hill country observerThe independent newspaper of eastern New York, southwestern Vermont and the Berkshires


News & Issues September 2016


Tax break for renewable energy draws skepticism

Washington County debates opting out of incentive program

A 16,000-panel solar installation along county Route 21 in Whitehall is one of three such projects planned in the town by Borrego Solar. But county supervisors are considering doing away with a property tax exemption the developer says it was counting on to help make the projects viable.
George Bouret photoBy EVAN LAWRENCE
Contributing writer


A 16,000-panel solar installation along county Route 21 in Whitehall is one of three such projects planned in the town by Borrego Solar. But county supervisors are considering doing away with a property tax exemption the developer says it was counting on to help make the projects viable.

George Bouret photo


The question of whether solar power and other renewable energy projects deserve a property tax exemption has lately become a hot topic of debate around rural Washington County.
New York state, which has set a goal of drawing 50 percent of its energy from renewable sources by 2030, has offered a property tax exemption for solar and wind power projects since the 1980s. Since 1990, the state has allowed local governments the option to opt out of the tax exemption program, although few have done so.

But in Washington County, where several large solar installations now are under development and more are in the discussion stages, a series of towns have chosen in recent months to stop offering property tax exemptions to renewable energy projects. Now county supervisors are debating whether to abandon the county’s share of the exemption as well.

Some towns in the county also have chosen to impose a moratorium on new large-scale solar installations while they review their development standards for these projects.

Last month, the county Board of Supervisors, which is made up of the supervisors of the county’s 17 towns, voted to hold a public hearing Sept. 16 on whether the county should opt out of its share of the property tax exemption for renewable energy projects. In New York, a public hearing is usually the last step before an elected body votes on a proposal.

The towns of Easton, Hampton and Hartford, and the Hartford school district, already have opted out of the tax exemption.

State law allows tax districts to grant property tax exemptions for various reasons. Most municipalities, for example, grant partial exemptions to qualifying veterans, senior citizens and for land used in farming. The lost revenue is made up by other taxpayers.

Like its towns and villages, the county also relies on property taxes to help fund its operations. In the county’s case, each town is assessed according to the value of its property. A large increase in one town’s value means that town pays a greater share of county taxes, even if the project is tax-exempt.


Shifting the burden?
Some supervisors say it’s unfair for the state to give renewable energy projects a financial break at the expense of local governments that rely mainly on property tax revenue.

“If the state wants to support solar, the state should cover the loss of assessed value with money from the state income tax,” said Easton Supervisor Dan Shaw, whose town has already opted out of the tax exemption.

Shaw added that no one on his rural town’s board is opposed to solar energy, but he said the board feels the state shouldn’t shift the burden onto other taxpayers. Farmers, veterans and the elderly benefit directly from their exemptions, but “senior citizens will never reap the benefits” of the solar exemption, he said.

Shaw said he also was concerned that although the tax exemption expires after 15 years, a solar facility might not last longer than that.

“It will never pay taxes,” he said.
The renewable energy exemption also applies to agricultural waste digesters, which turn liquid manure into methane and a dry material that can be spread on fields for fertilizer. Shaw said neither should need a property tax break.

“A solar farm is a business,” Shaw said. “So is an ag waste digester. It saves the farmer money and gives him a product he can sell. Why shouldn’t they be taxed? Farmers are already tax-exempt on their land and fuel.”

Shaw said he doesn’t see opting out of the tax exemption as affecting the viability of local farms.
“Somewhere along the line, somebody’s got to pay taxes,” Shaw said. “Our town is basically agricultural. We’re not opposed at all to solar. It’s a fine line to walk. I don’t think there’s any easy answers.”

But Jackson Supervisor Jay Skellie said he fears opting out of the renewable-energy tax exemption could hurt farmers. Skellie, a dairy farmer, was one of three supervisors who voted against holding a hearing on a county opt-out.

He noted that energy projects involving solar, wind and agricultural wastes are all included in the state’s exemption. If the county decides to tax one type of renewable energy project, he said, it will have to tax all three.

As the federal government tightens environmental regulations on manure disposal, many farmers are looking at waste digesters as a way to comply. Waste digesters are also “an opportunity for some people to make some money,” Skellie said.

“Waste digesters could help communities,” Skellie said. “A group of farmers could build one and produce all the heat and power for a school. The dry matter would be odorless. The nutrients could be taken out and spread on the fields. The technologies are really advancing rapidly. There could be a great breakthrough.”

Skellie also pointed out that the law allows taxing bodies to negotiate a payment-in-lieu-of-taxes or PILOT agreement to make up some of the lost revenue.


Seeing solar as a benefit
Whitehall Supervisor George Armstrong, who also voted against holding this month’s hearing, said solar projects are an economic benefit to his town.

“Our position on the town board is that we encourage solar, because we’re very supportive of renewable energy,” Armstrong said, adding that solar energy “provides income to the landowner, temporary jobs in construction, and a few long-term jobs for maintenance.”

