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Decision No. 18,261

Appeal of PAUL PUSKULDJIAN from action of the Board of Education of the North Shore Central School District regarding financial practices.

Decision No. 18,261

(April 10, 2023)

Frazer & Feldman, LLP, attorneys for respondent, James H. Pyun, Esq., of counsel

ROSA., Commissioner.--Petitioner, a resident taxpayer, challenges the actions taken by the Board of Education of the North Shore Central School District (“respondent”) regarding its 2022-2023 budget.  The appeal must be dismissed.

This appeal takes place against the backdrop of longstanding litigation between the Long Island Power Authority (“LIPA”) and Nassau County.  According to the record, LIPA owned or controlled properties in respondent’s district that provided substantial tax revenue through direct payments or payments in lieu of taxes (“PILOTs”).  LIPA filed numerous administrative and judicial proceedings challenging Nassau County’s assessment of these properties from approximately 2009 through 2022.[1]  Respondent commenced its own third-party beneficiary proceeding against LIPA and other entities in 2013.  LIPA and Nassau County began to explore settlement of these claims in 2022.

On April 7, 2022, respondent delivered a presentation regarding the effect that a proposed settlement of the litigation between LIPA and Nassau County would have on resident taxpayers.  Entitled “[t]he Impact of the [shift] of LIPA School Taxes on North Shore Residents,” the presentation explained how the settlement would “[s]hift ... school taxes to North Shore residents each year over (5) years ....”  In sum, certain LIPA properties would be removed from the tax rolls, thus leading other classes of taxpayers—primarily residential homeowners—to absorb the amounts the LIPA properties had paid in direct taxes or PILOT payments.  The presentation also included a chart reflecting the “[e]stimated 2022-23 Increase in School Taxes” to four home values ranging from $750,000 to $2 million.

Prior to the district’s May 17, 2022 annual meeting and budget vote, respondent circulated a “Special Budget Issue” newsletter providing district residents with detailed information regarding its budget proposal.  The newsletter adverted to the “possibility” that the LIPA/Nassau County claims would be settled.  In the newsletter, the superintendent stated that “[p]lanning has begun on how we could address any revenue shortfall with minimal impact on both ... [d]istrict program[s] and the tax levy.”  The budget proposal included a proposed tax levy increase of 2.499 percent, which was below the New York State allowable tax levy limit of 2.624 percent.  The newsletter indicated that the district would provide further updates on the LIPA/Nassau County litigation when available. 

Shortly after district voters approved the 2022-2023 proposed budget in May 2022, LIPA and Nassau County finalized the settlement agreement.  Generally, Nassau County agreed to remove certain LIPA properties from its tax rolls in exchange for “direct assessments”—essentially, settlement payments—for a period of five years.  By removing the LIPA properties from its tax rolls, the county deprived respondent of substantial tax revenue.  The difference between this revenue and the “direct assessments” paid to the county for the 2022-23 school year resulted in respondent incurring a $3.1 million revenue shortfall.

In July 2022, respondent settled its third-party beneficiary litigation against LIPA.  In this agreement, LIPA agreed to pay $3.25 million to respondent over several years.  

On August 3, 2022, respondent approved allocating $500,000 of the settlement funds toward its $3.1 million gap in tax revenue.  Respondent further authorized a tax levy in the amount of $85.9 million dollars.[2]  This appeal ensued.  Petitioner’s request for interim relief was denied on September 15, 2022.

Petitioner alleges that respondent knowingly misled taxpayers by not disclosing the impact of the LIPA settlement prior to the budget vote.  He further alleges that the LIPA/Nassau County lawsuit resulted in a de facto six percent increase in the tax levy, which far exceeded the 2.499 percent approved by voters.  He asks that respondent be directed to impose the voter-approved tax levy and that respondent utilize other resources to fill the $3.1 million revenue gap.

Respondent argues that the appeal is moot because there is no mechanism for returning taxes after imposition of the levy.  Respondent further contends that it acted in good faith with respect to the tax levy.  Respondent additionally asserts that although it was not a party thereto, it provided timely information to residents concerning the litigation between LIPA and Nassau County.

The appeal must be dismissed, in part, as moot.  The Commissioner will only decide matters in actual controversy and will not render a decision on a state of facts that no longer exists due to the passage of time or a change in circumstances (Appeal of Sutton, 57 Ed Dept Rep, Decision No. 17,331; Appeal of a Student with a Disability, 48 id. 532, Decision No. 15,940; Appeal of M.M., 48 id. 527, Decision No. 15,937; see Matter of Hearst Corp. v Clyne, 50 NY2d 707, 714 [1980]).  Where the Commissioner can no longer award a petitioner meaningful relief on his or her claims, no live controversy remains and the appeal must be dismissed (Appeal of R.B., 57 Ed Dept Rep, Decision No. 17,394; Appeal of N.C., 40 id. 445, Decision No. 14,522).  Petitioner seeks to retroactively modify the tax levy such that only the tax levy increase amount “approved by voters” be imposed.  However, there is no mechanism for returning a pro rata share of funds to the taxpayers after the tax levy (Appeal of Liberatore, 42 id. 321, Decision No. 14,869).  Therefore, petitioner’s request for relief must be dismissed as moot (compare Appeal of Wood and Grosso, 57 Ed Dept, Decision No. 17,358; Appeal of Wille, 56 id., Decision No. 17,050).

Petitioner’s remaining challenge to respondent’s actions at its August 3, 2022 meeting are without merit.  In an appeal to the Commissioner, a petitioner has the burden of demonstrating a clear legal right to the relief requested and establishing the facts upon which he or she seeks relief (8 NYCRR 275.10; Appeal of P.C. and K.C., 57 Ed Dept Rep, Decision No. 17,337; Appeal of Aversa, 48 id. 523, Decision No. 15,936; Appeal of Hansen, 48 id. 354, Decision No. 15,884).  While framed as a challenge to imposition of the tax levy, the circumstances about which petitioner complains are solely attributable to the LIPA and Nassau County litigation.  Respondent was not a party to this litigation.  Absent the settlement agreement reached by LIPA and Nassau County, respondent would have authorized a tax levy in the amount approved by the voters.  Instead, respondent found itself deprived of a substantial amount of tax revenue and was forced to adjust its budget accordingly.

The only decision within respondent’s control was how much, if any, of the settlement it received from its third-party beneficiary litigation to put toward its $3.1 million revenue shortfall.  This is precisely the kind of discretionary decision that respondent is entitled to make, as allocating more of the settlement money in the 2022-2023 fiscal year would result in greater liabilities thereafter.

Finally, petitioner’s contention that respondent “misled” voters or withheld information on the LIPA/Nassau County settlement is belied by the April 2022 presentation discussed above.  The record reflects that respondent provided detailed information to the public about the effect such a settlement would have on resident taxpayers.

In light of this disposition, I need not address the parties’ remaining contentions.




[1] The basis of LIPA’s objection appears to be that some of the properties contained decommissioned facilities that did not generate much, or any, energy.


[2] Respondent decreased the amount of its tax levy from the amount estimated in spring 2022 because, pursuant to the settlement agreement, the LIPA properties were removed from the tax rolls; as such, respondent could not obtain any revenue therefrom.  Moreover, although the LIPA properties agreed to pay “direct assessments” to Nassau County, the county’s Acting County Assessor directed respondent to “lower it’s [sic] levy by the total direct assessments received from LIPA.”