NY Solar and Wind Property Tax Calculator Review

On September 17, 2021, the New York State Department of Tax and Finance released a second (revised) Preliminary Assessment Model for assessing solar and wind energy projects. Its first preliminary valuation model was released on August 2, 2021. Comments on the two proposed property assessment models are due October 1, 2021.

All local tax jurisdictions in New York will require the use of the tax assessment model to assess renewable energy projects. The publication and use of a uniform methodology for evaluating renewable energy projects is one of several recent changes to New York’s Property Tax Laws (RPTLs) that the state has recently enacted. to promote solar, wind and other renewable energy projects.

One of these changes required local tax assessors to adopt a uniform revenue capitalization or discounted cash flow valuation approach to valuing renewable energy assets. A revenue capitalization approach values ​​the project using the net present value of a project’s future cash flows using a specified capitalization rate. Local assessors are required to use the new methodology starting with the 2022 assessment rolls.

The deployment of the property tax calculator offered by the New York Department of Taxation and Finance is a work in progress. The model uses several default “autofill” assumptions for solar and wind project revenues and expenses that often do not reflect actual project revenues and expenses. Many concerns have been raised, including the assumed discount rate, capacity factors, and unrealistic assumptions for real estate lease payments, often a significant expense for third-party-owned renewable energy projects.

Revised Model #2 aims to correct some of these issues. The second model is split into two worksheets, one for commercial distributed solar projects and one for large-scale projects. The revised preliminary model appears to correct some of the errors of the initial model, but still appears to use relatively low discount rates, capacity factors rarely achieved by many projects, and low site lease payments.

The Department of Tax and Finance emphasizes that both models are preliminary and that comments on both models should be filed by October 1, 2021. Following consideration of comments received during the comment period, the final valuation model may incorporate assumptions from Model #1 or Model #2, or a combination thereof, or modify the assumptions. . Please see the Solar and Wind Energy Project Appraisal Methodology for a copy of the revised appraisal methodology.

©2022 Pierce Atwood LLP. All rights reserved.National Law Review, Volume XI, Number 263

Penny D. Jackson