Fri, March 12, 2021 7:00 a.m.
By Terry Duffy
Editor-in-chief
At its working session on Monday, the Lewiston City Council approved a resolution against Section575-b, a proposed amendment to New York State's Property Tax Act, Section 487 that, if approved, would drastically change the valuation of real estate for wind and solar panels.
Prosecutor Al Bax told the board, "This is a response to the state's proposal to enact what they call Section575-b, an amendment to the Property Tax Act. In fact, it would allow the state to control the taxes that are can be levied on real estate that is an alternative energy source, so if solar and wind did that, it would take our local government away from local control of this problem.
"Indeed, if they cut the tax below our local tax rate, (it) would exhaust our tax base."
According to the current status of the law, the state law provides for a 15-year tax exemption for properties that contain wind and solar energy projects. However, this exception is not mandatory. In fact, Section 487 allows local governments to refuse the exemption and tax wind or solar energy projects based on the estimated value of a property. If a municipality speaks out against Section 487, a wind or solar project can demand that payment be made instead of the tax agreement (PILOT).
As part of the state's budget preparation / review process for 2022, New York is now attempting to incorporate Section575-b into its property tax law. If passed, signed by the governor, and enacted by both Houses, it would enable New York to "establish a standard nationwide approach to property tax assessment on wind and solar projects," according to a state memo sent to the City Regulatory and City Councils issued was provided by Wright Ellis, Supervisor for the City of Cambria.
"The governor tabled a budget this year that would remove the city's ability to evaluate properties used in renewable energy projects, including any project with a nameplate capacity of at least one megawatt," wrote Ellis. "I'm reaching out to colleagues across the state to do something about it."
The memo states: “Specifically, the calculated value for wind and solar energy projects is determined by an income capitalization or discounted cash approach that takes into account a valuation model established by the New York State Department of Taxation and Finance, and in consultation with the New York State Energy Research and Development Agency. The valuation also includes a solar or wind energy discount rate set annually by the New York State Department of Taxation and Finance. … The proposed change applies to all solar and wind energy projects with a nameplate of at least one megawatt. "
The memo states that the provision would “apply to wind or solar projects that can be built anywhere in New York, not just large Article 10 or 94-c projects proposed in New York State or western New York become.
"If this change is adopted, the state valuation model and state-controlled discount rate will almost certainly provide the tax incentives desired by developers and the state, making the section 487 opt-out irrelevant. Developers no longer need a PILOT to receive a discount. The discount is integrated into the tax law and controlled by the state. "
Bax said, “We have already lost a lot of interest in solar energy in this area. It is my opinion and I think it is the opinion of the city administration that we want to keep this local control with the city administration. "
In doing so, he tabled a resolution "against the addition of Section 575-b for the New York State Budget's 2022 Real Estate Tax Act".
The resolution is as follows:
“While the new Real Estate Tax Act §487 provides for a 15-year exemption from real estate tax for properties on which wind or solar energy projects have been built.
“While property tax exemption is not required under current law, local governments may refuse the exemption under Section 487 and tax wind or solar energy projects based on their full appraisal.
"And while the city isn't opting out of the current Section 487, the wind or solar projects must be paid for in lieu of taxes … agreement."
“And while in the current provision of Section 487, cities have the option to negotiate a PILOT with a developer or require that the project be paid full tax based on estimated value. …
“And during. The budget proves that the state is trying to incorporate Section 575-b into the Real Estate Tax Act, which drastically changes the valuation of real estate for wind and solar systems (equal to or greater than one megawatt) by establishing a statewide standard approach to wind – and solar energy projects.
"And while the state also wants to mandate as part of the budget process that the determined value for wind or solar energy projects is determined by an income capitalization of income or discounted tax flow approach that takes into account a valuation model created by the New York Department of Taxes and finances (in consultation with NYCERDA). …
“And while the state determined in the budget process that the valuation will also include a solar or wind energy discount rate, which is set annually by the New York Department of Taxation and Finance.
"It is hereby resolved that the City of Lewiston strongly maintain the right to domicile under the New York State Constitution, particularly with regard to land use and property taxes.
"Lastly, Governor Cuomo added Section575-b to this year's budget bill to remove the City of Lewiston's ability to evaluate properties used in renewable energy projects and remove any scrutiny from Section 487 . " …
"And if it is further decided, the city of Lewiston is decidedly against the inclusion of §575 in the property tax law in the budget 2022. …
"If so decided, the City of Lewiston urges the elected officials of Niagara County and New York State to oppose Section575-b of the Property Tax Act before it goes into effect in the budget process."
In a roll-call vote by Councilor Bill Geiben, which was supported by Councilor John Jacoby, the decision was unanimously adopted by the city administration without comment.