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FILED: ULSTER COUNTY CLERK 01/05/2024 04:46 PM INDEX NO. EF2023-2803
NYSCEF DOC. NO. 86 RECEIVED NYSCEF: 01/05/2024
STATE OF NEW YORK
SUPREME COURT COUNTY OF ULSTER
LEE PALMATEER,
VERIFIED ANSWER
Petitioner, WITH OBJECTIONS IN
- against - POINT OF LAW TO
VERIFIED AMENDED
GREENE COUNTY INDUSTRIAL DEVELOPMENT PETITION
AGENCY; NEW ATHENS GENERATING COMPANY,
LLC; GREENE COUNTY, NEW YORK; CATSKILL Index No. EF2023-2803
CENTRAL SCHOOL DISTRICT; and TOWN OF
ATHENS, NEW YORK, Assigned Judge:
Hon. David Gandin, J.S.C.
Respondents.
Respondent, Greene County Industrial Development Agency ("GCIDA"), by and through
its attorneys, Goldman Attorneys PLLC, Paul J. Goldman, Esq., of counsel, file this Verified
Answer with Objections in Point of Law to Verified Amended Petition (the "Answer") in response
to the Verified Amended Petition dated December 22, 2023 (the "Petition")1 in the above captioned
matter as follows:
PRELIMINARY STATEMENT
A. This litigation arises out of Petitioner's long-standing grievance with GCIDA2 and
the provision of financial assistance (as defined in General Municipal Law ("GML") §854(14)) to
a certain natural gas fueled power generation facility (the "Project") located in the Town of Athens
1 The Verified Amended Petition was filed at 5:46 PM on Friday, December 22, 2023 after the close of the last
business day prior to the Christmas holiday. Besides the sharpness of the Christmas Eve filing, the amended
pleading is improper because that right was not preserved in his adjournment request dated December 13, 2023
(NYSCEF Doc No. 51). See Hendricks v. Annucci, 179 A.D.3d 1232, 1234 (3d Dept. 2020).
2 Initially, in 2005, Petitioner brought suit against GCIDA and the Coxsackie-Athens Central School District which
proceeding was dismissed by Supreme Court and affirmed in Palmateer v. Greene County Indus. Dev. Agency, 38
A.D.3d 1087 (3d Dept. 2007). Undeterred from that dismissal, in 2009, Petitioner commenced another proceeding
before the Commissioner of Education challenging the grant of financial assistance with a sharing of the payments
in lieu of taxes for the Empire Merchants North project in the Town of Coxsackie which was also dismissed
(Decision No. 16,048 dated March 31, 2010) (R.321-328).
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(the "Town") (R.277-Business Description)3. During the years 2000 through 2002, the predecessor
to the current owner, Athens Generating Company, L.P., a Delaware limited partnership ("AGC"),
constructed the Project and received financial assistance. AGC and GCIDA entered into a straight
lease transaction (as defined in GML §854(15)) pursuant to which AGC received an exemption
from mortgage recording taxes and sales and use taxes for the portion of the Project that was not
otherwise exempt. See Tax Law §1115(a)(12). In addition, the Project received a fixed dollar
payment in lieu of tax agreement that was not tied to the assessment which had a two (2) year
construction period and a twenty (20) year operational period (the "Original PILOT Agreement").
The annual payments under the Original PILOT Agreement for the operational period started at
$2,750,000 for the first five years and increased to $5,250,000 for the last five years (the "PILOT
Payments"). Importantly, the Town's share of the PILOT Payments under the Original PILOT
Agreement was increased above the proportional sharing percentage in GML §858(15). See
generally, Palmateer v. Greene County Indus. Dev. Agency, 38 A.D.3d 1087 (3d Dept. 2007). In
connection with the Original PILOT Agreement, GCIDA and each of the Affected Tax
Jurisdictions4 (as defined in GML §854(16)) executed a certain Taxing Authority Allocation
Agreement (the "TAA Agreement") which provided that the Town was to receive more than its
statutory share for the entire term (R.21) as follows:
Affected Tax Jurisdiction Share of PILOT
County 18.4700%
School 70.4463%
Town 11.0837%
3 "R" refers to the Transcript of the Record of Proceedings certified January 4, 2024 followed by the applicable page
(the "Record").
4 The Affected Tax Jurisdictions for the Project are the Town, Greene County (the "County") and the Catskill Central
School District (the "School").
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(¶15 Affidavit of Raymond T. Ward sworn to December 14, 2023 (the "Ward Aff.") (NYSCEF
Doc Nos. 65 and 66).
B. The PILOT Payments were secured by a first lien mortgage in the amount of
$5,500,000 as well as a letter of credit with expiration dates and face amounts that varied such that
annual legal work was required for the maintenance of this collateral (¶16 Affidavit of Rene Van
Schaack sworn to January 5, 2024 (the "Van Schaack Aff.") (NYSCEF Doc No. 82).
C. During the construction period, AGC filed its first bankruptcy petition (R.294. R.4,
¶3.0). After completion, the Project had financial difficulties because it is a merchant power plant
whose income is derived solely from the sale of electricity on the grid through the New York
Independent System Operator ("ISO") (R.76). This market is highly competitive since New York
is a net importer of electric power. Moreover, the Project had no guaranteed source of revenue
since there was no power purchase contract with a utility company in place. Following New York's
mandate that all public utilities divest their generating assets, in the early 2000s, several merchant
power plants, including the Project, were constructed. These plants were premised upon the notion
that electric prices would increase and natural gas (i.e. the primary operating fuel) prices would
decrease. The opposite occurred resulting in less revenue, an inability to cover debt service and
three bankruptcies.
D. Following the initial bankruptcy, the lenders completed the Project and operated it
until November 2015 (R.4, R.318-320). Their operation included the second bankruptcy which
occurred on or about March 2014. Thereafter, on or about November 2015, the first power
company ownership of the project occurred with Talen Energy Supply LLC ("Talen") (R.4).
However, as a result of the continued shrinking demand, lower electric prices and higher fuel costs,
the operating margins were insufficient to cover all costs and debt service so that the Project again
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went into bankruptcy in June 2018 (R.11, R.6-7, ¶4.6). In 2020, as a result of the most recent
bankruptcy proceeding, Talen's ownership interest was transferred to the primary lender being
Beal Bank who now controls New Athens Generating Company, LLC ("NAGC") (R.3-4). The
four bankruptcy filings confirm the challenging business environment for merchant power plants.
The long-term operating prospects are even more unclear because of the NYS Climate Leadership
and Community Protection Act ("CLCPA") (R.13-14). Under CLCPA, approximately 100% of
the State's energy consumption is to be carbonless by 2040 and completely fossil fuel free by 2050
(R.13). CLCPA creates a limit on the remaining operating term for the Project.
E. The four bankruptcy proceedings, the annual expiration of the letter of credit,
various litigations, the refinances of the Project throughout the term of the Original PILOT
Agreement and other legal matters necessitated that GCIDA and its Counsel had constant
involvement with the Project in order to protect the interests of the Affected Tax Jurisdictions in
the PILOT Payments as well as the monetized power payments that GCIDA and Town each
received. Contrary to Petitioner's rhetoric, this work was not motivated by self-interest rather it
was required to protect the interests of the Affected Tax Jurisdictions who depend upon the timely
and complete payment of the PILOT Payments. In addition, these legal costs are simply expenses
that AGC/NAGC are required to pay/reimburse under the indemnity agreements set forth in the
lease agreement executed in connection with the Original PILOT Agreement. Fatal to Petitioner's
conflict of interest allegations relative to GCIDA is that GML §868 permits an IDA to collect
"rentals, fees and other charges" as the financial support for its bonds, notes and other obligations
since IDAs lack the power of taxation. Moreover, the collection of fees by IDAs is standard
practice for all IDA transactions (¶¶13-15 Affidavit of Paul J. Goldman sworn to January 5, 2024
(the "Goldman Aff.") (NYSCEF Doc No. 87). As a result, the conflict of interest and other
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erroneous assertions of nefarious behavior on the part of GCIDA and its Counsel are specious
since fees are permitted under GML §868 and payment is required in GCIDA's application and
project agreements (R.287, ¶7.6, R.288, ¶7.15). Notably, the payment of GCIDA's legal fees and
costs are required payments pursuant to the indemnity agreements even if the project is not
approved such that they are not contingent obligations (R.288, ¶7.15(1)). 2-4 Kieffer Lane LLC v.
