Assessor Manuals, Exemption Administration: RPTL Section 487

Exemption Administration Manual—Part 1: Residential—Other than multiple dwellings

Section 4.01, RPTL Section 487: Solar, wind, or certain other energy systems

Year originally enacted:

• 1977, reenacted 1990, 2014
• NYS owned or controlled property enacted 2019

Related statutes:

Publ Serv L §66-j

Summary:

Real property that contains a solar energy, wind energy, farm waste energy, micro-hydroelectric energy, fuel cell electric generating, micro-combined heat and power generating equipment, or an electric energy storage system approved by the State Energy Research and Development Authority is exempt from taxation for a period of 15 years to the extent of any increase in assessed value due to the system. Such property is liable for special ad valorem levies and special assessments. The exemption as reenacted in 1990 is subject to local option.

Additionally, real property, comprising of or including an eligible energy system, that is owned or controlled by New York State or a New York State department, agency or public authority where New York State or the New York State department, agency, or public authority has agreed in writing with the energy system owner or operator to purchase the produced energy or the environmental credits or attributes created by virtue of the system’s operation is permanently exempt from taxation, special ad valorem levies and special assessments, and the owner of such property shall not be subject to any requirement to enter in an agreement for payments in lieu of taxes. This exemption is subject to local option.

Eligibility requirements

Ownership requirements:

The property must be owned or controlled by New York State or a New York State department, agency or public authority to be eligible for the optional permanent exemption. None for the other exemptions.

Property location requirements:

None.

Property use requirements:

Property must contain a solar or wind energy system, an arrangement of solar or wind energy equipment designed to provide heating, cooling, hot water, or mechanical, chemical, or electrical energy by the collection of solar or wind energy and its conversion, storage, protection, and distribution. Solar or wind energy equipment qualifying the property for exemption includes collectors, controls, energy storage devices, heat pumps and pumps, heat exchangers, windmills, and other materials, hardware, or equipment necessary to the process by which solar radiation or wind is collected, converted into another form of energy, stored, protected from unnecessary dissipation, and distributed. It does not include pipes, controls, insulation, heat pumps, or other equipment that is part of the normal heating, cooling, or insulation system of a building. It does include insulated glazing or insulation to the extent that such materials exceed the energy efficiency standards required by law.

Or the property may contain a farm waste energy system, an arrangement of farm waste electrical generating equipment necessary to the process of producing, collecting, storing, cleaning, and converting agricultural waste biogas into forms of energy such as thermal, electrical, mechanical or chemical and by which the biogas and converted energy are distributed on-site. It does not include pipes, controls, insulation, or other equipment that are part of the normal heating, cooling or insulation system of a building. Farm waste electric generating equipment includes equipment that generates electrical energy from biogas produced by the anaerobic digestion of agricultural waste, such as livestock manure, farming waste and food processing wastes with a rated capacity of not more than 1,000 kilowatts that is: 1) manufactured, installed and operated in accordance with applicable government and industry standards, 2) connected to the electric system and operated in conjunction with an electric corporation's transmission and distribution facilities, 3) operated in compliance with the provisions of Section 66-j of the Public Service Law, 4) fueled at a minimum of 90 percent annually by biogas produced from the anaerobic digestion of agricultural waste such as livestock manure materials, crop residues and food processing wastes, and 5) fueled by biogas generated by anaerobic digestion with at least 50 percent by weight of its feedstock being livestock manure materials annually.

Or the property may contain a micro-hydroelectric energy system, an arrangement or combination of micro-hydroelectric energy equipment designed to provide electrical energy by the use of  flowing water. It does not include pipes, controls, insulation or other equipment which are part of the normal heating, cooling, or insulation system of a building. It does not include insulated glazing or insulation to the extent that such materials exceed the energy efficiency standards established by law. Micro-hydroelectric  energy equipment means any energy storage device, penstock, turbine, generator and other materials, hardware and equipment necessary to the process by which the flow of stream or river water or water from other water bodies is converted into electrical energy; protected from unnecessary dissipation; and distributed.

