Long Island Power Auth. v. Anderson
| Citation | 918 N.Y.S.2d 307,31 Misc.3d 540 |
| Parties | LONG ISLAND POWER AUTHORITY, Plaintiff, v. Gilbert ANDERSON, P.E., as Administrative Head of Suffolk County Sewer Districts and as Commissioner of Public Works of the County of Suffolk, Suffolk County Sewer District No. 3-Southwest, Suffolk County Sewer Agency, Suffolk County Department of Public Works, Suffolk County Legislature and County of Suffolk, Defendants. |
| Decision Date | 23 February 2011 |
| Court | United States State Supreme Court (New York) |
M. Allan Hyman, Esq., Certilman Ballin Adler and Hyman, LLP, East Meadow for Plaintiff.
Chris Termini, Esq., Asst. County Atty., County Attorney of the County of Suffolk, Hauppauge
Motion (seq. no. 3) by the attorney for the plaintiff for an order in favor of the plaintiff awarding it summary judgment pursuant to CPLR 3212 is granted. Cross-motion (seq. no. 4) by the attorneys for the defendants for an order in favor of the defendants awarding them summary judgment pursuant to CPLR 3212 is denied.
The plaintiff, Long Island Power Authority (LIPA) seeks a judgment exempting LIPA from the imposition of commercial sewer use assessments, fees or charges against a property located within Islip, known as Brentwood (hereinafter the Property) and an order enjoining defendants from imposing commercial sewer use fees or charges against LIPA on the Property. Defendants counterclaim for the sum of $2,007,995, of which $1,007,995 is allegedly owed by plaintiff to defendants as a result of the assessments. Plaintiff LIPA is exempt from taxes and assessmentspursuant to the Public Authorities Law § 1020-p (the "LIPA ACT"). However, LIPA is required to make disbursements known as PILOTS (payments in lieu of taxes) to municipalities negatively impacted by the removal of local properties from the tax rolls during LIPA's acquisition of the assets of the Long Island Lighting Company (LILCO) in the 1990s. Id. § 1020-q. In addition, LIPA has the power to enter into discretionary agreements with any municipality to pay annual sums in lieu of taxes in respect to properties owned within the municipality. Id. § 1020-f(w).
In 2003, LIPA acquired a parcel of land that was once part of the now defunct Pilgrim State Psychiatric Center, located in Islip, New York. The previous owners of the Property had entered into a Connection Agreement in 1991 with the local sewer agencies that set out sewer design and a fee structure. LIPA subsequently improved its newly acquired property with two gas-fired electric generation units. LIPA asserts the generation units are not attached to the local sewer system, do not generate, and are not capable of generating sewage. In 2006, LIPA settled a civil action involving the Property through a PILOT agreement with the Assessors of the Town of Islip agreeing to voluntarily pay approximately $2,000,000 for each tax year from 2003/04 through 2008/09.
In 2005, Suffolk County Sewer Districts notified LIPA that an assessment would be imposed on the Property for commercial sewer use for the previous two (2) years and subsequent years. The November 2005 notice stated that LIPA owed the Suffolk County Sewer District No. 3-Southwest (the District) $804,192, the bulk of which was predicated upon an ad valorem, or value of the property assessment. LIPA contested the assessments, but defendants rejected the requests for reconsideration. Subsequently, an additional statement dated May 1, 2007 assessed a further $203,803 against LIPA for commercial sewer use in the period of 1/1/07 to 12/31/07, raising the total amount charged to LIPA by the sewer district to $1,007,995. As a result of the defendant's failure to grant the plaintiff the relief it requested, LIPA commenced the within action for a judgment declaring that LIPA be exempt from these assessments and a permanent injunction prohibiting the imposition of commercial sewer use fees on the Property.
In this summary judgment motion for a declaratory judgment, plaintiff predicates its motion on three claims: 1) LIPA is exempt form the imposition of commercial sewer use assessments; 2) the connection agreement, upon which defendants rely, does not authorize the imposition of commercial sewer use charges in this case; and 3) LIPA cannot be assessed for commercial sewer use if the Property is unconnected and does not use sewer facilities. LIPA argues the District is wrongfully assessing LIPA for "Commercial Sewer Use" even though LIPA does not use it, and the property is not connected to the District's sewer facilities.