County of Ulster, 172 A.D.3d 1597, 1601 (3d Dept. 2019). The non-contingent nature of legal
fees for IDA counsel was recently confirmed by the Appellate Division, Third Department:
[n]ext, we agree with Supreme Court that the indemnification
provision to which petitioner agreed requires petitioner to pay the
IDA's counsel fees and expenses. The language of the
indemnification provision was broad and highly inclusive, applying
to "any and all liability" arising out of the IDA's examination,
processing and determination of petitioner's application, as well as
"all causes of action and attorneys' fees and any other expenses
incurred in defending any suits or actions which may arise as a result
of any of the foregoing.". 2-4 Kieffer Lane LLC, 172 A.D.3d at
1601.
F. Contrary to the erroneous contention about "contingent fees", Section 7.6 of
GCIDA's application for financial assistance (the "Application") confirms that the fees are not
contingent as follows:
[t]he applicant will be responsible for all legal costs incurred by the
Agency related to the preparation and execution of all documents
necessary to receive Agency benefits. Reimbursement may include
legal notices. The applicant will be billed separately by Agency's
counsel at the closing. (R.287).
G. The hold harmless agreement in the Application requires the payment of the legal
fees incurred with GCIDA's Counsel "regardless of whether or not the Application or Project
described therein…are favorably acted upon by the Agency" (R.288, ¶7.15(1)). As a result of this
unequivocal obligation to pay and/or reimburse GCIDA's legal fees, Petitioner's contingent fee
assertions are meritless.
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H. The prohibition on contingent fees for an IDA applies only to an officer or full-time
employee of an IDA. See GML §858-a(1). Notwithstanding the claim in the Petition and even
though the legal fees were not contingent, an attorney for an IDA is statutorily permitted to charge
contingent fees pursuant to the exception in GML §858-a(1).
I. Consistent with the two (2) year notice of termination in GML §858(15), on
September 8, 2020, GCIDA notified the Affected Tax Jurisdictions of the pending expiration of
the Original PILOT Agreement, that the Town's then current $1,240,000,000 assessment5 would
have a significant financial impact and that planning for its termination was a matter of prudent
financial management (R.274-275). Following the September 2020 letter, a meeting was held with
the Affected Tax Jurisdictions where the impact of the $1.240 billion assessment was discussed
along with the continued financial difficulties of the Project, its current bankruptcy, the financial
difficulties of the Empire Power plant in City of Rensselaer6 and the cost and risks of an assessment
review proceeding (R.8-13). GCIDA recommended that the Affected Tax Jurisdictions obtain an
appraisal report. However, none of the Affected Tax Jurisdictions commissioned an appraisal
report.
J. As a result of that inaction, the Company applied to GCIDA for an extension of the
Original PILOT Agreement for an additional twenty (20) year period that would commence with
the 2023 assessment roll (the "Extended PILOT Agreement") (R.276-296). Ultimately, the
payments due under the Extended PILOT Agreement were negotiated to be an increase of the fixed
dollar PILOT Payments from those set forth in the Original PILOT Agreement (R.52). Further,
5 The Company did not challenge the $1.240 billion assessment established for the 2014 assessment roll since the
Project was exempt from taxation and none of its payments were based on the assessment.
6 The Empire Power Plant is also a gas fired merchant power plant built proximate in time to the Project and is
within the same ISO pricing area so that it is similarly situated to the Project.
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the first mortgage on the Project in favor of GCIDA which secures the PILOT Payments was
increased to $11,000,000 (R.386-429) and the monetized power payments provided to GCIDA and
the Town were extended. In addition, the TAA Agreement was extended to apply to the Extended
PILOT Agreement (R.297-300). Significantly, had the TAA Agreement had not been extended,
then the Town's share of the PILOT Payments under the Extended PILOT Agreement would be
much lower:
Affected Tax Jurisdiction Share of PILOT
County 18.0240%
School 73.1197%
Town 8.563%
(Ward Aff. at ¶16).
K. The extension of the TAA Agreement provides the Town with approximately
$116,939 of excess annual funds above the statutory proportional distribution under GML
§858(15). Over the term of the Extended PILOT Agreement, this results in an approximate benefit
to the Town of approximately $2,338,780. As a result, Petitioner has no financial harm from the
Extended PILOT Agreement and in fact, as a constituent resident of the Town, he is receiving a
net proportional monetary benefit in the form of lower Town taxes (Ward Aff. at ¶19).
L. The Record confirms that the only appraisal of the Project came from the NAGC
with a $208,000,000 estimate of value (R.72, R.11-13). The Town and its consultant, Laurence
Farbstein never provided an appraisal or valuation analysis despite two years prior notice following
the September 8, 2020 letter (R.64-65, R.92-100). As a result, Petitioner's undervaluation thesis
is a hunch based on the outdated 2014 assessment of $1,240,000,000 (R.458, R.11-13)7(Pirrone
7
See ¶¶4-6 Affidavit of Michael Pirrone sworn to January 4, 2024 (the "Pirrone Aff.") filed by the Town on the
(NYSCEF Doc. No. 77).
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Aff. at ¶¶4-6). Confirmation that the Project was over assessed is found from the $654,000,000
estimate of value for 2022 (R.12). For the 2023 tentative assessment roll, the Project assessment
was further reduced to a market value of $515,051,600 (R.12, R.316). After reviewing the 2023
grievance, the Town's Board of Assessment Review ("BAR") reduced the full value assessment to
$346,000,000 (R.316, R.12). Contrary, to the assertion in the Petition, GCIDA had nothing to do
with the BAR's decision to reduce the 2023 assessment.
M. Most importantly, all of the Affected Tax Jurisdictions approved the Extended
PILOT Agreement, because they recognized that an assessment dispute with the large taxpayer
would be lengthy and expensive (R.297-315) (¶¶6-22 Affidavit of Shaun S. Groden sworn to
December 26, 2023 (NYSCEF Doc. Nos. 63 and 64) (the "Groden Aff."); ¶¶4-13 Affidavit of Dan
Wilson sworn to January 3, 2023 (NYSCEF Doc. No. 74) (the "Wilson Aff."). Undeterred by
reality, Petitioner believes that he is the viceroy for the entire community having the power to
unilaterally foist his vision to supercede the determinations of the Affected Tax Jurisdictions
(R.297-315).
N. Court of Appeals precedent clearly establishes that the Petitioner lacks taxpayer
standing to challenge the grant of an exemption for the Project. See Colella v. Bd. of Assessors of
County of Nassau, 95 N.Y.2d 401, 408 (2000) citing Van Deventer v. Long Is. City, 139 NY 133
(1893). This precedent applies here and was recently reaffirmed by the Appellate Division Third
Department. See 61 Crown Street, LLC v. Ulster County Indus. Dev. Agency, 221 A.D.3d 1089
(3d Dept. 2023)8 as follows:
[a]lthough petitioners maintain that they are injured because the
granting of the PILOT agreement would decrease the amount of
8 The Petitioner does not live within the boundaries of the School District and in fact lives in the Coxsackie-Athens
School District (the "CA District") (R.484-485). As a result, Petitioner has an even more remote pecuniary interest
(i.e. limited Town and County taxes) which is not different from the community at large so that he lacks standing.
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taxes that would have to be paid to the relevant tax authorities,
thereby increasing their tax burdens, this alleged injury is not one
that is distinct from an injury suffered by the general public (see
Matter of Quigley v. Town of Ulster, 66 A.D.3d 1295, 1296, 887
N.Y.S.2d 381 [3d Dept. 2009]).
O. In ¶20 of the Petition, Petitioner makes the exact identical claim for standing that
was rejected by the Court in 61 Crown Street alleging "[h]is Town property tax burden is
increased." Putting aside that such allegation is patently false, it is insufficient to confer standing
pursuant to 61 Crown Street (Ward Aff. at ¶19). Moreover, his assertion is unsupported since the
Petition has no calculations. Further, it is unsupportable since it ignores the actual 2023
assessment, the continuation of the TAA agreement and the continuation of the monetized power
payments and host community benefit agreement (Ward Aff. at ¶19; Exhibit "A" thereto). When
those financial benefits are factored into the calculation of the actual tax rates for the County and
the Town for the 2024 tax levy, Petitioner has no financial harm (Ward Aff. at ¶19, Exhibit A). In
further support of this Answer submitted herewith are: (a) the Affidavit of Eric Hoglund sworn
January 4, 2024 (the "Hoglund Aff."), (b) the Van Schaack Aff., (c) the Groden Aff., (d) the Wilson
Aff., (e) the Ward Aff., (f) the Pirrone Aff. and (e) the Goldman Aff.
