Real Property Taxation of Solar and Wind Energy Systems in New York State Update: New Amendments to RPTL §575-b Intended to Clarify the State’s Assessment Model

Intended to promote clarity and predictability in valuation of solar and wind energy systems, RPTL § 575-b has been anything but clear or predictable since its enactment in 2021. Under section 575-b, the New York State Department of Taxation and Finance (DTF), is required to develop an appraisal model utilizing a discounted cash flow (DCF) approach and discount rates to value solar and wind energy systems for property tax and assessment purposes. The purpose of the “DTF Model” is to make property taxation of such projects more predictable for developers and local officials alike.

RPTL § 575-b has already withstood one legal challenge by a group of local assessors and municipal officials after the State stepped in with special legislation that moot the claims asserted in Town of Blenheim, et al, v. Hiller, et al, (Albany Supreme Court, Index No. 903157-2022) (See: Real Property Taxation of Solar and Wind Energy Systems in New York State – Farrell Fritz). Now, it seems a second lawsuit has likewise been resolved by special legislation signed into law by Governor Kathy Hochul, NY State Senate Bill 2025-S8012

Intended to clarify RPTL § 575-b and implementation of the DTF Model, the Legislation is in direct response to a second legal challenge brought by municipal officials in Airey, et al. v. State of New York, et al., (Albany Supreme Court, Index No. 903991-24). In Airey, the DTF Model and RPTL § 575-b were struck down as unconstitutional on the basis that DTF’s decision to exclude renewable energy certificates and investment tax credits from the DCF Model revenue calculation was arbitrary and capricious, and therefore RPTL § 575-b was an unconstitutional delegation of the legislative power to tax to a state administrative agency. (See: Real Property Taxation of Solar and Wind Energy Systems in New York State Update: Court Declares RPTL § 575-b Unconstitutional in Airey v. State – Farrell Fritz)

The amendment was proposed in response to the Airey decision, in part, and the sponsor’s memorandum reaffirms the Legislature’s commitment to incentivize clean energy by creating predictable and stable taxation for renewable energy projects. Sponsor’s Memorandum, NY State Senate Bill 2025-S8012. Section 1 adds subsections (d) and (e), which provide that:

• 1(d) – expenses associated with host community benefits, the decommissioning of solar and wind energy systems, and community solar subscriber management costs associated with solar energy systems, shall be included as expenses.
• 1(e) – federal investment and production tax credits granted by the Internal Revenue Code and environmental values, including but not limited to renewable energy credits, shall be deemed intangible assets and not included as revenue streams.

Section 2 adds subdivision 5, which clarifies that no costs will be imposed against any assessing unit’s established valuations on the basis of the Model. Previously, such costs would have been accepted pursuant to RPTL § 722.

The revisions to RPTL § 575-b moot the issues raised in the Airey decision and, once again, re-establish the DTF Model as the valuation standard for solar and wind projects throughout New York State.