Legislators consider PILOT for otherwise tax-exempt solar projects

Montgomery County legislators are considering establishing a payment in lieu of taxes (PILOT) schedule for any future commercial solar energy projects in the county, including any projects already in progress but have not yet received a site plan approval or a building permit. The legislature tabled a resolution on Tuesday that would have put the PILOT in place after hearing from one Town of Florida land owner and a representative of California-based Borrego Solar company who said the measure would cause them to cancel two of their projects in Montgomery County.

The resolution cites New York State law which allows the increase in value for any property due to the installation of solar panels to be completely tax exempt for 15 years. However, the same state law allows municipalities to withdraw the exemption or impose a PILOT contract. The resolution under consideration would provide a 50% exemption on the increase on assessed value of a property on which a commercial solar facility is built, with a decrease of 5% to the exemption in each year after that until the property would be taxed at full value after 10 years.

Don Nadler, president of Nadler Bros. Inc., which owns property near New York State Thruway Exit 27 where Borrego plans to put their solar panels, urged legislators to modify the resolution so that the project could still enjoy the 15 year tax-exemption.

Nadler acknowledged the project had yet to secure a site plan or building permit, which would be required in order to avoid the PILOT under the proposed resolution.

“However, we do have a power-purchase agreement with SUNY [the State University of New York]. The plans have been fairly well developed and are ready to be presented, and I think at this point I would like to ask that if you [legislators] could modify the [resolution] to include any project that has a power-purchase agreement and a NYSERDA agreement in place. That would save our project.”

Patti Smith, a project developer for Borrego, said the PILOT would have a significant effect on their plans. The project on Nadler’s property is one of three Borrego is working on in Montgomery County. At least two of the projects “will not go forward if this PILOT is put in place,” she said.

“The power-purchase agreements were negotiated based on the assumption of a 15-year tax exemption that was in place,” Smith said. “The additional tax burden that the county is proposing will negatively impact the viability of the projects in development and prevent them from moving forward.”

Nadler said the proposed project could generate as much as $448,000 in sales tax revenue within a year or 18 months.

Smith said the company has an ongoing project in upstate New York which is 80 to 90 percent complete. District 6 Legislator John Duchessi asked Smith if she knew how much sales tax was being collected from that project.

“We’re really not clear with respect to the sales tax issue,” Duchessi said. “By way of comparison, on the project you just mentioned that’s 80 percent complete, how much sales tax was paid on that?”

Smith was not able to cite any figures but said she would check with other company officials to provide an answer.

Before moving to table the resolution, District 1 Legislator Thomas Quackenbush asked if waiting a month for additional information would “kill the project”. Smith said it would not, since company officials are looking at filing a site permit in June.

According to the resolution, the factors that justify the imposition of the PILOT on solar projects include:

  • The need for new tax revenue to stabilize county finances
  • “The development of large-scale solar facilities generates minimal employment opportunities, since the facilities do not require on-site personnel for operations.”
  • Due to New York State’s Remote Net Metering policy, there is no requirement that a solar energy facility contribute to the reduction in energy costs within the county
  • “Utility scale solar arrays may impact upon community character by removing acreage from agricultural production and by introducing large sizes, strong regular geometries, and highly reflective features into a pastoral landscape.”

John Becker and Tim Becker both contributed to this report
Featured photo copyright Canstock/italianestro