SPECIFIC RESPONSES TO CONTENTIONS
1. With respect to paragraph "1" of the Petition, GCIDA denies all such allegations
and affirmatively asserts that GML §868 allows GCIDA "to establish and collect rentals, fees and
other charges", and the process utilized by GCIDA to evaluate the Extended PILOT Agreement
was rational and complied with applicable law and procedure as confirmed by the approval of the
Affected Tax Jurisdictions (R.311-315).
2. With respect to the paragraph "2" of the Petition, GCIDA denies all such allegations
and affirmatively asserts that GML §868 allows GCIDA "to establish and collect rentals, fees and
other charges" rendering the contingent fee theory is meritless and further the findings statement,
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with its detailed evaluation and response to all comments and other documentary evidence
establishes the rationality of GCIDA approvals (R.1-273) (the "Findings Statement").
3. With respect to paragraph "3" of the Petition, GCIDA denies all such allegations
and affirmatively asserts that GCIDA's counsel does not have a conflict of interest since the prior
lease document and the application for financial assistance (the "Application") confirm NAGC's
obligation to pay all legal fees regardless of the determination of GCIDA such that there is no
"contingent fee" arrangement (R.287, ¶7.6, R.288, ¶7.15). See 2-4 Kieffer Lane, LLC, 172 A.D.3d
at 1601. Further, the exception in GML §858-a(1) permits an IDA attorney to charge contingent
fees.
4. With respect to paragraph "4" of the Petition, GCIDA denies all such allegations
and affirmatively asserts that the Findings Statement establishes the rationality of the approval of
the Extended PILOT Agreement to maintain the status quo of the certainty of PILOT Payments
over a prolonged assessment dispute (R.297-300) (Wilson Aff. at ¶¶4-13; Groden Aff. at ¶¶6-22).
Contrary to the Petition, the Record had a single property appraisal with a fair market value of
$208,000,000 (R.72, R.12) and the Unform Tax Exemption Policy of GCIDA does not require an
appraisal as a condition precedent to grant of financial assistance (R.532, ¶A). This determination
was confirmed within Supreme Court's holding in 61 Crown Street (NYSCEF Doc No. 165,
Decision/Order, in 61 Crown Street, LLC v. Ulster County Indus. Dev. Agency, Sup Ct, Ulster
County, Index No. EF2021-1389). The Project's financial documents reviewed by GCIDA's
counsel are confidential and proprietary as determined by the New York Department of Public
Service ("DPS"), which denied Petitioner's request under FOIL, and Petitioner did not appeal such
denial (R.486-521).
5. With respect to paragraph "5" of the Petition, GCIDA denies all such allegations
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and affirmatively asserts that such financial documents were reviewed by GCIDA's Counsel
pursuant to a confidentiality agreement, and the confidential nature of such financial information
was in the DPS determination which Petitioner declined to appeal (R.486-521).
6. With respect to paragraph "6" of the Petition, GCIDA denies knowledge or
information sufficient to respond to such allegations and affirmatively asserts that Petitioner does
not have standing to challenge the determination of the BAR to reduce the assessment for the
Project and that such contentions are time barred since the BAR reduced the assessment on or
about June 1, 2023 so that the November 20, 2023 filing of the original petition is outside the four
(4) month limitation period (R.316-317).
7. With respect to paragraph "7" of the Petition, GCIDA denies all such allegations
and affirmatively asserts that the Findings Statement establishes the rationality of its determination
(R.1-273). The contentions relative to the Town of Athens are denied as time barred because the
determination to reduce the assessment occurred on June 1, 2023 so that the November 20, 2023
filing of the original petition is outside the four (4) month limitation period (R.316-317).
8. With respect to paragraph "8" of the Petition, denies knowledge or information
sufficient to respond to all such allegations.
9. With respect to paragraph "9" of the Petition, GCIDA admits all such allegations
therein, including that Petitioner lives within the CA District, and the Project is not within the CA
District so that Petitioner's pecuniary interest is limited to County and Town taxes and that
Petitioner is receiving a net financial benefit of $51.74 so he lacks taxpayer standing (R.484-485,
Ward Aff. at ¶19).
10. With respect to paragraph "10" of the Petition, GCIDA denies all such allegations
on Petitioner's expert status, affirmatively asserts that Petitioner failed to lay the required
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foundation for his expert status on legal ethics and refers all matters of law to the Court for its
resolution9.
11. With respect to paragraph "11" of the Petition, admits all such allegations.
12. With respect to paragraph "12" of the Petition, denies the allegations as to the State
of organization of NAGC and the ownership of the Project since NAGC is a lessee of the Project;
denies knowledge or information sufficient as to the operator status of the Project and denies all
other allegations therein.
13. Admits the allegations in paragraph "13" of the Petition.
14. Admits the allegations in paragraph "14" of the Petition.
15. Admits the portion of the allegations in paragraph "15" of the Petition as to the
status of the Town and denies knowledge and/or information sufficient to respond to remaining
contentions therein.
16. Admits the portion of the allegations in paragraph "16" of the Petition about Paul
J. Goldman being counsel to GCIDA during the period in which the Findings Statement was
evaluated and denies the balance of the allegations because the Board of Directors of GCIDA used
its good faith business judgment to evaluate the risks poised to the Affected Tax Jurisdictions from
an assessment review proceeding with the County's largest taxpayer and the contentions both for
and against the Extended PILOT Agreement. Further, GCIDA denies that Paul J. Goldman is a
"defacto officer" of GCIDA since he has no voting authority on any matters coming before
9 Petitioner's self-proclaimed expert status in legal ethics matter is defeated by adverse findings in several reported
cases. See PrecisionFlow Technologies, Inc. v. CVD Equipment Corp., 140 F.Supp.2d 195 (N.D.N.Y. 2001)
(imposing sanctions upon PrecisionFlow and its counsel). James E. Zalewski, Draftics, Ltd. v. Shelroc Homes,
LLC, 2012 WL 280732 (N.D.N.Y. 2012) (An attorney has been disqualified from representing the plaintiffs in a
copyright infringement case because the lawyer may have garnered confidential information when he previously
interviewed to become defendant's counsel in the same matter). Zalewski v. Cicero Builder Dev., Inc., 754 F.3d
95, 108-109 (2d. Cir. 2014) (Award of attorney fees vacated and remanded).
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GCIDA, he is not an officer, director or employee of GCIDA nor does he have any check signing
authority for GCIDA. Mr. Goldman is an independent contractor and is not subject to GML Article
18 and the staff of GCIDA and the Board of Directors of GCIDA are free to reject his advice (Van
Schaack Aff. at ¶29, Goldman Aff. at ¶¶17-18). See Budin v. Davis, 172 A.D.3d 1676, 1678 (3d
Dept. 2019).
17. With respect to paragraph "17", refers all matters of law to the Court for its
resolution.
18. With respect to paragraph "18", refers all matters of law to the Court for its
resolution.
19. Denies the allegations in paragraph "19" and refers the Court to the currently
pending motions to change the venue to Greene County (NYSCEF Doc Nos. 36-50, 53-60).
20. Denies the allegations in paragraph "20" of the Petition and affirmatively asserts
that Petitioner's conclusory self-serving allegations of increased tax burden are inaccurate and
insufficient to confer taxpayer standing, and there is no documentary evidence to support the
erroneous claim that GCIDA was involved with the 2023 assessment review made by the BAR for
the Project (R.316-317). Finally, there is no support for the self-serving allegations of
impingement upon Petitioner's right to participate in the governance of the Town (R.315).
21. Denies the allegations set forth in paragraph "21" of the Petition and affirmatively
asserts that such self-serving and conclusory allegations are insufficient to confer standing.
22. Denies the allegations set forth in paragraph "22" of the Petition and affirmatively
asserts that Petitioner does not have standing since the Petition is devoid of any documentary
evidence that any of the members of the Board of Directors of GCIDA who voted to approve the
Extended PILOT Agreement had a conflict of interest at the time of the approval of the Extended
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PILOT Agreement (See Hoglund Aff. and the respective responses to ¶43 of the Petition, R.287,
¶7.4, R.288, ¶7.14). Petitioner's citation to Dudley v. Town Bd. of Town of Prattsburgh, 22 Misc.3d
1128(A) (Sup Ct, Steuben County 2009) is inapposite since the gravamen of Petitioner's claim is
a taxpayer challenge to the approval of Extended PILOT Agreement so that 61 Crown Street
governs especially since the Affected Tax Jurisdictions approved the Extended PILOT Agreement
(R.297-315). Finally, Petitioner's conflict of interest allegations are devoid of merit since GML
§868 specifically provides that IDAs are empowered to "establish and collect rentals, fees and
other charges" which is how IDAs have the credit support to issue bonds, notes and other
obligations since IDAs lack the power of taxation (Goldman Aff. at ¶11, Van Schaack Aff. at ¶¶20-
21).