Or the property may also contain a fuel cell electric generating system, an arrangement or combination of equipment designed to produce electrical energy through reaction of chemicals, including but not limited to hydrogen, oxygen, methane and natural gas. Fuel cell electric generating equipment means a solid oxide, molten carbonate, proton exchange membrane or phosphoric acid fuel cell with a combined rated capacity of not more than two thousand kilowatts. It does not include insulated glazing or insulation to the extent that such materials exceed the energy efficiency standards established by law.

Or the property may contain a micro-combined heat and power generating equipment system, an arrangement or combination of equipment designed to produce electrical energy and heat for a residential customer on such customer's premises. Micro-combined heat and power generating equipment means an integrated, cogenerating building heating and electrical power generation system, owned, leased or operated by a residential customer, located at such customer's premises, operating on any fuel and of any applicable engine, fuel cell or other technology with a rated capacity of at least one kilowatt and not more than ten kilowatts electric and any thermal output that has a design total fuel use efficiency in the production of heat and electricity of not less than eighty percent, and annually produces at least two thousand kilowatt hours of useful energy in the form of electricity that may work in combination with supplemental or parallel conventional heating systems, that is manufactured, installed and operated in accordance with applicable government and industry standards, that is connected to the electric system and operated in conjunction with an electric corporation's transmission and distribution facilities. It does not include pipes, controls, insulation or other equipment which are part of the normal heating, cooling, or insulation system of a building. It does not include insulated glazing or insulation to the extent that such materials exceed the energy efficiency standards established by law.

Or the property may contain an electric energy storage system, an arrangement or combination of equipment designed to store electrical energy in electric energy storage equipment and release electric power at a later time. Electric energy storage equipment means a set of technologies capable of storing electric energy and releasing that energy as electric power at a later time. Electric energy storage technologies may store energy as potential, kinetic, chemical or thermal energy, that can be released as electric power and include, but are not limited to, various types of batteries, flywheels, electrochemical capacitors, compressed air storage and thermal storage devices.

Or the property may contain a fuel-flexible linear generator electric generating system, an arrangement or combination of fuel-flexible linear generator electric generating equipment designed to produce electric energy from linear motion created by the reaction of gaseous or liquid fuels, including but not limited to biogas and natural gas. Fuel-flexible linear generator electric generating equipment is defined as an integrated system consisting of oscillators, cylinders, electricity conversion equipment and associated balance of plant components that directly convert the linear motion of the oscillators into electricity and which has a combined rated capacity of not more than 2000 kilowatts.

Structures that satisfy the requirements for exemption under RPTL §483-e (Anaerobic Digestion Facilities) cannot receive this exemption.

Eligibility for the optional permanent exemption requires that the energy produced, or the environmental credits or attributes created by virtue of the system’s operation must be purchased by New York State or a New York State department, agency or public authority.

Certification by state or local government:

Permanent Exemption:

For the permanent exemption applicable to property owned or controlled by New York State or a New York State department, agency or public authority the agreement to purchase the energy produced or the environmental credits or attributes created by virtue of the system’s operation must be in writing.

Required construction start date or other time requirement:

Partial exemption:

Solar, wind, or farm waste energy system must be (a) in existence or constructed prior to July 1, 1988, or (b) constructed after January 1, 1991 and before January 1, 2030. Micro-hydroelectric energy, fuel cell electric generating, micro-combined heat and power generating equipment, or electric energy storage equipment and electric energy storage systems must be constructed after January 1, 2018 and before January 1, 2030

Local option

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 with respect to solar, wind, or farm waste energy systems which began construction after January 1, 1991 and before January 1, 2030, and to micro-hydroelectric energy systems, fuel cell electric generating systems, micro-combined heat and power generating equipment systems, or electric energy storage equipment and electric energy storage systems constructed after January 1, 2018 or the effective date of the local law or resolution, whichever is later.

The option must be exercised by counties, cities, towns, and villages through adoption of a local law and by school districts by adoption of a resolution.

