December 23, 2020
New York State’s Real Property Tax Law (RPTL) Section 487 is an important piece of legislation for solar energy and energy storage systems in the state of New York. RPTL Section 487 encourages the growth of NY renewable energy systems by making projects more financially viable. This is true of both smaller residential systems, as well as large-scale projects. To give the law its full title:
New York Real Property Tax Law: Sec. 487. Exemption From Taxation for Certain Solar or Wind Energy Systems or Farm Waste Energy Systems
What is New York Real Property Tax Law Section 487?
NY RPTL Section 487 offers a 15-year real property tax exemption for properties located in New York State with renewable energy systems such as solar PV projects. It’s important to note that landowners with a renewable energy system are not exempt from all property taxes. The law is applicable only to the value which a solar system adds to the overall value of the property.
What does RPTL 487 mean for Local Governments?
Local governments that do not opt out of RPTL 487 may benefit financially from payment in lieu of taxes (PILOT) agreements. By default, the law applies to all New York municipalities. Unless a local government takes specific action in the form of a local law, ordinance, or resolution opting out, then the exemption is in effect. If a local government does decide to take action to opt out, they must file a copy of this action with the New York State Department of Taxation and Finance, and the New York State Energy Research and Development Authority (NYSERDA).
Local governments considering opting out of New York Real Property Tax Law Section 487 should consult NYSERDA’s in-depth FAQ, available to download here.
What does RPTL 487 mean for Solar Projects in New York?
Project developers such as YSG Solar will issue notification letters with our intention to develop a solar generating facility upon receiving site control, and again prior to commencement of construction. All letters shall be sent as certified mail and developers should maintain records of all letters issued and copies of all response letters.
Towns that have opted out of RPTL 487 do not have the ability to negotiate or enter into a PILOT agreement. This can kill a solar development project right away. It leaves the town assessor to place a value on a solar generating facility, and for the facility to be taxed at the same percentages as residential, commercial, and other facilities with no uses similar to a solar generation facility. YSG encourages all towns who are serious about helping the environment and their community to not opt out of 487.
Opting out prohibits solar construction in towns, preventing towns from receiving any revenue that they may have generated from a PILOT agreement. This issue is not about providing incentives to solar projects. This is an issue that is an absolute requirement and will be the deciding factor on whether a solar project is built, or never sees the light of day.
The Town of Canandaigua, NY, is a perfect example of a local town that opted out with their school district and, as a result, has prevented solar projects from being constructed. New York solar project developers—it’s time to start siting projects based on the jurisdictions that have not opted out of RPTL 487.
Other States With Property Tax Exemptions for Solar
New York is not the only state which offers property tax exemptions for solar PV projects. A large number of states across the country have recognized the value of tax exemptions in boosting solar deployment and, in turn, local economies. Currently, thirty-three other states offer property tax exemptions for solar projects. Of those thirty-three states, twenty-two mandate property tax exemptions for 100% of the value of solar energy installations over 10 or more years, including the likes of:
California
New Jersey
Massachusetts
South Dakota
Montana
Kansas
Are you a New Yorker interested in solar energy? Reach out to YSG now. YSG has been working in the solar sector for over ten years, developing everything from small rooftop residential installations to large-scale solar farm projects. To learn more, send us an email or call at 212.389.9215 today.
YSG Solar is a project development vehicle responsible for commoditizing energy infrastructure projects. We work with long-term owners and operators to provide clean energy assets with stable, predictable cash flows. YSG's market focus is distributed generation and utility-scale projects located within North America.
Sources:
https://newyork.public.law/laws/n.y._real_property_tax_law_section_487
Featured Photo by Thomas Habr on Unsplash.