23. Admits the portion of the allegations set forth in paragraph "23" of the Petition that
the Affected Tax Jurisdictions, as the legislative bodies having the pecuniary interest in the
Extended PILOT Agreement pursuant to GML §859-a(3), approved the Extended PILOT
Agreement, and affirmatively asserts that Petitioner makes conclusory self-serving allegations of
increased tax burden that are not unique and insufficient to confer taxpayer standing, denies all
other allegations set forth in paragraph "23" of the Petition and refers matters of law to the Court
for its determination.
24. Denies the allegations set forth in paragraph "24" of the Petition and affirmatively
asserts that Petitioner does not have standing to challenge the approvals made by the Affected Tax
Jurisdictions and GCIDA for the Extended PILOT Agreement pursuant to 61 Crown Street.
25. Denies the allegations set forth in paragraph "25" of the Petition and affirmatively
asserts that Petitioner lacks standing to challenge the determinations of the Affected Tax
Jurisdictions and GCIDA to approve the Extended PILOT Agreement pursuant to 61 Crown Street.
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AS AN ANSWER TO THE FIRST CAUSE OF ACTION
26. With respect to paragraph "26" of the Petition, admits that GCIDA, the Affected
Tax Jurisdictions, Paul J. Goldman and NAGC were named in a Notice of Claim dated September
11, 2023 and denies all other allegations asserted therein (R.522-527).
27. With respect to paragraph "27" of the Petition, admits that Section 12.3 of the
Findings Statement and the other IDA documents set forth the obligation of NAGC with respect
to the required investment in the Project which keeps the Project in an operational and competitive
status and denies the remaining allegations set forth in paragraph "27" of the Petition (R.29).
28. Denies knowledge and/or information to respond to the allegations in paragraph
"28" of the Petition, affirmatively refers the Court to the September 8, 2020 letter as the
pretermination notice now required under GML §858(15) (R.274-275), and further affirmatively
asserts that the "$1.240 billion" assessment established by the Town for the 2014 assessment roll
was unsupported by an appraisal or valuation and is substantially out of date so that it has no
relevance to the 2023 assessment for the Project (Pirrone Aff. at ¶¶4-6). See RPTL §301.
29. Denies the allegations set forth in paragraph "29" of the Petition (See Groden Aff.
at ¶¶5-22, Van Schaack Aff. at ¶¶4-10 and Wilson Aff. at ¶¶4-13).
30. Denies knowledge and/or information to respond to the allegations in paragraph
"30" of the Petition and refers the Court to the Application and Findings Statement for its contents
(R.1-273, R.276-296).
31. Denies the allegations in paragraph "31" of the Petition and references that the
administrative fee paid to GCIDA was pursuant to GML §868, GCIDA's fee schedule and the
determination of the Board of Directors and that the payment of such administrative fee at the
closing of the straight lease transaction is the standard practice for IDAs in New York State (R.69,
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¶4)10 (Goldman Aff. at ¶¶13-15, Van Schaack Aff. at ¶¶20-21).
32. Denies knowledge and/or information to respond to the allegations in paragraph
"32" of the Petition and refers the Court to the Application for its contents (R.287) which obligates
NAGC to pay/reimburse GCIDA for the legal fees incurred with the processing of the Extended
PILOT Agreement request and defending the challenges to the same (R.287-288, ¶7.15(1)). 2-4
Kieffer Lane, LLC, 172 A.D.3d at 1601.
33. Denies knowledge and/or information to respond to the allegations in paragraph
"33" of the Petition and refers the Court to the Application for its contents which establishes that
NAGC was responsible to pay/reimburse all legal fees incurred with Counsel to GCIDA so that
the payment of the same was not contingent (R.287, ¶7.6, R.288, ¶7.15).
34. Denies the allegations in paragraph "34" of the Petition.
35. Denies the allegations in paragraph "35" of the Petition and affirmatively asserts
that there is no conflict of interest as NAGC was obligated to pay/reimburse all such legal fees in
processing the request for the Extended PILOT Agreement and the applicable documents. See 2-4
Kieffer Lane, LLC, 172 A.D.3d at 1601. (R.287, ¶7.6, R.288, ¶7.15).
36. Denies the allegations in paragraph "36" of the Petition.
37. Denies the allegations in paragraph "37" of the Petition and affirmatively asserts
that GCIDA is in compliance with Authorities Budget Office ("ABO") requirements, and that Mr.
Goldman is not an officer, director or employee of GCIDA (Van Schaack Aff. at ¶¶22-29).
38. Denies the allegations set forth in paragraph "38" of the Petition and affirmatively
asserts that GCIDA is in compliance with the requirements of the ABO and the New York State
10 The IDA Fee was 1% (R.304, ¶D.1) of total investment of $33,200,000 (R.281) = $332,000 (See also R.69, ¶4).
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Comptroller's Office, and that Mr. Goldman is not an officer, director or employee of GCIDA (Van
Schaack Aff. at ¶¶22-29).
39. Denies the allegations set forth in paragraph "39" of the Petition and affirmatively
asserts that Mr. Goldman is not an "officer, director or employee" of GCIDA since he is an
independent contractor who is neither a member of Board of Directors or an officer or employee
of GCIDA. Further, the status of Mr. Goldman as counsel to GCIDA is subject to annual
appointment and removal at any time by Board of Directors of GCIDA (Van Schaack Aff. at ¶28).
40. Denies the allegations in paragraph "40" of the Petition and affirmatively asserts
that the draft findings are pre-decision documents subject to public comment, modification and the
subsequent approval/rejection by the Board of Directors of GCIDA.
41. Denies the allegations in paragraph "41" of the Petition and affirmatively asserts
that the monetized power payments paid to GCIDA and the Town, respectively, are a carryover
from the obligations under the Original PILOT Agreement so that these obligations are not a
contingent payment but are part of the agreed upon structure of costs that must be paid pursuant to
the Extended PILOT Agreement and permitted by GML §868 (R.25, ¶11.1.2)
42. Denies the allegations in paragraph "42" of the Petition and affirmatively asserts
that such obligations are permitted under the Application, GML §868 and are normal course
payments for IDAs across New York (Goldman Aff. at ¶¶13-15).
