Montague to get windfall in FirstLight settlement

Staff Writer
Published: 8/24/2019 6:55:53 AM

MONTAGUE — The town is poised for a potentially large influx of usable cash in the next few weeks, when a tax dispute between the town and FirstLight Hydro Generating Co. is expected to be settled out of court, freeing up money the town had been holding for the possibility of a court-ordered payment to the power company.

The amount has not been publicized yet, and is known only by a handful of town officials. Finance Committee Chairwoman Jen Audley did not know the amount, but described it as “possibly a significant windfall.”

Details of the amount of money and ideas on how to spend it will likely come out within the next two weeks, when the settlement is expected to be finalized.

The pending deal with FirstLight is an out-of-court settlement of a lawsuit that FirstLight brought against the town regarding the assessed taxable value of its land in Montague. FirstLight owns two major parcels of land for each of its power facilities in Montague, valued most recently in 2017 at about $135 million, according to Director of Assessing Karen M. Tonelli; plus the machinery in the power facilities, valued at about $20 million; and several smaller pieces of land along the Connecticut River.

The lawsuit dates to 2014, when FirstLight challenged the tax bill on its Montague properties, arguing that the properties had been overvalued in the town’s assessment, Tonelli said. Subsequently the company challenged its Montague tax bill in every following year through 2019.

Meanwhile the town of Montague, anticipating the possibility of a court-ordered payout to FirstLight, increased its “tax overlay,” an account that a town’s assessors department keeps for cases like this or other kinds of tax refunds. With FirstLight being one of the largest tax-paying entities in Montague, this brought the overlay amount to about $2.1 million, Tonelli said.

Town Administrator Steve Ellis described the overlay as a “buffer,” necessary for dealing with potential litigation or other tax-related surprises.

“At no point has the town carried an overly large overlay,” he said.

In December 2018, a Boston court ruled against FirstLight’s argument that it had been overtaxed in 2014, Tonelli said. FirstLight then said that it would appeal the decision in a higher court.

“We were really getting nowhere, other than getting six or seven years of potential liability behind us,” Tonelli said. She added that she would have expected FirstLight to challenge its 2020 tax bill if things went on that way.

Rather than continue the legal battle, about a month and a half ago the town and FirstLight started work on an out-of-court settlement, Tonelli said.

The settlement is not yet official because it hasn’t been signed by all involved parties, but Tonelli expects it to be finalized likely within the next two weeks.

When the settlement is made and there is no longer any possibility of a court-ordered payment from the town to FirstLight, some portion of the $2.1 million that the town now has in tax overlay will be designated as “overlay surplus,” to be spent in other ways by the town.

Overlay surplus money can be appropriated through a Town Meeting vote. Or, if it isn’t spent within the fiscal year (which ends at the end of June), it goes to the town’s “free cash” account, Tonelli said.

When the amount of money is publicly known, Audley said, decisions about what to do with it will likely involve Ellis, the Selectboard and the Capital Improvements Committee.

A Special Town Meeting is scheduled for Oct. 2, but Audley said the Finance Committee won’t have enough time between now and then to make recommendations regarding the money. She said it is likely that Montague will have another Special Town Meeting later this year to appropriate the money.

Reach Max Marcus at or 413-772-0261, ext. 261.

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