One large solar project has been completed and two others are in the planning stages in Whitehall, Armstrong said.

“We’re going into a PILOT agreement with the developers,” Armstrong said. “Most of that land has agricultural exemptions, and some has veterans’ exemptions. People aren’t paying much tax on that land anyway. Tax-wise, we’ll end up OK.”

Armstrong said he doesn’t see why the town’s increase in its tax value from solar projects would be a problem at the county level. If all three solar projects in Whitehall are completed, the town’s assessed value would increase by about $30 million.

But “nothing remains static,” Armstrong said. Other towns’ values are rising as well, he said, giving the example of a new supermarket in Fort Edward and an expansion of the Fort Miller Co. facility in Easton.

“Why would you ever want development in your town if you were afraid it would raise your assessment?” Armstrong asked.

He suggested some people are opposed to the tax exemption because renewable energy facilities represent “change, and people are resistant.”

Valerie Reagan, a solar power advocate who previously served as village mayor in Cambridge, noted that “towns and counties give tax exemptions all the time to promote businesses.”
The Cambridge, an assisted living facility that opened recently in the former Cambridge Hotel, received a 100 percent tax exemption for five years and a 50 percent exemption for another five, she said. It will be fully taxed after that.

“Why does the county want to opt out” of the renewables exemption? she asked. “It seems like an ill-advised way to increase their revenue stream.”


Changing the rules
The possibility that Washington County might opt out of the tax exemption for renewable energy “certainly does give us pause,” said Rob Garrity, the leader of the development team that is working on the three installations in Whitehall for Borrego Solar.

“We have substantial time and resources committed on the basis that the county wasn’t opting out,” Garrity said.

Garrity said the largest of the Whitehall projects, a 5.3-megawatt installation with about 16,000 panels covering 20 acres, is complete and partly in service. It will be fully operational when National Grid finishes transmission improvements in the area. New York state is buying the power to run the ski areas at Whiteface and Gore mountains in the Adirondacks.

Electricity from the other two Whitehall projects, he said, is committed to the polytechnic center at the University at Albany.

Garrity said Borrego’s facilities have a minimum life expectancy of 25 years and could last 30 to 40 years. Construction on the two smaller projects hasn’t started, but Borrego has done preliminary work such as locating wetlands on the sites, title searches, securing incentives from the New York State Energy Research and Development Authority, or NYSERDA, and completing the town’s site-plan review process, he said.

Boreggo is spending millions of dollars on labor and equipment, Garrity said, and it’s paying “hundreds of thousands of dollars” in sales tax on the equipment.

“Just because these projects cost a lot of money to build doesn’t mean people are making a lot of money on them,” he said. “The returns are in the single digits. Adding a property tax that wasn’t even contemplated could make the project not work. A county opt-out would be a significant deterrent.”

According to a NYSERDA fact sheet on the tax exemption, jurisdictions that opt out “may find that they will not actually collect more revenue from solar or other renewable energy systems, because the systems may not be built if they are fully taxable. ... Activity in other states suggests that there is less solar development in jurisdictions that opt out of the property tax exemption, with little to no additional tax revenue collected.”

Opting out of the exemption means that residential, farm and small business solar projects will be taxed as well. This “makes solar installations more expensive for homeowners and local businesses,” the fact sheet adds.


Protecting farmland?
Some people worry that large solar projects will take up prime farmland or be an eyesore. The town of Greenwich, one of the few Washington County towns with zoning, renewed a six-month moratorium on commercial solar projects in August in part to deal with those issues. (Greenwich Supervisor Sara Idleman did not return phone calls asking for comment.)

The town of Jackson, which has no zoning, imposed a six-month moratorium on large solar projects in July.

“We needed to get some kind of site planning,” Skellie said. “The solar may have pushed it.”
Some large projects have been proposed in Jackson, but nothing is definite, Skellie said. The town board wants to ensure that any solar facilities in the rural town would be safe and not “encroach on the neighbors,” he said. The town might decide to require screening and fencing around such projects.

The town of Easton’s six-month moratorium on large solar projects expires this month. The town’s only land-use controls are subdivision regulations, which means the town Planning Board would only have jurisdiction if a landowner leased part of a parcel for a solar facility. The town board discussed the issue, opted out of the tax exemption, and decided no further action was necessary, Shaw said.

“We’re an easy town to get along with,” Shaw said.
In Whitehall, Armstrong said he recognizes the need to protect prime farmland, but he pointed out that not every open field is suitable for solar development. Sites also need to be near transmission lines that have enough capacity to take the extra energy, he said.

“If all the solar you could put in the county were developed, it would be only a small fraction of the farmland in use,” Armstrong said.

The Whitehall project sites are marginal for farming, he said. The owner of one site plans to graze sheep under the ground-mounted panels.

Armstrong said he supports solar development because “it’s a huge source of renewable energy with no adverse effect on the environment.

“There’s no noise, and birds don’t run into them,” Armstrong said. “At some point in time, they’re going to run out of oil. Towns that resisted solar will rue their decision when their energy bills go up.”