43. Denies the allegations in paragraph "43" of the Petition and affirmatively asserts
that: (a) there were no prohibited conflicts of interest as alleged in paragraph 43(a) on the part of
GCIDA's chairman as the maintenance services occurred during May and June 2020 which is more
than three (3) years prior to the approval of the Extended PILOT Agreement (R.329-333), and that
the Chairman ceased doing work for the Project with the June 2020 work (Hoglund Aff. at ¶¶5-
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Preview
FILED: ULSTER COUNTY CLERK 01/05/2024 04:46 PM INDEX NO. EF2023-2803 NYSCEF DOC. NO. 86 RECEIVED NYSCEF: 01/05/2024 STATE OF NEW YORK SUPREME COURT COUNTY OF ULSTER LEE PALMATEER, VERIFIED ANSWER Petitioner, WITH OBJECTIONS IN - against - POINT OF LAW TO VERIFIED AMENDED GREENE COUNTY INDUSTRIAL DEVELOPMENT PETITION AGENCY; NEW ATHENS GENERATING COMPANY, LLC; GREENE COUNTY, NEW YORK; CATSKILL Index No. EF2023-2803 CENTRAL SCHOOL DISTRICT; and TOWN OF ATHENS, NEW YORK, Assigned Judge: Hon. David Gandin, J.S.C. Respondents. Respondent, Greene County Industrial Development Agency ("GCIDA"), by and through its attorneys, Goldman Attorneys PLLC, Paul J. Goldman, Esq., of counsel, file this Verified Answer with Objections in Point of Law to Verified Amended Petition (the "Answer") in response to the Verified Amended Petition dated December 22, 2023 (the "Petition")1 in the above captioned matter as follows: PRELIMINARY STATEMENT A. This litigation arises out of Petitioner's long-standing grievance with GCIDA2 and the provision of financial assistance (as defined in General Municipal Law ("GML") §854(14)) to a certain natural gas fueled power generation facility (the "Project") located in the Town of Athens 1 The Verified Amended Petition was filed at 5:46 PM on Friday, December 22, 2023 after the close of the last business day prior to the Christmas holiday. Besides the sharpness of the Christmas Eve filing, the amended pleading is improper because that right was not preserved in his adjournment request dated December 13, 2023 (NYSCEF Doc No. 51). See Hendricks v. Annucci, 179 A.D.3d 1232, 1234 (3d Dept. 2020). 2 Initially, in 2005, Petitioner brought suit against GCIDA and the Coxsackie-Athens Central School District which proceeding was dismissed by Supreme Court and affirmed in Palmateer v. Greene County Indus. Dev. Agency, 38 A.D.3d 1087 (3d Dept. 2007). Undeterred from that dismissal, in 2009, Petitioner commenced another proceeding before the Commissioner of Education challenging the grant of financial assistance with a sharing of the payments in lieu of taxes for the Empire Merchants North project in the Town of Coxsackie which was also dismissed (Decision No. 16,048 dated March 31, 2010) (R.321-328). 1 1 of 41 FILED: ULSTER COUNTY CLERK 01/05/2024 04:46 PM INDEX NO. EF2023-2803 NYSCEF DOC. NO. 86 RECEIVED NYSCEF: 01/05/2024 (the "Town") (R.277-Business Description)3. During the years 2000 through 2002, the predecessor to the current owner, Athens Generating Company, L.P., a Delaware limited partnership ("AGC"), constructed the Project and received financial assistance. AGC and GCIDA entered into a straight lease transaction (as defined in GML §854(15)) pursuant to which AGC received an exemption from mortgage recording taxes and sales and use taxes for the portion of the Project that was not otherwise exempt. See Tax Law §1115(a)(12). In addition, the Project received a fixed dollar payment in lieu of tax agreement that was not tied to the assessment which had a two (2) year construction period and a twenty (20) year operational period (the "Original PILOT Agreement"). The annual payments under the Original PILOT Agreement for the operational period started at $2,750,000 for the first five years and increased to $5,250,000 for the last five years (the "PILOT Payments"). Importantly, the Town's share of the PILOT Payments under the Original PILOT Agreement was increased above the proportional sharing percentage in GML §858(15). See generally, Palmateer v. Greene County Indus. Dev. Agency, 38 A.D.3d 1087 (3d Dept. 2007). In connection with the Original PILOT Agreement, GCIDA and each of the Affected Tax Jurisdictions4 (as defined in GML §854(16)) executed a certain Taxing Authority Allocation Agreement (the "TAA Agreement") which provided that the Town was to receive more than its statutory share for the entire term (R.21) as follows: Affected Tax Jurisdiction Share of PILOT County 18.4700% School 70.4463% Town 11.0837% 3 "R" refers to the Transcript of the Record of Proceedings certified January 4, 2024 followed by the applicable page (the "Record"). 4 The Affected Tax Jurisdictions for the Project are the Town, Greene County (the "County") and the Catskill Central School District (the "School"). 2 2 of 41 FILED: ULSTER COUNTY CLERK 01/05/2024 04:46 PM INDEX NO. EF2023-2803 NYSCEF DOC. NO. 86 RECEIVED NYSCEF: 01/05/2024 (¶15 Affidavit of Raymond T. Ward sworn to December 14, 2023 (the "Ward Aff.") (NYSCEF Doc Nos. 65 and 66). B. The PILOT Payments were secured by a first lien mortgage in the amount of $5,500,000 as well as a letter of credit with expiration dates and face amounts that varied such that annual legal work was required for the maintenance of this collateral (¶16 Affidavit of Rene Van Schaack sworn to January 5, 2024 (the "Van Schaack Aff.") (NYSCEF Doc No. 82). C. During the construction period, AGC filed its first bankruptcy petition (R.294. R.4, ¶3.0). After completion, the Project had financial difficulties because it is a merchant power plant whose income is derived solely from the sale of electricity on the grid through the New York Independent System Operator ("ISO") (R.76). This market is highly competitive since New York is a net importer of electric power. Moreover, the Project had no guaranteed source of revenue since there was no power purchase contract with a utility company in place. Following New York's mandate that all public utilities divest their generating assets, in the early 2000s, several merchant power plants, including the Project, were constructed. These plants were premised upon the notion that electric prices would increase and natural gas (i.e. the primary operating fuel) prices would decrease. The opposite occurred resulting in less revenue, an inability to cover debt service and three bankruptcies. D. Following the initial bankruptcy, the lenders completed the Project and operated it until November 2015 (R.4, R.318-320). Their operation included the second bankruptcy which occurred on or about March 2014. Thereafter, on or about November 2015, the first power company ownership of the project occurred with Talen Energy Supply LLC ("Talen") (R.4). However, as a result of the continued shrinking demand, lower electric prices and higher fuel costs, the operating margins were insufficient to cover all costs and debt service so that the Project again 3 3 of 41 FILED: ULSTER COUNTY CLERK 01/05/2024 04:46 PM INDEX NO. EF2023-2803 NYSCEF DOC. NO. 86 RECEIVED NYSCEF: 01/05/2024 went into bankruptcy in June 2018 (R.11, R.6-7, ¶4.6). In 2020, as a result of the most recent bankruptcy proceeding, Talen's ownership interest was transferred to the primary lender being Beal Bank who now controls New Athens Generating Company, LLC ("NAGC") (R.3-4). The four bankruptcy filings confirm the challenging business environment for merchant power plants. The long-term operating prospects are even more unclear because of the NYS Climate Leadership and Community Protection Act ("CLCPA") (R.13-14). Under CLCPA, approximately 100% of the State's energy consumption is to be carbonless by 2040 and completely fossil fuel free by 2050 (R.13). CLCPA creates a limit on the remaining operating term for the Project. E. The four bankruptcy proceedings, the annual expiration of the letter of credit, various litigations, the refinances of the Project throughout the term of the Original PILOT Agreement and other legal matters necessitated that GCIDA and its Counsel had constant involvement with the Project in order to protect the interests of the Affected Tax Jurisdictions in the PILOT Payments as well as the monetized power payments that GCIDA and Town each received. Contrary to Petitioner's rhetoric, this work was not motivated by self-interest rather it was required to protect the interests of the Affected Tax Jurisdictions who depend upon the timely and complete payment of the PILOT Payments. In addition, these legal costs are simply expenses that AGC/NAGC are required to pay/reimburse under the indemnity agreements set forth in the lease agreement executed in connection with the Original PILOT Agreement. Fatal to Petitioner's conflict of interest allegations relative to GCIDA is that GML §868 permits an IDA to collect "rentals, fees and other charges" as the financial support for its bonds, notes and other obligations since IDAs lack the power of taxation. Moreover, the collection of fees by IDAs is standard practice for all IDA transactions (¶¶13-15 Affidavit of Paul J. Goldman sworn to January 5, 2024 (the "Goldman Aff.") (NYSCEF Doc No. 87). As a result, the conflict of interest and other 4 4 of 41 FILED: ULSTER COUNTY CLERK 01/05/2024 04:46 PM INDEX NO. EF2023-2803 NYSCEF DOC. NO. 86 RECEIVED NYSCEF: 01/05/2024 erroneous assertions of nefarious behavior on the part of GCIDA and its Counsel are specious since fees are permitted under GML §868 and payment is required in GCIDA's application and project agreements (R.287, ¶7.6, R.288, ¶7.15). Notably, the payment of GCIDA's legal fees and costs are required payments pursuant to the indemnity agreements even if the project is not approved such that they are not contingent obligations (R.288, ¶7.15(1)). 