Local News
TOWN OF LOCKPORT: Generator wants tax-exempt status extended
TOWN OF LOCKPORT — The town Industrial Development Agency is considering extending Lockport Energy Associates’ property tax-exempt status a while longer.
The IDA board of directors will hold a public hearing at 9 a.m. Thursday, in the town hall, regarding LEA’s request for a three-year extension of its existing payment-In-lieu-of-taxes package.
LEA is asking for a guarantee it won’t be charged county or school property taxes on the Lockport Cogeneration Facility, Junction Road, through 2015, unless it surpasses certain net profit thresholds. There’s already a full tax exemption deal in effect on the plant through 2012, according to David Kinyon, IDA administrative director.
Extension is desired to assist Shell Oil, whose electricity marketing division has the gas-fired plant on contract to produce electricity on demand, said Lewis Staley, a director of plant owner Fortistar.
“It’s been running at a deficit,” Staley said. “We’re trying to maintain the workforce and have it there when the economy comes back.”
LEA produces steam for General Motors’ Lockport plant on Upper Mountain Road. From the time it opened in 1991 until 2007, it also produced electricity for GM/Delphi and NYSE&G.; Since those contracts expired, it has produced very little electricity, Staley said. The past couple of years, generation on Shell demand has been intermittent only, from 55 to 100 hours per year.
Currently, electricity supply is high and demand is low statewide; that’s a reflection of recession, Staley said. But as Shell Oil crafts a new long-term development plan, it’s betting on eventual recovery; and is seeking tax stability for Lockport Cogeneration, which it’s carrying through a period of “negative cash flow.”
“If our hunch is correct, the economy will turn around. In the meantime, we have to reduce standby costs,” Staley said.
Lockport Cogeneration has had 100 percent property tax-exempt status continuously since it opened, according to Kinyon. The existing PILOT contains a “kickout” clause subjecting the plant to graduated taxation in the event it generates an annual net profit of $5 million or more. When applicable, tax payments would rise as net profits increase.
These are the terms that LEA/Shell want extended through 2015.
The plant is not exempt from special district taxes, meaning water, sewer, fire protection and lighting district fees based on assessed value. For the purpose of calculating these, the plant has a pre-set assessed value of $12.5 million, through 2012.
Lockport Cogeneration currently has 14 employees. During the summer, it usually adds two employees, Staley said.
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