In or about 1991 the New York State Office of Mental Hygiene (OMH) had to abandon its then existing sewage treatment plant located on the Pilgrim State Premises in order to meet wastewater discharge standards of the New York State Department of Environmental Conservation (N.Y.S. DEC). OMH was required to enter into a contract with the District in order to connect to and receive sewer services from the District's sewer system, since the Pilgrim State Premises is not located within the boundary of the District, or within the boundary of any other Suffolk County sewer district.
The 1991 Connection Agreement provided for an "Initial Capacity" of 480,000 gallons per day allocated for OMH and an Additional Capacity of 250,000 per day, 20,000 of which was allocated to Suffolk County Community College ("SCCC"), located on the Northeast portion of the Pilgrim State Premises. Payment for the sewer services under the 1991 Connection Agreement is set forth in § 6(a) entitled "Fees and Charges Payable to the District" and was based on the following: a per parcel charge; an ad valorem charge; a user charge; a metered pretreatment fee; and an administration fee.
Section 6(c) of the 1991 Connection Agreement provides: "All fees and charges payable by OMH under Sections 6(a)(i) through 6(a)(v) hereof shall commence upon the date the Project Facilities are first placed into operational use for the benefit of OMH."
The 1991 Connection Agreement provides that if other parties desired to connect to the District's sewer facilities to be constructed and installed on the Pilgrim State Premises, written notice to the District is required.
"No properties, parties, persons, corporations or other entities shall be permitted to connect to the Project Facilities or any other sewerage facilities of OMH, whether or not situate in, under or upon the Premises, nor to any sewerage facilities in, under or upon the Premises, whether or not owned by OMH, whether inside or outside the boundary lines of the District, without prior written notice to the District."
The 1991 Connection Agreement also contains a provision (Section 24) to protect the District's sewer system if there were a change in ownership or use that would adversely affect the District's facilities.
The District began billing OMH for sewer services in 1997 when the Pilgrim State Premises were actually connected to, and began using, the District's sewer facilities.
According to Benjamin Wright, an employee of the Suffolk County Department of Public Works, who was familiar with the 1991 Connection Agreement, the intention was that OMH would be charged for sewer services once the connection was completed. Defendants claim they became aware in the early 2000s that several entities had acquired portions of the Premises no longer used by OMH, namely: LIPA, the New York Power Authority ("NYPA"), the Wingate Inn, the Town of Islip IDA, and the New York State Department of Parks and Recreation ("Parks Department").
The evidence shows that SCC, Wingate Inn and NYPA all executed separate connection agreements in their own names. According to Mr. Wright, there is a procedure applicable to new owners who wanted to connect to the District's facilities, which involved executing their own connection agreements with the District, and which had to be ratified by the Legislature before the connection could be effectuated.
The District began billing SCC for sewer charges in 1997 when SCC connected to, and wastewater began flowing, into the District's sewer system. The District began billing the Wingate Inn for sewer charges when the Wingate Inn connected to the District's sewer system in 2003, because, according to Mr. Clausen, a Department of Public Works (DPW) accountant, it was only then that "billing begins." NYPA connected to the District's sewer facilities in 2002 and the District commenced billing NYPA for sewer charges in 2003.
It was not until 2005, that Mr. Clausen, the DPW accountant, admittedly made a unilateral decision to begin billing LIPA, retroactive to 2003, for "commercial sewer use," even though he knew LIPA did notuse, and was not connected to the District's sewer facilities. Mr. Clausen testified that he did not discuss sending bills to LIPA with anyone in the department; he simply decided to bill LIPA when he "found out," sometime in 2004, that portions of the Pilgrim State premises had been transferred to LIPA, as well as NYPA and the Islip IDA. Mr. Clausen also "found out" about the transfer to the Parks Department in 2004, but only began billing the Parks Department in 2009, over five years after he learned of the transfer and during the pendency of this lawsuit. The plaintiff's Statement of Uncontested Material Facts states:
LIPA...
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