2-4 Kieffer Lane LLC v. County of Ulster, 172 A.D.3d 1597, 1601 (3d Dept. 2019). The non-contingent nature of legal fees for IDA counsel was recently confirmed by the Appellate Division, Third Department: [n]ext, we agree with Supreme Court that the indemnification provision to which petitioner agreed requires petitioner to pay the IDA's counsel fees and expenses. The language of the indemnification provision was broad and highly inclusive, applying to "any and all liability" arising out of the IDA's examination, processing and determination of petitioner's application, as well as "all causes of action and attorneys' fees and any other expenses incurred in defending any suits or actions which may arise as a result of any of the foregoing.". 2-4 Kieffer Lane LLC, 172 A.D.3d at 1601. F. Contrary to the erroneous contention about "contingent fees", Section 7.6 of GCIDA's application for financial assistance (the "Application") confirms that the fees are not contingent as follows: [t]he applicant will be responsible for all legal costs incurred by the Agency related to the preparation and execution of all documents necessary to receive Agency benefits. Reimbursement may include legal notices. The applicant will be billed separately by Agency's counsel at the closing. (R.287). G. The hold harmless agreement in the Application requires the payment of the legal fees incurred with GCIDA's Counsel "regardless of whether or not the Application or Project described therein…are favorably acted upon by the Agency" (R.288, ¶7.15(1)). As a result of this unequivocal obligation to pay and/or reimburse GCIDA's legal fees, Petitioner's contingent fee assertions are meritless. 5 5 of 41 FILED: ULSTER COUNTY CLERK 01/05/2024 04:46 PM INDEX NO. EF2023-2803 NYSCEF DOC. NO. 86 RECEIVED NYSCEF: 01/05/2024 H. The prohibition on contingent fees for an IDA applies only to an officer or full-time employee of an IDA. See GML §858-a(1). Notwithstanding the claim in the Petition and even though the legal fees were not contingent, an attorney for an IDA is statutorily permitted to charge contingent fees pursuant to the exception in GML §858-a(1). I. Consistent with the two (2) year notice of termination in GML §858(15), on September 8, 2020, GCIDA notified the Affected Tax Jurisdictions of the pending expiration of the Original PILOT Agreement, that the Town's then current $1,240,000,000 assessment5 would have a significant financial impact and that planning for its termination was a matter of prudent financial management (R.274-275). Following the September 2020 letter, a meeting was held with the Affected Tax Jurisdictions where the impact of the $1.240 billion assessment was discussed along with the continued financial difficulties of the Project, its current bankruptcy, the financial difficulties of the Empire Power plant in City of Rensselaer6 and the cost and risks of an assessment review proceeding (R.8-13). GCIDA recommended that the Affected Tax Jurisdictions obtain an appraisal report. However, none of the Affected Tax Jurisdictions commissioned an appraisal report. J. As a result of that inaction, the Company applied to GCIDA for an extension of the Original PILOT Agreement for an additional twenty (20) year period that would commence with the 2023 assessment roll (the "Extended PILOT Agreement") (R.276-296). Ultimately, the payments due under the Extended PILOT Agreement were negotiated to be an increase of the fixed dollar PILOT Payments from those set forth in the Original PILOT Agreement (R.52). Further, 5 The Company did not challenge the $1.240 billion assessment established for the 2014 assessment roll since the Project was exempt from taxation and none of its payments were based on the assessment. 6 The Empire Power Plant is also a gas fired merchant power plant built proximate in time to the Project and is within the same ISO pricing area so that it is similarly situated to the Project. 6 6 of 41 FILED: ULSTER COUNTY CLERK 01/05/2024 04:46 PM INDEX NO. EF2023-2803 NYSCEF DOC. NO. 86 RECEIVED NYSCEF: 01/05/2024 the first mortgage on the Project in favor of GCIDA which secures the PILOT Payments was increased to $11,000,000 (R.386-429) and the monetized power payments provided to GCIDA and the Town were extended. In addition, the TAA Agreement was extended to apply to the Extended PILOT Agreement (R.297-300). Significantly, had the TAA Agreement had not been extended, then the Town's share of the PILOT Payments under the Extended PILOT Agreement would be much lower: Affected Tax Jurisdiction Share of PILOT County 18.0240% School 73.1197% Town 8.563% (Ward Aff. at ¶16). K. The extension of the TAA Agreement provides the Town with approximately $116,939 of excess annual funds above the statutory proportional distribution under GML §858(15). Over the term of the Extended PILOT Agreement, this results in an approximate benefit to the Town of approximately $2,338,780. As a result, Petitioner has no financial harm from the Extended PILOT Agreement and in fact, as a constituent resident of the Town, he is receiving a net proportional monetary benefit in the form of lower Town taxes (Ward Aff. at ¶19). L. The Record confirms that the only appraisal of the Project came from the NAGC with a $208,000,000 estimate of value (R.72, R.11-13). The Town and its consultant, Laurence Farbstein never provided an appraisal or valuation analysis despite two years prior notice following the September 8, 2020 letter (R.64-65, R.92-100). As a result, Petitioner's undervaluation thesis is a hunch based on the outdated 2014 assessment of $1,240,000,000 (R.458, R.11-13)7(Pirrone 7 See ¶¶4-6 Affidavit of Michael Pirrone sworn to January 4, 2024 (the "Pirrone Aff.") filed by the Town on the (NYSCEF Doc. No. 77). 7 7 of 41 FILED: ULSTER COUNTY CLERK 01/05/2024 04:46 PM INDEX NO. EF2023-2803 NYSCEF DOC. NO. 86 RECEIVED NYSCEF: 01/05/2024 Aff. at ¶¶4-6). Confirmation that the Project was over assessed is found from the $654,000,000 estimate of value for 2022 (R.12). For the 2023 tentative assessment roll, the Project assessment was further reduced to a market value of $515,051,600 (R.12, R.316). After reviewing the 2023 grievance, the Town's Board of Assessment Review ("BAR") reduced the full value assessment to $346,000,000 (R.316, R.12). Contrary, to the assertion in the Petition, GCIDA had nothing to do with the BAR's decision to reduce the 2023 assessment. M. Most importantly, all of the Affected Tax Jurisdictions approved the Extended PILOT Agreement, because they recognized that an assessment dispute with the large taxpayer would be lengthy and expensive (R.297-315) (¶¶6-22 Affidavit of Shaun S. Groden sworn to December 26, 2023 (NYSCEF Doc. Nos. 63 and 64) (the "Groden Aff."); ¶¶4-13 Affidavit of Dan Wilson sworn to January 3, 2023 (NYSCEF Doc. No. 74) (the "Wilson Aff."). Undeterred by reality, Petitioner believes that he is the viceroy for the entire community having the power to unilaterally foist his vision to supercede the determinations of the Affected Tax Jurisdictions (R.297-315). N. Court of Appeals precedent clearly establishes that the Petitioner lacks taxpayer standing to challenge the grant of an exemption for the Project. See Colella v. Bd. of Assessors of County of Nassau, 95 N.Y.2d 401, 408 (2000) citing Van Deventer v. Long Is. City, 139 NY 133 (1893). This precedent applies here and was recently reaffirmed by the Appellate Division Third Department. See 61 Crown Street, LLC v. Ulster County Indus. Dev. Agency, 221 A.D.3d 1089 (3d Dept. 2023)8 as follows: [a]lthough petitioners maintain that they are injured because the granting of the PILOT agreement would decrease the amount of 8 The Petitioner does not live within the boundaries of the School District and in fact lives in the Coxsackie-Athens School District (the "CA District") (R.484-485). As a result, Petitioner has an even more remote pecuniary interest (i.e. limited Town and County taxes) which is not different from the community at large so that he lacks standing. 