increments.


The PILOT was negotiated in order to provide some stability in planning for the coal-based power plant.  With changes in pollution control regulations, attention to the plant's carbon footprint, and the volatility of the electrical power market, the County found itself with a choice of costly assessment costs and litigation, or coming to some kind agreement with the company.  In a letter to the Tompkins County Industrial Development Agency he said, "There are two potential paths to take: either face continuous and costly litigation over the forseeable future or enter into a long-term agreement that establishes a valuation approach, stability, and equity."

"The initial agreement increases the current taxable value from $142 million in 2008 to $160 million in 2009," Grimm told the board.  "$180 million the following year, and increases $25 million per year until 2013 when the value will reach $255 million.  It is projected that AES Cayuga's total property tax burden will increase in this initial term by approximately $2,900,000 from $3,700,000 in 2008 to $6,600,000 in 2013."

Board members were concerned that the PILOT program not fix the amount of taxes, but only the assessment value.  David Dittman said he was concerned that the contract not lock in a tax amount.  He said that the tax should be based on a fair assessment of the plant.  "If they're just saying they don't want to vary, you know what I say," he told the board.  "I say tough luck.  They're a member of this community like everybody else.  They should pay on the value of that plant and it should be valued in with the rest of the properties in the district."

"I think David's point is very well taken based on what's happening with home values right now," said Board member Richard Thaler.  "As an attorney that has a firm that does a lot of real estate business, the value of the properties has decreased.  Offers to buy are normally 20% less than the price that is put on them, and somewhere along the line they compromise between 9% and 15%.  That is generally what's happening in this community, which is less than in most communities in upstate New York."

But Business Administrator Mary June King explained that Dittman's concerns are met in the agreement.  King has been attending meetings with Whicher and other stakeholders, and says the agreement does not set a tax amount, but establishes an assessment of the plant's value.  The plant will pay the same amount per $1,000 of assessed value that everyone else does.  AES Cayuga is the largest property taxpayer in Tompkins County.

"AES Cayuga has been an outstanding  corporate citizen throughout this process," King said.  "They were not looking at necessarily getting their taxes cut.  They were just looking at stability in their business planning.  They were willing to say, 'We're not concerned about the tax rate, we're not negotiating that.  We just need to know what we can project to AES at the international level so that we can do our planning from that perspective."


King did say that the level of state aid could be affected by the higher amount of money the PILOT will generate for the district.  With fast changing rules and formulas, she said that it is impossible to predict what New York State will do when calculating aid.

"I don't think it is going to negatively impact our state aid and our financial advisors agree," she told the board.  "It is a revenue issue for us.  They are no longer on our assessed role.  They are now a different revenue line for us.  For us it's something where we can solidly anticipate what money we're going to get from AES Cayuga based on our tax rate and based on their changing assessed value.  So I think it's a good thing for us."

Grimm said that the additional income could help to rebuild the district's capital reserves.  "There will be a time when we need to go out and ask for more money, in addition to what the regular school tax is, for capital projects for infrastructure needs," he noted.  "How much do we have and how are we going to build that into our financial planning?  We're going to be getting some more funds (from AES Cayuga).  Those funds can be something that can start to become the backbone for this long term infrastructure rehabilitation as well."

Grimm and King said they would ask Whicher to attend a school board meeting to answer questions about the agreement and how it affects school income.

"The choice is clear," Whicher concludes in his letter.  "The negotiating teams are to be commended for developing this true win-win PILOT agreement."

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