With a recently retired Federal Judge playing the role of a mediator, a dispute between power giant American National Power (“ANP”) and the Town of Blackstone (“Blackstone”) in Massachusetts is taking a break from the Courthouse. The pending litigation concerns an estimated $10 million in tax revenue that Blackstone officials maintain the company must pay the town through 2019 concerning one of the company’s co-generation plants. The mediation is an attempt to resolve two legal actions the company has filed in protest of its bills, which actions are pending before the Massachusetts Appellate Tax Board in Boston and the Middlesex County Superior Court in Framingham, MA.

The combatants met for two lengthy sessions of mediation and among those participating were Blackstone Town Administrator Raymond Houle, Selectman Chairman Charles Sawyer and other members of the selectmen’s panel.

A mediated settlement will be of obvious benefit to all involved since it will allow the town and the company to avoid a costly litigation battle. During last October’s financial town meeting, Blackstone voters, acting on the request of officials, appropriated $50,000 as a down payment on the legal costs of taking a stand against ANP in court. This year, officials are asking for an even heftier fortification of the war chest — $250,000 — to carry on the courtroom battle, if necessary.

Arguing that softening market conditions for electricity have lessened the value of its holdings, ANP wants the town to reduce its assessments, thereby lowering the company’s tax bills. The town calculates ANP’s taxes in two ways: Like any property owner, ANP gets a tax bills for its real estate and land. When the company built its plant in the late 1990s, it also negotiated a plan known as a Payment in Lieu of Taxes, or PILOT, fixing assessments on turbines and other business equipment for 20 years, through 2019.

The two methods resulted in a combined assessment of roughly $2.87 million on the company this year. But the company, as it did last year, protested the assessment in court and paid only a portion of it — about $1.94 million. The payment represents 100 percent of the company’s obligations on real estate, but only about two-thirds of what the town maintains it owes under the PILOT. If the trend continued for the life of the agreement, the town would stand to lose about $10 million in revenue.

This is another example of the beneficial role mediated resolutions can play in business litigation.

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