Glen may opt out of tax law that gives break to solar, wind developers – The Daily Gazette - The Daily Gazette
GLEN — The Glen Town Board will consider opting out of a real property tax exemption requiring the town to negotiate payment in lieu of tax agreements with solar and wind developers that give companies an advantage.
Town Supervisor Timothy Reilly on Tuesday said the town is considering opting out of the state’s Real Property Tax Law Section 487, which provides a property tax exemption to solar, wind and other energy projects for 15 years on assessed property values that are improved by the installed systems.
Local governments and school districts that levy property taxes and do not opt out of the provision must either provide a full tax exemption or negotiate a PILOT agreement with developers not to exceed the assessed value of the property with the addition of the energy system.
Reilly believes opting out would likely contribute to greater tax revenues for the town while eliminating the lengthy process of negotiating PILOT agreements with developers and fees for attorneys to review the agreements.
“I think the PILOT programs certainly favor the applicant more than the town and I think in this case we’re looking to get a fair assessment on these facilities as they’re constructed,” Reilly said. “I want the best position for the town to be gotten.”
The involvement of multiple taxing entities can complicate negotiations as officials bargain independently and try to compare outcomes before finalizing agreements, Reilly added. For projects in Glen, developers must also negotiate PILOTs with Fonda-Fultonville Central School District. Montgomery County is not part of the negotiations after opting out of the property tax exemption in 2018.
“I think it would be a lot cleaner,” Reilly said of opting out. “There seems to be a lack of continuity between who is negotiating on whose behalf.”
Town Assessor Stella Gittle agrees that opting out of the exemption would be beneficial for Glen, pointing out that PILOT agreements are typically negotiated to start at a reduced assessment rate paying out lower property taxes and gradually increasing towards the full value over the years of the agreement. The end point may still be set below the full value.
“PILOTs are usually worked out so it comes out a little bit less than a straight tax. Otherwise, there would be no reason to do a PILOT agreement, you’re basically just cutting the company a break,” Gittle said.
The method for appraising solar and wind projects enacted in the 2021-22 state budget and established by the state Department of Taxation and Finance already provides developers a tax break, she added.
The state’s appraisal model establishes discounted property assessment rates for solar and wind projects of one megawatt or larger that takes into account future cash flow balanced against investor risk to set a reduced rate that will attract investment.
Under the state model, the property assessment used to calculate property taxes is discounted according to the size and type of system involved. Solar projects of five megawatts or larger receiving a base discount of 7.16% and smaller projects receiving a base discount of 8%.
“The companies got exactly what they wanted,” Gittle said. “I think the values are way too low.”
Local assessors must use the state model when setting assessment rates for constructed solar or wind projects and make annual adjustments, which Gittle said creates more work and can cause fluctuations in the total value of the town’s assessment roll year to year which can impact overall tax bills.
“It certainly adds work, it’s basically another unfunded state mandate,” Gittle said.
Still, Gittle believes opting out of the property tax exemption would be in the town’s best interest. Depending on the size of the project and the municipality, she estimated some communities could be missing out on thousands of dollars in tax revenues under PILOT agreements with solar and wind developers.
“These companies are already getting a huge exemption with that state model, so there is no reason to give them another one by doing PILOT agreements,” Gittle said.
The Town Board in September approved the only current PILOT agreements, both with Eden Renewables for the Van Epps Solar and Mohawk View Solar projects. The existing agreements would not be impacted if the town opts out of the exemption.
Neither Reilly, who took elected office in January, nor Gittle were able to comment on the agreements as they were not involved in the negotiations.
If the town does opt out of the tax law exemption, property owners who lease their land for solar or wind projects could be on the hook for taxes related to any increases in the assessed value of the property from the installations.
While PILOT agreements are negotiated between the town and the developer, Gittle said increases to assessed property values would now apply to the property itself with any resulting increases to property tax bills becoming the responsibility of the landowners if the town opts out of the tax law exemption.
“I would hope that whomever is leasing their property, whatever lease agreement they have is written in such a way that any increase to property value because of a solar farm or any increase in their taxes is paid for by the solar company,” Gittle said. “But they’re going to have to do that through their lease agreement.”
The Town Board has called a special meeting on Monday at 2:15 p.m. to schedule a public hearing on the local law opting out of the property tax exemption for the next regular meeting on March 14. The board could immediately enact the law after receiving feedback from residents next month.
Reach Ashley Onyon at [email protected] or @AshleyOnyon on Twitter.
source: https://dailygazette.com/2022/02/23/glen-may-opt-out-of-tax-law-that-gives-break-to-solar-wind-developers/
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