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NYPA relicensing payment acceleration considered

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By BRIAN HAYDEN

MASSENA - Lottery players can receive their big winnings up front or have it spread out over a longer period of time.

The towns of Massena, Waddington and Louisville haven’t won the lottery, but will receive relicensing payments for the next 40 years from the New York Power Authority. Officials may soon discuss whether to accelerate those payments - to receive more money over less years - to invest in river tourism or another effort which could create jobs and add to the tax base.

St. Lawrence County and several towns, villages and school districts split a $1.7 million annual payment from NYPA, according to Deputy County Treasurer Robert Santamoor. Of that, $655,600 goes to the county, $284,000 to the town of Massena, $160,266 to the town of Waddington $185,600 to the Madrid-Waddington School District, $179,200 to the town of Louisville, $133,200 to the Massena Central School District and $80,133 and $22,000 to the villages of Waddington and Massena, respectively.

The funding stems from the 2003 relicensing agreement which allowed the NYPA’s St. Lawrence-FDR Power project in Massena to continue operating for another 50 years; the payments go to the communities most affected by the 1950s construction of the dam.

Supervisor Joseph D. Gray wondered if the area could receive more money over, for example, 20 years, and then get none toward the end of the relicensing agreement. The money could be used for a collective economic development project, like further enhancing public access to the St. Lawrence River to promote tourism. Mr. Gray did not have specific ideas for projects yet.

The 2003 agreement is approaching its 10-year anniversary, at which time officials will revisit the NYPA settlement. Within the agreement was a provision: NYPA and the host communities every decade could review and “discuss issues not anticipated” in 2003, and accelerating payments may be one topic broached.

“If we have a major project that needs funding and we can go to NYPA to say give us some of our money up front, that would make sense,” Mr. Gray said.

Mr. Gray recognized the acceleration as taking away from future funding, but figured that money would be worth far less because of inflation by the end years of the relicensing agreement anyways.

“That’s the choice we have to make,” Mr. Gray said. “If we can invest the money so it turns over in the local economy and creates jobs and revenue, wouldn’t that be a bigger advantage?”

The Local Government Task Force agreed to the 50-year payment schedule back when the 2003 agreement was finalized, according to NYPA spokesman Paul DiMichele.

“If they would like to reconsider the timing of the payments, we would be open to discuss that with them,” Mr. DiMichele said in an email.

Accelerating NYPA payments has worked well three hundred miles west in Buffalo, according to Rep. Brian Higgins, that city’s congressman.

Buffalo is in close proximity to NYPA’s other major hydro dam, the Niagara Power Project. Mr. Higgins was instrumental in crafting Niagara’s agreement, which was finalized a couple of years after St. Lawrence-FDR’s.

The agreement had originally set aside $3.5 million annually for redeveloping Buffalo’s waterfront. Much like Massena, Buffalo had declined from its 20th century industrial heyday. Much of the waterfront land needed for the city’s once-bustling seaport and industries had sat unused for years.

In 2010, officials there amended the relicensing agreement. Instead of $3.5 million over 50 years, Buffalo began receiving approximately in excess of $8 million annually over 20, and nothing thereafter. The acceleration has made all the difference, Mr. Higgins said.

“We could drag this out over 50 years or accelerate it and develop a waterfront that will define Buffalo for the next 50 years,” Mr. Higgins said. “We needed this to leverage exactly what is happening today.”

The acceleration of payments means no NYPA funding in final decades of the settlement agreement, but the additional money up front is paying off, Mr. Higgins said.

“That’s a risk worth taking,” Mr. Higgins said.

In 2012, the city’s waterfront, where the Niagara and Buffalo Rivers meet Lake Erie, hosted 425 different events attracting approximately 700,000 visitors from Western New York and Southern Ontario, Mr. Higgins said.

Tourists flock to see the unearthed Western terminus of the Erie Canal, watch Thursday evening summer concerts and regularly scheduled historical speakers, grab an ice cream cone or dinner on the water and take boat tours in areas which sat idle up until several years ago.

More projects are on the way. The canal terminus is being expanded and will house an outdoor ice rink three times the size of Rockefeller Center’s by winter 2013, Mr. Higgins said. A children’s museum, hotels, restaurants and an indoor ice rink complex built by Buffalo Sabres owner Terry Pegula are also planned.

When public dollars are leveraged, private investment follows, Mr. Higgins said.

“The strategy we implemented is paying off,” he said. “We’ve seen nothing but benefits around us.”

The NYPA funding represents approximately half of the total public dollars set aside for Buffalo’s waterfront, but is a crucial piece, Mr. Higgins said.

“It was the smartest things we did,” Mr. Higgins said. “It doubled the availability of resources to get this thing jump started.”

The key to accelerating, Mr. Higgins said, is to have defined projects which would benefit from such a payment plan. He advised against receiving extra money up front to plug holes in budgets and alleviate tax increases.

Louisville, for example, uses its $179,200 annual allocation to pay off its highway garage and town hall. Of Massena’s $284,000 allocation, $85,000 goes toward paying off the Massena Community Center and the rest is used in the general fund. Waddington’s $160,000 payment offsets property taxes and highway department costs, Supervisor Mark Scott said.

Mr. Scott agreed that any payment acceleration would have to be invested into long-term development projects to make it worthwhile.

“We need to make sure that the projects we fund would generate more revenue than if we continue the normal schedule of payments,” Mr. Scott said.

Supervisor Larry R. Legault saw both pros and cons to such an idea. He wondered whether the handful of entities receiving money would be willing to give up future funding in order to collectively invest it into developing the area’s riverfront.

“When you’re talking development of riverfront property, you need millions to develop infrastructure,” Mr. Legault said. “That could be a difficult hurdle with the other entities. Would they be willing to pool it together to make it work? I’d be open for discussions of how it would affect our particular town,” he said.

Mr. Scott and others, like Massena Mayor James F. Hidy, would prefer to see a net gain of NYPA funds, and not just a redistribution of payments. Some north country officials have long contended that the 2003 relicensing agreement pales in comparison to the agreement Niagara received and is unfair.

From 2009 to 2014, the Niagara region is receiving a total of $384 million from NYPA for relicensing benefits and non-relicensing capital expenditures. NYPA is investing $63 million toward relicensing commitments and $145 million for non-relicensing capital expenditures in the north country, totaling approximately $208 million in the same period, Mr. DiMichele said.

NYPA officials contend that the Niagara Power Project is larger and produces more than the St. Lawrence-FDR project. The benefits provided to Western New York compared to the north country are directly proportional to the size and output of the two plants, Mr. DiMichele said.

Area leaders disagree.

“Let’s talk about making the fund larger and adding additional payments,” Mr. Scott said. “It’s clear per megawatt produced that our deal was not as good as Western New York’s.”

Mr. Hidy called the two relicensing agreements “totally lopsided” and wondered why the vast majority of money heading to the north country is set aside for wildlife Habitat Improvement Projects along the river, and not people and job-producing oriented projects. NYPA owes more because of the amount of taxable property it placed underwater decades ago, he said.

“We can’t be bullied any longer,” Mr. Hidy said. “They always hold the trump card.”

Mr. Gray agreed the relicensing “was not as good a deal as we should have gotten,” but that the focus should now be on what localities can do to maximize it.

Accelerating payments is one option.

“We had a chance to take a bite of the apple and instead we settled for the nibble,” Mr. Gray said. “Is there a mechanism in place that could help us for years to come?”

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