An outdated law and a series of decisions by an obscure tax authority are disrupting the state's landscape for solar projects.
The question revolves around whether commercial solar projects should be exempt from paying municipal property taxes. The lack of clarity threatens to take revenue from municipal budgets – and hamper the progress of the solar industry as some municipal officials are reluctant to cut deals with solar developers.
"It's a confusing landscape and that has created a lot of uncertainty for businesses and there are many questions about how we can resolve this," he said David Gahl, Senior Director of Northeast State Affairs for the Solar Energy Industries Association, a national lobby group for the solar industry.
Massachusetts Legislators are considering passing a law that is the subject of lengthy negotiations between local officials and solar developers to remove property tax exemptions for large solar developers. The proposal is on a committee of the Legislative Conference considering a more comprehensive law on climate change.
On Thursday, Auditor Suzanne Bump released a report highlighting the confusion around existing laws and asking lawmakers to clarify the situation.
"I don't think lawmakers have knowingly and intentionally enabled the big solar developers to almost completely avoid property taxes," Bump said. "In order to The law needs to be updated to reflect reality. "
The subject is particularly important on the south coast, in C.Ental Massachusetts and Berkshire County, which is home to many large solar farms.
A law passed in the mid-1970s provided an exemption from property tax for solar panels, which are the primary power systems for a property. The intention was to help residents who wanted to install off-grid solar panels on the roof to power their homes.
For decades property tax exemption was primarily applied in this way – –– by private homeowners to supply their homes with electricity.
When commercial solar parks were developed, some paid taxes. Others used a separate provision in state law that enables municipalities to join PILOT or to make agreements with solar systems instead of taxes in order to make regular payments instead of taxes on solar systems. The idea was to create a structure in which solar producers can anticipate the size of future payments while ensuring that municipalities do not lose any tax revenue.
However, between 2014 and 2017, the state's Appellate Tax Board ruled in several cases that the property tax exemption applies to both residential and commercial solar systems. In one major case in 2016, the Appellate Tax Board ruled that a Swansea solar farm – which powers the owners nearby at home but sold 98 percent of its energy to local bank branches –- was eligible for a property tax exemption. The city of Swansea finally negotiated a PILOT agreement with the solar developer.
Unity City, village Assessor Lane Partridge, past president of the Massachusetts Association of Assessing Officers, said the problem is that the law was written so long ago, "that it has nothing to do with current technology and the current way we do things to do."
The decisions of the tax authority have left the state's solar landscape in uncertainty. While decisions of the Appellate Tax Board are only for that special cases In the dispute, the decisions opened the door to further legal remedies. According to Bump, the Appellate Tax Board now has 71 pending appeals related to tax exemptions for solar projects.
If a decision is challenged in the state appeals court, a decision there can have nationwide effects. While observers say some community officials are considering appeals because of the high cost –– – and potential risk – –– No legal remedies have been lodged in legal disputes.
Currently, community officials are hoping that lawmakers will solve the problem. The assessor group has negotiated a compromise language with the Association of Solar Developers – and both sides say that they are close to a compromise, but are not quite there yet.
Partridge said he was confident that Bump's report, calling for legislative action, would "help us cross the finish line" to pass a bill.
Rep. Jeffrey Roy, a Franklin Democrat, and Senator Michael Rodrigues, a Westport Democrat, introduced laws that would clarify the tax status of solar panels by restricting property tax exemptions to smaller solar panels – generally those that are enough Electricity for the solar panels produce property on which they are located. Roy's language is included in the House version of a climate change law included on the conference committee.
Roy's amendment, which could be changed by the conference committee, would only exempt from property tax solar projects for residential buildings that produce no more than 125 percent of the energy needed to power the property in which they are located. (Rodriguess The proposal would also include commercial solar projects, but similarly limits eligibility for smaller projects that supply electricity to their own or an adjacent property.) "It's just a matter of going back to what the original legislation was supposed to do to help homeowners get their homes solar powered, ”said Roy.
Gahl Solar companies have many concerns about the details of Roy's proposal. Overall, the industry believes that residential and small business installations should be tax free, while larger installations should run PILOT agreements – ideally in a format that is more standardized than it is today.
