Dynegy misses tax payment
Dynegy Inc., which owns the Danskammer and Roseton plants, recently failed to make their tax payment of $17,193,747 to the Marlboro Central School District.
Marlboro School Superintendent Ray Castellani announced the failure of payment at the Oct. 4 board meeting, indicating that he would be attending a meeting with representatives of the company and the Town of Newburgh the following day at the Dutchess County Bankruptcy Court.
In a follow up interview, Castellani said Dynegy is still seeking a buyer for the plants. He said the company asked if the district would be “willing to work with them in order to attract potential buyers and we said as long as it’s something we can work on that is beneficial to both sides, we’re always willing to work with people.”
Castellani said at this time Dynegy has no purchase proposal on the table but have acknowledged their missed tax payment. He said the company is looking for a way to at least make a partial payment to the district “but they wanted to make sure that we are open to any kind of discussion and that’s exactly what it [meeting] was.”
At a previous school board meeting, mention was made of a $2 million payment from Dynegy; however, Castellani clarified that statement, saying it was made to the Town of Newburgh, which leaves the full amount still owed to Marlboro.
Castellani said action will have to be taken soon.
“In the next month or so when the [tax] warrant is up, we’re going to have some type of payment or start to go out to borrow money,” he said, adding that the latter option would involve the district borrowing for a Tax Anticipation Note [TAN]. He said, however, if Dynegy agrees to a schedule of partial payments, perhaps a TAN will not be needed.
Castellani said Dynegy’s final tax deadline, which includes a penalty, is in early November but is hoping to attend additional meetings before then to see if a solution can be reached. He said there will also be additional discussions with the school board on this issue.
Castellani pointed out that over the past three years the district has “shaved” $4 million off their annual school budget in an effort to save money. He said the district is considering additional plans.
“We have plans that are in place on different tax rates and different percentages of what we’d be doing,” he said. “We’ll have to look at which model we’re going to be looking at.”
Castellani continues to reach out for help to state Sen. William Larkin [R-Cornwall], Assemblyman Frank Skartados [D-Milton], Ulster County Legislator Richard Gerentine [R-Marlborough], Ulster County Executive Mike Hein and Orange County Executive Ed Diana. He said that all are sympathetic to the district’s plight and continue to offer their support “and we’re seeing what exactly that will entail for us.”
Castellani said in the event that Dynegy is not forthcoming with a payment, the hope is for Orange County to make up the funding gap. He said prior to going out for a TAN the district would petition Albany “but I don’t think that’s going to make any difference right now.”
“If the County of Orange is not ready to make us whole, we have to borrow,” he said. “They have until the spring to make us whole. Their take is that this is not a regular proceeding; it is a bankruptcy proceeding, so we may be in court with them but they have been very good with us. There are a lot of unknowns that we have to find out here.”
Castellani promised there would be no school closings, “especially in the middle of the year” even if Dynegy and the state fail to provide the necessary funding that the district needs.
Castellani said he feels this entire matter is a “multi, multi-million-dollar shell game where Dynegy takes money out of one holding and makes another holding [company].
“It’s a big business and that’s what makes business successful I guess in some parts, but it’s at the expense of school districts,” he commented.
Castellani said the fact is that this has nothing to do with Marlboro – “it’s all with the Town of Newburgh and Dynegy.”
“We, as a district and as a board are working closely with all the representatives that we need to,” he said. “This is going to be a difficult process. We’re working day to day, trying to figure out what’s best for all constituents and still run a program.”
Castellani said Dynegy has not definitively said they are closing the plants but instead note that they are not operating at full capacity in plants that are in need of significant upgrades. He added that Dynegy is insisting that in order to meet Environmental Protection Agency standards, while trying to interest a buyer “they need relief on their taxes. That’s what they’re talking about.”
Castellani promised to keep the school board and the public informed of any new developments as this moves forward through the legal process. He said he welcomes phone calls and comments from the public on this issue at school board meetings.
By MARK REYNOLDS