8 8 of 41 FILED: ULSTER COUNTY CLERK 01/05/2024 04:46 PM INDEX NO. EF2023-2803 NYSCEF DOC. NO. 86 RECEIVED NYSCEF: 01/05/2024 taxes that would have to be paid to the relevant tax authorities, thereby increasing their tax burdens, this alleged injury is not one that is distinct from an injury suffered by the general public (see Matter of Quigley v. Town of Ulster, 66 A.D.3d 1295, 1296, 887 N.Y.S.2d 381 [3d Dept. 2009]). O. In ¶20 of the Petition, Petitioner makes the exact identical claim for standing that was rejected by the Court in 61 Crown Street alleging "[h]is Town property tax burden is increased." Putting aside that such allegation is patently false, it is insufficient to confer standing pursuant to 61 Crown Street (Ward Aff. at ¶19). Moreover, his assertion is unsupported since the Petition has no calculations. Further, it is unsupportable since it ignores the actual 2023 assessment, the continuation of the TAA agreement and the continuation of the monetized power payments and host community benefit agreement (Ward Aff. at ¶19; Exhibit "A" thereto). When those financial benefits are factored into the calculation of the actual tax rates for the County and the Town for the 2024 tax levy, Petitioner has no financial harm (Ward Aff. at ¶19, Exhibit A). In further support of this Answer submitted herewith are: (a) the Affidavit of Eric Hoglund sworn January 4, 2024 (the "Hoglund Aff."), (b) the Van Schaack Aff., (c) the Groden Aff., (d) the Wilson Aff., (e) the Ward Aff., (f) the Pirrone Aff. and (e) the Goldman Aff. SPECIFIC RESPONSES TO CONTENTIONS 1. With respect to paragraph "1" of the Petition, GCIDA denies all such allegations and affirmatively asserts that GML §868 allows GCIDA "to establish and collect rentals, fees and other charges", and the process utilized by GCIDA to evaluate the Extended PILOT Agreement was rational and complied with applicable law and procedure as confirmed by the approval of the Affected Tax Jurisdictions (R.311-315). 2. With respect to the paragraph "2" of the Petition, GCIDA denies all such allegations and affirmatively asserts that GML §868 allows GCIDA "to establish and collect rentals, fees and other charges" rendering the contingent fee theory is meritless and further the findings statement, 9 9 of 41 FILED: ULSTER COUNTY CLERK 01/05/2024 04:46 PM INDEX NO. EF2023-2803 NYSCEF DOC. NO. 86 RECEIVED NYSCEF: 01/05/2024 with its detailed evaluation and response to all comments and other documentary evidence establishes the rationality of GCIDA approvals (R.1-273) (the "Findings Statement"). 3. With respect to paragraph "3" of the Petition, GCIDA denies all such allegations and affirmatively asserts that GCIDA's counsel does not have a conflict of interest since the prior lease document and the application for financial assistance (the "Application") confirm NAGC's obligation to pay all legal fees regardless of the determination of GCIDA such that there is no "contingent fee" arrangement (R.287, ¶7.6, R.288, ¶7.15). See 2-4 Kieffer Lane, LLC, 172 A.D.3d at 1601. Further, the exception in GML §858-a(1) permits an IDA attorney to charge contingent fees. 4. With respect to paragraph "4" of the Petition, GCIDA denies all such allegations and affirmatively asserts that the Findings Statement establishes the rationality of the approval of the Extended PILOT Agreement to maintain the status quo of the certainty of PILOT Payments over a prolonged assessment dispute (R.297-300) (Wilson Aff. at ¶¶4-13; Groden Aff. at ¶¶6-22). Contrary to the Petition, the Record had a single property appraisal with a fair market value of $208,000,000 (R.72, R.12) and the Unform Tax Exemption Policy of GCIDA does not require an appraisal as a condition precedent to grant of financial assistance (R.532, ¶A). This determination was confirmed within Supreme Court's holding in 61 Crown Street (NYSCEF Doc No. 165, Decision/Order, in 61 Crown Street, LLC v. Ulster County Indus. Dev. Agency, Sup Ct, Ulster County, Index No. EF2021-1389). The Project's financial documents reviewed by GCIDA's counsel are confidential and proprietary as determined by the New York Department of Public Service ("DPS"), which denied Petitioner's request under FOIL, and Petitioner did not appeal such denial (R.486-521). 5. With respect to paragraph "5" of the Petition, GCIDA denies all such allegations 10 10 of 41 FILED: ULSTER COUNTY CLERK 01/05/2024 04:46 PM INDEX NO. EF2023-2803 NYSCEF DOC. NO. 86 RECEIVED NYSCEF: 01/05/2024 and affirmatively asserts that such financial documents were reviewed by GCIDA's Counsel pursuant to a confidentiality agreement, and the confidential nature of such financial information was in the DPS determination which Petitioner declined to appeal (R.486-521). 6. With respect to paragraph "6" of the Petition, GCIDA denies knowledge or information sufficient to respond to such allegations and affirmatively asserts that Petitioner does not have standing to challenge the determination of the BAR to reduce the assessment for the Project and that such contentions are time barred since the BAR reduced the assessment on or about June 1, 2023 so that the November 20, 2023 filing of the original petition is outside the four (4) month limitation period (R.316-317). 7. With respect to paragraph "7" of the Petition, GCIDA denies all such allegations and affirmatively asserts that the Findings Statement establishes the rationality of its determination (R.1-273). The contentions relative to the Town of Athens are denied as time barred because the determination to reduce the assessment occurred on June 1, 2023 so that the November 20, 2023 filing of the original petition is outside the four (4) month limitation period (R.316-317). 8. With respect to paragraph "8" of the Petition, denies knowledge or information sufficient to respond to all such allegations. 9. With respect to paragraph "9" of the Petition, GCIDA admits all such allegations therein, including that Petitioner lives within the CA District, and the Project is not within the CA District so that Petitioner's pecuniary interest is limited to County and Town taxes and that Petitioner is receiving a net financial benefit of $51.74 so he lacks taxpayer standing (R.484-485, Ward Aff. at ¶19). 10. With respect to paragraph "10" of the Petition, GCIDA denies all such allegations on Petitioner's expert status, affirmatively asserts that Petitioner failed to lay the required 11 11 of 41 FILED: ULSTER COUNTY CLERK 01/05/2024 04:46 PM INDEX NO. EF2023-2803 NYSCEF DOC. NO. 86 RECEIVED NYSCEF: 01/05/2024 foundation for his expert status on legal ethics and refers all matters of law to the Court for its resolution9. 11. With respect to paragraph "11" of the Petition, admits all such allegations. 12. With respect to paragraph "12" of the Petition, denies the allegations as to the State of organization of NAGC and the ownership of the Project since NAGC is a lessee of the Project; denies knowledge or information sufficient as to the operator status of the Project and denies all other allegations therein. 13. Admits the allegations in paragraph "13" of the Petition. 14. Admits the allegations in paragraph "14" of the Petition. 15. Admits the portion of the allegations in paragraph "15" of the Petition as to the status of the Town and denies knowledge and/or information sufficient to respond to remaining contentions therein. 16. Admits the portion of the allegations in paragraph "16" of the Petition about Paul J. Goldman being counsel to GCIDA during the period in which the Findings Statement was evaluated and denies the balance of the allegations because the Board of Directors of GCIDA used its good faith business judgment to evaluate the risks poised to the Affected Tax Jurisdictions from an assessment review proceeding with the County's largest taxpayer and the contentions both for and against the Extended PILOT Agreement. Further, GCIDA denies that Paul J. Goldman is a "defacto officer" of GCIDA since he has no voting authority on any matters coming before 9 Petitioner's self-proclaimed expert status in legal ethics matter is defeated by adverse findings in several reported cases. See PrecisionFlow Technologies, Inc. v. CVD Equipment Corp., 140 F.Supp.2d 195 (N.D.N.Y. 2001) (imposing sanctions upon PrecisionFlow and its counsel). James E. Zalewski, Draftics, Ltd. v. Shelroc Homes, LLC, 2012 WL 280732 (N.D.N.Y. 2012) (An attorney has been disqualified from representing the plaintiffs in a copyright infringement case because the lawyer may have garnered confidential information when he previously interviewed to become defendant's counsel in the same matter). Zalewski v. Cicero Builder Dev., Inc., 754 F.3d 95, 108-109 (2d. Cir. 2014) (Award of attorney fees vacated and remanded). 12 12 of 41 FILED: ULSTER COUNTY CLERK 01/05/2024 04:46 PM INDEX NO. EF2023-2803 NYSCEF DOC. NO. 86 RECEIVED NYSCEF: 01/05/2024 GCIDA, he is not an officer, director or employee of GCIDA nor does he have any check signing authority for GCIDA. Mr. Goldman is an independent contractor and is not subject to GML Article 18 and the staff of GCIDA and the Board of Directors of GCIDA are free to reject his advice (Van Schaack Aff. at ¶29, Goldman Aff. at ¶¶17-18). See Budin v. Davis, 172 A.D.3d 1676, 1678 (3d Dept. 2019). 17. With respect to paragraph "17", refers all matters of law to the Court for its resolution. 18. With respect to paragraph "18", refers all matters of law to the Court for its resolution. 19. Denies the allegations in paragraph "19" and refers the Court to the currently pending motions to change the venue to Greene County (NYSCEF Doc Nos. 36-50, 53-60). 