Without clarity, local authorities and developers have had difficulty reaching agreements on how solar systems should be taxed. While a municipality can still negotiate a PILOT agreement with a solar developer, the state tax authority Decisions mean that municipalities have little influence and the value of solar properties can be viewed as lower. There were more and more disputes about assessments and tax breaks.
"If a solar developer can go to the Appellate Tax Board and find out they're exempt from tax, why should they negotiate a PILOT?" Asked Bump.
Some municipalities have imposed a moratorium on new solar systems. Granby, for example, passed a solar moratorium in 2019 amid officials feared solar developers would be exempted from property tax. Charlton, which has 25 solar panels, imposed a temporary moratorium on solar panels and then introduced new zoning rules and a limit of 30 systems.
Charlton reviewer Kathleen Stanley said communities like hers were "in the air". Charlton has not negotiated any PILOT agreements with its solar Facilities, however had taxed them. Now several solar project owners have appealed to the Appellate Tax Board, and community officials are trying to negotiate settlements. Stanley said in the recent Appellate Tax Board decisions, "Many communities are making agreements about what they think is less than full and fair cash value because the exemption is held above their heads."
John Robertson, legislative director for the Massachusetts Municipal Association, said community officials are particularly concerned about a loss of revenue when they can no longer tax large solar panels. If solar developers pay less taxes, other taxpayers will have to fill the gap. "But allt They knew what the rules were, and when the Appellate Tax Board's case was decided, the rules suddenly changed, ”said Robertson. "We want to make the rules the way they were before."
In 2019 the number of new solar systems was half as high as in the previous year. While the decline was due to several factors, including land use concerns and a restructuring of government solar incentive programs, Bump said property taxation “is preventing communities from allowing facilities when they lose large chunks of revenue. "
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reporter, Commonwealth
about Shira Schoenberg
Shira Schoenberg is a reporter for CommonWealth magazine. Shira previously worked at Springfield Republican / MassLive.com for more than seven years, covering state politics and elections, topics like the start of the legal marijuana industry, problems with the state care system, and the US Senate elections. Elizabeth Warren and Governor Charlie Baker. Shira won the Massachusetts Bar Association's Award for Outstanding Achievement in Legal Journalism in 2018 and has received multiple stories from the New England Newspaper and Press Association. Shira covered the 2012 New Hampshire presidential primary for the Boston Globe. She previously worked for the Concord (N.H.) Monitor, where she wrote on the state government, City Hall, and Barack Obama's 2008 New Hampshire Primary Campaign. Shira holds a Masters Degree from Columbia University's Graduate School of Journalism.
about Shira Schoenberg
Shira Schoenberg is a reporter for CommonWealth magazine. Shira previously worked at Springfield Republican / MassLive.com for more than seven years, covering state politics and elections, topics like the start of the legal marijuana industry, problems with the state care system, and the US Senate elections. Elizabeth Warren and Governor Charlie Baker. Shira won the Massachusetts Bar Association's Award for Outstanding Achievement in Legal Journalism in 2018 and has received multiple stories from the New England Newspaper and Press Association. Shira covered the 2012 New Hampshire presidential primary for the Boston Globe. She previously worked for the Concord (N.H.) Monitor, where she wrote on the state government, City Hall, and Barack Obama's 2008 New Hampshire Primary Campaign. Shira holds a Masters Degree from Columbia University's Graduate School of Journalism.
From the perspective of the solar industry Gahl According to the company, it is difficult for companies to estimate their project costs if they do not know what taxes are included and how much to pay municipalities. PILOT agreements often differ greatly between municipalities. (Bump's review also recommends that the Treasury Department provide clearer guidelines for establishing a standard PILOT agreement.) "Ultimately, it increases the time it takes to get these projects to completion. " Gahl said.
partridge, the Concord Assessor, The negotiated PILOT agreements, which vary between municipalities, should not be a substitute for legal clarity in the EU Law and It is difficult for developers and evaluators to rely so heavily on PILOTs. "We have contracts to do what needs to be done instead of the law telling us what to do. This is A difficult process, ”he said.
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