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Town Remains Opted Out of Solar Property Tax Exemption

Tompkins County Director of Assessment Jay Franklin told Lansing Town Board members Wednesday that they should protect property tax revenue from potential industrial solar farms within  town boundaries.  The Town opted out of providing a tax exemption for solar installations five years ago, but Franklin said a recent lawsuit ruled that a town had not actually opted out because it had not filed with the New York State Energy Research and Development Authority (NYSERDA).  Town Attorney Guy Krogh said it would be less costly to file with NYSERDA, and simpler that going through old records to see if the Town has already done so.

"If the Town wants to maintain the exemption, just to play it safe we should probably send a copy to NYSERDA," Krogh said. "I don't know what they'll do with it.  I think it will be killing trees needlessly, but that is apparently what the State mandates."

New York Real Property Law Section 487 specifies that the exemption only applies to value added by a solar array, wind turbines, or farm waste energy systems.  For example, if a new solar array adds $20,000 of market value to your $200,000 house, you would only pay County, Town and School taxes on $200,000, assuming all three taxing authorities opted out before construction began.  Fire Departments are not subject to the exemption, which means your property tax would be based on the full $220,000 value of the property.

"The New York State Real Property Tax law pretty much controls everything that you're allowed to do at the town level, determining which exemptions you choose to offer or not offer," Franklin said. "You have to opt in to most exemptions, but Real property Tax Law Section 487 is an oddball.  It's one of the exemptions that you have to choose to opt out of.  It provides an exemption for the increase in value for 15 years, for any solar farm, farm waste system, wind, and a lot of other ones that the State legislature keeps adding."

Franklin said that the law makes no distinction between small home solar panels and huge industrial solar arrays.  But he said opting out does not add property taxes for homeowners, because solar panels don't add value to houses in terms of how they are currently assessed.

"We've been tracking this for many years and we still haven't seen solar panels on someone's house adding value," he said. "It's counter-intuitive to everything that you may think.  But if you have two identical houses, one that has solar panels and one that does not, which house would you buy?  You'd probably buy the house that doesn't have solar panels and put solar panels on it yourself.  You would be getting newer solar panels, a little more efficient, with a little more useful life.  You take advantage of the income tax credits.  You'd know that it was installed correctly.  I don't want to say solar panels are a negative on a house.  If income tax credits go away, that whole scenario shifts."

Taxing authorities in Tompkins County have opted out of the exemption, including the Towns of Lansing and Enfield, plus the Lansing, Dryden, Ithaca City, and Newfield school districts.  Over 290 New York State municipalities and school districts have opted out.  Most of these, including Lansing, passed a local law or resolution opting out of solar wind and farm waste energy systems.  Some opted out of tax exemptions for a wider variety of alternative power tax exemptions including micro-hydroelectric, fuel cell electric generating, micro-combined heat and power generating, and electric energy storage systems.

In September a New York Supreme Court ruling voided a property tax levied on Cornell University Ruminant Center's 2.8 megawatt solar installation of 9,333 solar panels on 20 acres of land that can produce 3.2 million kilowatt hours. Developer Laertes Solar, LLC and Cornell sued the Town of Harford for not applying the exemption to the company's tax bill, even though the Town had opted out.  The suit claimed that state law requires municipalities to file opt-out laws or resolutions with the New York State Energy Research and Development Authority (NYSERDA), which the Town had not done.  Acting Supreme Court justice David H. Guy ruled against the town, saying the tax bill was void on the grounds that the Town did not file with NYSERDA and, therefore, had not opted out.

Franklin said he thinks the ruling is shaky, but is advising Tompkins County municipalities to make sure they have filed with NYSERDA as a precaution.

"I've talked to NYSERTA," Franklin said. "NYSERTA doesn't keep track of any of these exemptions.  The Town did file with the Department of Taxation and Finance.  I assume it was filed with the Secretary of State in the normal manner.  So in my mind the Town is out, but there is this court case out there, and that's why I alertred all the municipalities (in Tompkins County) that opted out of the exemption, to say you might want to consider filing with NYSERTA."

Since the Town Board opted out of the tax exemption in 2013 a number of large solar farm projects have come and gone, including a 1.5MW solar array solar farm that would have consisted of about 5,000 solar modules that would have produced 1,712,542 kWh that would have saved the school district $20,989 in its first year.  But the Board of Education voted to kill the deal, because they were worried about locking the district into a 20 year contract, arguing that the amount of savings didn't warrant uncertainties about the technology and being locked out of potentially  better savings possibilities for two decades.

At least three major solar farms are being contemplated for Lansing.  The largest is an 18 megawatt solar farm on 75 acres of land at the Cayuga Power Plant.  A $24.7 million renovation to the Ithaca-Tompkins Airport includes a solar canopy over parking lots that will enhance other solar electricity sources that Airport manager Mike Hall expectes to reduce his utility costs by $50,000 annually, while powering a terminal that will be 50% larger than its current size. In June Hall said he was negotiating with Cayuga Solar to provide power to the airport.  And in September the Lansing Planning Board considered a sketch plan application for a new 5MW, 24 acre community solar array project Monday, proposed for a site on Jerry Smith Road in Lansing.  Power from the Jerry Smith solar array would be offered to local consumers at an estimated 10% discount from current rates.

"In my mind you're almost safer being out of the exemption because if a solar farm comes in that's industrial in size, two megawatts or more, its really a commercial entity," Franklin said. "So as of right now we are not penalizing property owners for being out of the exemption, but you're protecting yourself in case an industrial solar developer comes in."

Krogh was also skeptical that NYSERDA keeps records of taxing authorities that have opted out, but advised the Board to file with NYSERDA by registered, return-receipt mail just to be on the safe side.

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