20. Denies the allegations in paragraph "20" of the Petition and affirmatively asserts that Petitioner's conclusory self-serving allegations of increased tax burden are inaccurate and insufficient to confer taxpayer standing, and there is no documentary evidence to support the erroneous claim that GCIDA was involved with the 2023 assessment review made by the BAR for the Project (R.316-317). Finally, there is no support for the self-serving allegations of impingement upon Petitioner's right to participate in the governance of the Town (R.315). 21. Denies the allegations set forth in paragraph "21" of the Petition and affirmatively asserts that such self-serving and conclusory allegations are insufficient to confer standing. 22. Denies the allegations set forth in paragraph "22" of the Petition and affirmatively asserts that Petitioner does not have standing since the Petition is devoid of any documentary evidence that any of the members of the Board of Directors of GCIDA who voted to approve the Extended PILOT Agreement had a conflict of interest at the time of the approval of the Extended 13 13 of 41 FILED: ULSTER COUNTY CLERK 01/05/2024 04:46 PM INDEX NO. EF2023-2803 NYSCEF DOC. NO. 86 RECEIVED NYSCEF: 01/05/2024 PILOT Agreement (See Hoglund Aff. and the respective responses to ¶43 of the Petition, R.287, ¶7.4, R.288, ¶7.14). Petitioner's citation to Dudley v. Town Bd. of Town of Prattsburgh, 22 Misc.3d 1128(A) (Sup Ct, Steuben County 2009) is inapposite since the gravamen of Petitioner's claim is a taxpayer challenge to the approval of Extended PILOT Agreement so that 61 Crown Street governs especially since the Affected Tax Jurisdictions approved the Extended PILOT Agreement (R.297-315). Finally, Petitioner's conflict of interest allegations are devoid of merit since GML §868 specifically provides that IDAs are empowered to "establish and collect rentals, fees and other charges" which is how IDAs have the credit support to issue bonds, notes and other obligations since IDAs lack the power of taxation (Goldman Aff. at ¶11, Van Schaack Aff. at ¶¶20- 21). 23. Admits the portion of the allegations set forth in paragraph "23" of the Petition that the Affected Tax Jurisdictions, as the legislative bodies having the pecuniary interest in the Extended PILOT Agreement pursuant to GML §859-a(3), approved the Extended PILOT Agreement, and affirmatively asserts that Petitioner makes conclusory self-serving allegations of increased tax burden that are not unique and insufficient to confer taxpayer standing, denies all other allegations set forth in paragraph "23" of the Petition and refers matters of law to the Court for its determination. 24. Denies the allegations set forth in paragraph "24" of the Petition and affirmatively asserts that Petitioner does not have standing to challenge the approvals made by the Affected Tax Jurisdictions and GCIDA for the Extended PILOT Agreement pursuant to 61 Crown Street. 25. Denies the allegations set forth in paragraph "25" of the Petition and affirmatively asserts that Petitioner lacks standing to challenge the determinations of the Affected Tax Jurisdictions and GCIDA to approve the Extended PILOT Agreement pursuant to 61 Crown Street. 14 14 of 41 FILED: ULSTER COUNTY CLERK 01/05/2024 04:46 PM INDEX NO. EF2023-2803 NYSCEF DOC. NO. 86 RECEIVED NYSCEF: 01/05/2024 AS AN ANSWER TO THE FIRST CAUSE OF ACTION 26. With respect to paragraph "26" of the Petition, admits that GCIDA, the Affected Tax Jurisdictions, Paul J. Goldman and NAGC were named in a Notice of Claim dated September 11, 2023 and denies all other allegations asserted therein (R.522-527). 27. With respect to paragraph "27" of the Petition, admits that Section 12.3 of the Findings Statement and the other IDA documents set forth the obligation of NAGC with respect to the required investment in the Project which keeps the Project in an operational and competitive status and denies the remaining allegations set forth in paragraph "27" of the Petition (R.29). 28. Denies knowledge and/or information to respond to the allegations in paragraph "28" of the Petition, affirmatively refers the Court to the September 8, 2020 letter as the pretermination notice now required under GML §858(15) (R.274-275), and further affirmatively asserts that the "$1.240 billion" assessment established by the Town for the 2014 assessment roll was unsupported by an appraisal or valuation and is substantially out of date so that it has no relevance to the 2023 assessment for the Project (Pirrone Aff. at ¶¶4-6). See RPTL §301. 29. Denies the allegations set forth in paragraph "29" of the Petition (See Groden Aff. at ¶¶5-22, Van Schaack Aff. at ¶¶4-10 and Wilson Aff. at ¶¶4-13). 30. Denies knowledge and/or information to respond to the allegations in paragraph "30" of the Petition and refers the Court to the Application and Findings Statement for its contents (R.1-273, R.276-296). 31. Denies the allegations in paragraph "31" of the Petition and references that the administrative fee paid to GCIDA was pursuant to GML §868, GCIDA's fee schedule and the determination of the Board of Directors and that the payment of such administrative fee at the closing of the straight lease transaction is the standard practice for IDAs in New York State (R.69, 15 15 of 41 FILED: ULSTER COUNTY CLERK 01/05/2024 04:46 PM INDEX NO. EF2023-2803 NYSCEF DOC. NO. 86 RECEIVED NYSCEF: 01/05/2024 ¶4)10 (Goldman Aff. at ¶¶13-15, Van Schaack Aff. at ¶¶20-21). 32. Denies knowledge and/or information to respond to the allegations in paragraph "32" of the Petition and refers the Court to the Application for its contents (R.287) which obligates NAGC to pay/reimburse GCIDA for the legal fees incurred with the processing of the Extended PILOT Agreement request and defending the challenges to the same (R.287-288, ¶7.15(1)). 2-4 Kieffer Lane, LLC, 172 A.D.3d at 1601. 33. Denies knowledge and/or information to respond to the allegations in paragraph "33" of the Petition and refers the Court to the Application for its contents which establishes that NAGC was responsible to pay/reimburse all legal fees incurred with Counsel to GCIDA so that the payment of the same was not contingent (R.287, ¶7.6, R.288, ¶7.15). 34. Denies the allegations in paragraph "34" of the Petition. 35. Denies the allegations in paragraph "35" of the Petition and affirmatively asserts that there is no conflict of interest as NAGC was obligated to pay/reimburse all such legal fees in processing the request for the Extended PILOT Agreement and the applicable documents. See 2-4 Kieffer Lane, LLC, 172 A.D.3d at 1601. (R.287, ¶7.6, R.288, ¶7.15). 36. Denies the allegations in paragraph "36" of the Petition. 37. Denies the allegations in paragraph "37" of the Petition and affirmatively asserts that GCIDA is in compliance with Authorities Budget Office ("ABO") requirements, and that Mr. Goldman is not an officer, director or employee of GCIDA (Van Schaack Aff. at ¶¶22-29). 38. Denies the allegations set forth in paragraph "38" of the Petition and affirmatively asserts that GCIDA is in compliance with the requirements of the ABO and the New York State 10 The IDA Fee was 1% (R.304, ¶D.1) of total investment of $33,200,000 (R.281) = $332,000 (See also R.69, ¶4). 16 16 of 41 FILED: ULSTER COUNTY CLERK 01/05/2024 04:46 PM INDEX NO. EF2023-2803 NYSCEF DOC. NO. 86 RECEIVED NYSCEF: 01/05/2024 Comptroller's Office, and that Mr. Goldman is not an officer, director or employee of GCIDA (Van Schaack Aff. at ¶¶22-29). 39. Denies the allegations set forth in paragraph "39" of the Petition and affirmatively asserts that Mr. Goldman is not an "officer, director or employee" of GCIDA since he is an independent contractor who is neither a member of Board of Directors or an officer or employee of GCIDA. Further, the status of Mr. Goldman as counsel to GCIDA is subject to annual appointment and removal at any time by Board of Directors of GCIDA (Van Schaack Aff. at ¶28). 40. Denies the allegations in paragraph "40" of the Petition and affirmatively asserts that the draft findings are pre-decision documents subject to public comment, modification and the subsequent approval/rejection by the Board of Directors of GCIDA. 41. Denies the allegations in paragraph "41" of the Petition and affirmatively asserts that the monetized power payments paid to GCIDA and the Town, respectively, are a carryover from the obligations under the Original PILOT Agreement so that these obligations are not a contingent payment but are part of the agreed upon structure of costs that must be paid pursuant to the Extended PILOT Agreement and permitted by GML §868 (R.25, ¶11.1.2) 42. Denies the allegations in paragraph "42" of the Petition and affirmatively asserts that such obligations are permitted under the Application, GML §868 and are normal course payments for IDAs across New York (Goldman Aff. at ¶¶13-15). 43. Denies the allegations in paragraph "43" of the Petition and affirmatively asserts that: (a) there were no prohibited conflicts of interest as alleged in paragraph 43(a) on the part of GCIDA's chairman as the maintenance services occurred during May and June 2020 which is more than three (3) years prior to the approval of the Extended PILOT Agreement (R.329-333), and that the Chairman ceased doing work for the Project with the June 2020 work (Hoglund Aff. at ¶¶5- 17 17 of 41 FILED: ULSTER COUNTY CLERK 01/05/2024 04:46 PM