New York State Revises Solar and Wind Property Tax Calculator | Pierce Atwood LLP

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On September 17, 2021, the New York State Department of Taxation and Finance released a second (revised) preliminary assessment model to assess solar and wind energy projects. Its first preliminary assessment model was released on August 2, 2021. Comments on the two proposed property assessment models are expected 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 valuing renewable energy projects is one of many recent changes to New York Tax Laws (RPTL) that the state recently passed to promote energy projects. solar, wind and other renewable energies.

One of those changes required local tax assessors to take a flat income capitalization, or discounted cash flow, valuation approach to valuing renewable energy properties. 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 tax assessors are required to use the new methodology as of the 2022 assessment rolls.

The deployment of the property tax calculator offered by the New York Department of Taxation and Finance is underway. The model uses several default “auto-fill” 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 renewable energy projects owned by third parties.

Revised Model # 2 aims to correct some of these issues. The second model is divided 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 original model, but still appears to use relatively low discount rates, capacity factors rarely achieved by many projects, and low site lease payments.

The Ministry of Taxes and Finance points out that the two models are preliminary and that comments on the two models must be filed by October 1, 2021. After reviewing the 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 visit methodology for evaluating solar and wind energy projects for a copy of the revised assessment methodology.


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