Judge Orders Equipment Sale At Fulton Cogeneration Facility

FULTON, NY – Three years since court battles began with Fulton Cogeneration Associates, the Oswego County Industrial Development Agency (IDA) is expecting some relief for money the company has owed since March 2005.

The IDA filed a formal complaint in federal court in July 2005, citing a breach of contract in an attempt to collect $1.4 million that was owed under the company’s payment in lieu of tax agreement. Every group that has had an ownership role in the cogeneration facility since the pilot agreement was initiated was included in the lawsuit, including Fulton Cogeneration Association, L.P. (FCA), El Paso Power Merchant Energy North America Company, Lion Capital Management Group (LCM) and its partner Fimab and Promeneur & Hausmann, Inc.

According to L. Michael Treadwell, executive director of Operation Oswego County and an officer for the IDA, a judge recently agreed that equipment inside the facility could be sold.

“We received court approval to sell the equipment to recoup the pilot payment that was missed in 2005,” Treadwell said Monday. “The buyer sent crews in last Wednesday to start the process of removing the equipment.”

The purchase price on the equipment was $2.5 million for “everything under the roof,” Treadwell said. The money was received from Noel Consulting, which is representing the buyer.

Treadwell noted that the buyer made a deposit of the full purchase price. The money is being held in an account until the removal process is complete. At that time, the sheriff’s office fees will come off the top for the department’s responsibilities in the disposition of the equipment.

“The balance will be provided to the IDA to cover our costs of maintaining the equipment, cleaning the chemicals out of the building and for legal fees we’ve paid,” Treadwell said. “The balance of that money will be distributed to the taxing authorities.”

The $1.4 million for the 2005 pilot payment was slated to be divided on a pro-rata share between the city of Fulton, Oswego County and the Fulton City School District.

“We are hopeful that the balance will be sufficient to reimburse all of the taxing authorities for their pro-rata share,” Treadwell said.

Treadwell noted, however, that he is not sure when the money will become available.

“The removal process may take to the end of this year,” he said. “But the money can’t be distributed until that has been completed.

“There are a couple of groups in the facility now,” Treadwell said. “Will they be taking everything? We’re not sure. They have purchased external things too, such as the electrical equipment from the substation.

“They will likely resell everything to third-party users,” he added. “I am sure they already have buyers.”

From Wednesday to Friday, Treadwell said the company spent time planning its approach to remove the equipment. He noted that some equipment inside the facility is very large.

“Some of the equipment will be brought to the Port in Oswego for barge transport overseas,” he said. “They are lining everything up that needs to be done.”

O’Brien and Gere has been on site on the IDA’s behalf to help with information such as disconnecting electrical and natural gas equipment.

“(The IDA) is not in charge of anything but we retained O’Brien and Gere because they are familiar with the plant and took care of things like weatherization,” Treadwell noted. “The sheriff is in charge of the disposition of the equipment.”

While the proceeds from the sale will help to replenish the funds that the IDA has put out, Treadwell said it does not satisfy the lawsuit the agency has against Fulton Cogeneration, which still owns the building. In addition to the delinquent 2005 pilot payment, Treadwell noted that the company has not paid its property tax bill for 2006, 2007 or 2008.

“At some point, the city could go after the building for back taxes,” he said.

Fulton Mayor Ronald Woodward said that could take place as early as January.

“If they haven’t paid their taxes by the end of the year, the city will go after it,” Woodward said. “It is a 20,000 square foot, steel building with a secure site and parking. I imagine that the city will be able to market that pretty easily.”

Woodward said that the company has until Dec. 29 to pay its 2008 taxes. If it doesn’t, January will mark an additional year of taxes owed and the city will begin the legal process to take ownership of the facility.

“If the judge is satisfied that our notification process is sufficient, we will own the facility,” Woodward said. “We have notified everybody but we haven’t received anything back. I don’t expect the city will have a hard time showing that.”

To date, Woodward said that the company owes more than $300,000 in property taxes. The building is assessed at $2.7 million.

“We have no desire to hold on to it,” Woodward said. “As soon as it is in our name, we will start to market it.”

As for Lion Capital Management, which sealed an agreement to take over the facility in 2004, Treadwell said he is not sure what the company’s plans are at this time.

“We don’t know what plans they have at this point in time,” he said. “The only thing that is being dealt with at this point is the attachment that the IDA has on the equipment at the facility.”

Woodward noted that the equipment sale will be a positive step in terms of the city’s future efforts.

“For us to be able to market that as a vacant building, it gives someone the opportunity to make it what they want,” Woodward said. “That’s a good thing.”

“We are very pleased with the decision the court has made,” Treadwell added. “The IDA has been told by both (Fulton school Superintendent Bill Lynch and Woodward) that they appreciate our efforts, our due diligence and the expenses that the IDA has taken on to bring this to a reasonably positive conclusion.”

“We are very appreciative of the IDA and of Mike Treadwell‘s efforts in this,” Woodward said. “He has kept me involved every step of the way and been very helpful to the city.”

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