Local Option - Solar, Wind & Biomass Energy Systems Exemption

Section 487 of the New York State Real Property Tax Law provides a 15-year real property tax exemption for solar, wind energy, and farm-waste energy systems constructed in New York State. As currently effective, the law is a local option exemption, meaning that local governments are permitted to decide whether or not to allow it. The exemption was mandatory prior to a 1990 reenactment in which the local option clause was added. The exemption is valid unless a government opts out of the exemption, as opposed to the more common practice of requiring governments to "opt-in" in order to offer an exemption. As originally created, the exemption was limited to solar and wind energy systems, but in September 2002, it was expanded (S.B. 6592) to include farm-waste energy systems. The maximum rated system capacity for eligible farm-waste energy systems is 1,000 kilowatts (kW). In 2017, A.B. 260 included micro-hydroelectric energy systems, fuel cell electric generating systems, micro-combined heat and power generating equipment systems, electric energy storage equipment, and electric energy storage systems as eligible for the incentive.S.B. 5966A enacted in July 2006 extended the previous December 31, 2006 in-service deadline to December 31, 2010, and A.B. 10875 enacted in August 2010 extended the deadline until December 31, 2014. S.B 7062 of 2014 further extended the deadline to January 1st, 2025.

The exemption applies to solar, wind, or farm waste energy systems that (a) exist or constructed prior to July 1, 1988 (mandatory), or (b) constructed after January 1, 1991, and prior to January 1, 2025 (local option). Micro-hydroelectric energy, fuel cell electric generating, micro-combined heat and power generating equipment, or electric energy storage equipment and systems must be constructed after January 1, 2018 and before January 1, 2025. The amount of the exemption is equal to the increase in assessed value attributable to the energy system. The exemption applies only to general municipal and school district taxes; it cannot be applied to special assessments or special ad valorem levies. With respect to systems constructed after January 1, 1991, and before January 1, 2025, each county, city, town, village and school district (except the city school districts of New York, Buffalo, Rochester, Syracuse and Yonkers) may choose whether to disallow the exemption. The option must be exercised by counties, cities, towns and villages through adoption of a local law and by school districts through adoption of a resolution. Click here for a list of municipalities that have opted not to offer the exemption. Alternatively, a local government that has not opted out of the exemption is permitted to require the property owner to enter into a contract for payments in lieu of taxes, not to exceed the amount payable without the exemption. Partial exemptions are also available if a solar, wind, or farm waste energy system or components of it also serve as part of the building structure. The increase in value exempt from taxation is equal to the assessed value attributable to such system or components multiplied by the ratio of "incremental cost" of the system or components to the total cost of the system or components. The "incremental cost" is the increased cost of the solar, wind, or farm waste energy system or component which also serves as part of the building structure, above the cost for similar conventional construction, which enables its use as a solar, wind, or farm waste energy system or component.