Mirant's Massive Sale Makes For Uncertain Future

By Dan Hust
SULLIVAN COUNTY — March 2, 2007 — Last year, Mirant famously told Swinging Bridge Reservoir residents that it was willing to sell its local hydroelectric facilities for a mere dollar.
Turns out Alliance Energy Renewables is willing to pay quite a bit more than that.
But its $3 million bid in U.S. Bankruptcy Court to purchase Mirant NY-Gen’s thousands of acres and energy facilities could be a disaster in the making, according to local officials.
Three power generating stations and nearly 3,200 acres are under Mirant ownership along the Mongaup River in southern Sullivan and western Orange counties.
That includes the Toronto, Swinging Bridge, Mongaup Falls and Rio reservoirs – which historically have hosted everything from wintering bald eagles and boaters to hunting clubs and upscale developments.
Thanks to a tax agreement painfully hammered out between Mirant and the affected taxing districts three years ago, the entire property – stretching from Mongaup Valley in the north to the Delaware River in the south – is now valued at $26.6 million.
For the past year, Mirant – struggling with bankruptcy proceedings – has sought to unload the reportedly unprofitable Mongaup holdings, especially the expensive dam repair issue at Swinging Bridge.
Alliance Energy Renewables, a natural gas company that owns several turbines near upstate Massena, has made a bid that Sullivan County Attorney Sam Yasgur said is referred to as a “stalking horse” – meaning that Mirant has agreed to accept it unless a higher bid is received.
Mirant has said that it will finalize the $3 million sale on March 6 – and if it goes through, all that acreage and facilities will lose more than $20 million in value.
That means a potential loss of millions of tax dollars for Sullivan County, the Monticello and Eldred school districts, and the towns of Forestburgh, Thompson, Bethel and Lumberland.
And it gets worse from there – no one knows what Alliance plans for the property (attempts to locate a media representative were unsuccessful), and while it may indeed run its new holdings for hydroelectric purposes, it may not be required to refill the Swinging Bridge Reservoir to do so.
Drawn down to creek level since 2005, the reservoir is about ready to be refilled in stages, according to Mirant, pending completion of repairs to the sinkhole-damaged dam.
But once Mirant leaves, will Alliance refill the reservoir or leave such a huge liability issue alone?
If it chooses the latter, Sullivan County will get hit with a double-whammy: loss of even more assessed value for properties lining the reservoir, and the elimination of the county’s largest boating lake – and all the tourism dollars and recreational opportunities that go with it.
Yasgur said the county’s bankruptcy attorney did all he could, but as Eldred CS Interim Supt. Charlotte Gregory put it, the sale looks “like a done deal.”
“I guess what we’re doing is sitting tight and watching what’s going to happen,” she explained.
Eldred stands to lose close to a quarter of a million dollars in assessed valuation, on top of the $1.5 million hit it took when Mirant successfully renegotiated its assessments with the school and others in 2004, reducing Mirant’s taxes by nearly 65 percent.
The Town of Lumberland could be equally hard-hit, as the bulk of Mirant’s holdings comprise its eastern border.
Monticello CS may not face as critical a problem, but Supt. Patrick Michel did admit, “I’m a little worried… It will absolutely have a tax impact.”
So officials from the school and township level on up to the state are scrambling to find a solution.
“Lumberland and Eldred Central School are really in a horrible situation,” lamented Assemblywoman Aileen Gunther.
So what can be done?
“The state could assume control,” pointed out Gunther, who lives close to Mirant’s Forestburgh holdings.
However, she added, making the property a state park or preserve would come with usage restrictions – and would undoubtedly impact the tax base, as all state properties are legally tax-exempt.
Still, she considers it a possibility, especially since the state can reimburse the affected municipalities for part of the lost taxes.
Gunther has an Albany colleague working on it and hopes to have an answer soon.
“Still, it’s a tremendous liability,” she said of Swinging Bridge’s situation.
And that’s stymied Yasgur’s efforts, as well.
“The county tried to interest some public entities in buying it,” he related, saying he approached the NYS Department of Environmental Conservation (DEC), the NYS Parks Department and the New York Power Authority, all to no avail.
He remains optimistic with the DEC, however, as it owns more than 5,300 acres surrounding much of Mirant’s property.
And he’s intent on not giving up.
“We’re coordinating with state, federal and local representatives to see what else can be done,” Yasgur said.