Real Property Taxation of Solar and Wind Energy Systems in New York State: Update

An earlier Tax Tracker discussed the appraisal methodology for solar and wind energy projects in New York State under Section 575-b of the Real Property Tax Law: Real Property Taxation of Solar and Wind Energy Systems In New York State: Methodology for Projects – Farrell Fritz.

Enacted in 2020, Section 575-b provides that solar and wind projects of at least one megawatt must be assessed for real property tax values under the Discounted Cash Flow (DCF) methodology using a model formula (the “Model”) and discount rates established by the NYS Department of Taxation and Finance (“DOTF”). An initial Model was established by the DOTF and implemented statewide for the 2022 and 2023 tax years. Now that Model has been updated by DOTF, effective May 1, 2024, and must be used by all local assessors valuing solar and wind projects for the 2024 tax year. A summary of changes to the 2024 Model include:

• Net energy metering projects have been incorporated.
• Market transition credits/community credits and community adders now default to the highest credit amount unless overridden by the user.
• Revenue forecasts, expense forecasts, and discount rates have been updated.

More on the updated Model and the revised discount rates for 2024 can be found on the DOTF website here: Appraisal methodology for solar and wind energy projects (ny.gov)

In April, the 2024 Model survived a collateral attack by a group of local assessors and municipal officials who, again, sought a temporary restraining order preventing implementation of the updated Model. Albany County Court denied the TRO request, but the application for a preliminary injunction is scheduled for May 24, 2024, in Airey, et al. v. State of New York, et al. (Index No. 903991-2014). This newest lawsuit is a second attempt by local officials seeking to invalidate the Section 575-b Model, following the resolution of earlier litigation in Town of Blenheim, et al, v. Hiller, et al, (Albany Supreme Court, Index No. 903157-2022). That litigation was resolved following action by the State Legislature that moot the claims raised in Blenheim.

For more on the Blenheim litigation and continued efforts by New York State to encourage renewable project development through Section 575-b and other initiatives, you can reference this article previously published in the Nassau Lawyer: Real Property Taxation of Solar and Wind Energy Systems in New York State – Farrell Fritz