Construction of a solar or wind energy system or a farm waste energy system shall be deemed to have begun upon the full execution of a contract or interconnection agreement with a utility. However, if such contract or interconnection agreement requires a deposit to be made, then construction shall be deemed to have begun when the contract or interconnection agreement is fully executed and the deposit is made. The owner or developer of such a system shall provide written notification to the appropriate local jurisdiction or jurisdictions upon execution of the contract or the interconnection agreement. Written notice by an owner or developer to a taxing jurisdiction of its intent to construct a qualifying energy system must include a hard copy letter sent to the highest-ranking official of the taxing jurisdiction. Such letter must explicitly reference RPTL § 487(9) and clearly state that unless the taxing jurisdiction responds within 60 days, in writing, with its intent to require a PILOT agreement, such project shall not be obligated to pay PILOTs. 

Each county, city, town, village and school district (except the city school districts of New York, Buffalo, Rochester, Syracuse, and Yonkers) may also choose to allow a permanent exemption for qualified real property owned or controlled by New York State or a New York State department, agency or public authority. The option must be exercised by counties, cities, towns, and villages through adoption of a local law and by school districts by adoption of a resolution.

Limitation on exemption

*Amount is limited to any increase in assessed value that is attributable to the solar, wind, or farm waste energy system. (see Calculation of Exemption).

**If allowed by local option (see also Payments in lieu of taxes).

***Applies only to the optional permanent exemption for NYS owned or controlled properties

Payments in lieu of taxes

None required.

However, each county, city, town, village and school district (except the school districts of New York, Buffalo, Rochester, Syracuse, and Yonkers) that has not disallowed the exemption may require the owner of a property which includes a solar or wind energy system to enter into a contract for payments in lieu of taxes. As part of such contract, the property owner may be required to make annual payments in an amount not to exceed the amounts which would have been payable without the exemption. Such a contract may not operate more than 15 years, commencing from the date on which the benefits of this exemption first become effective.

No agreement for payment in lieu of taxes may be required of owners of properties receiving the permanent exemption applicable to NYS owned or controlled properties.

Written notice by an owner or developer to a taxing jurisdiction of its intent to construct a qualifying energy system must include a hard copy letter sent to the highest-ranking official of the taxing jurisdiction. Such letter must explicitly reference RPTL § 487(9) and clearly state that unless the taxing jurisdiction responds within 60 days, in writing, with its intent to require a PILOT agreement, such project shall not be obligated to pay PILOTs. Should a taxing jurisdiction adopt a local law or resolution at any time within or prior to the 60 day window indicating the taxing jurisdiction’s ongoing intent to require a PILOT agreement for such systems, such local law or resolution shall be considered notification to the owners or developers, and no further action would be required on the part of the taxing jurisdiction as long as the local law or resolution remains in effect through the end of the 60-day notification period.

Calculation of exemption

General municipal and school district taxes:

Permanent Exemption:

Exempt from all taxation  

Partial exemption:

Increase in assessed value attributable to the solar, wind, or farm waste energy system. 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.

Note: Incremental cost calculations only apply when eligible systems are incorporated into structures. Incremental cost calculations should not be applied when the eligible system is standalone.

See also the examples given in the definitions/guidelines booklet following this Exemption Profile.

Note: If a farm waste energy system would otherwise be subject to the provisions of RPTL Article 5, Title 5, concerning oil and gas economic units, those units are exempt from taxation if energy produced in a farm waste energy system is collected from a landfill or used to power farm waste energy systems or farm waste electrical generating equipment (see Property Use Requirements above). This exemption applies to property on assessment rolls based on taxable status dates occurring on or before December 31, 2017. 

Special ad valorem levies and special assessments:

Partial Exemption:

No exemption allowed.

Permanent Exemption

Exempt from special ad valorem levies and special assessments.

Coding of exemption on assessment roll

Assessment roll section: Taxable (RPS Section 1).

Filing requirements (owner or occupant of property)

File Form RP-487, Application for Tax Exemption of Solar, Wind, or Farm Waste Energy Systems

Reporting requirements (assessor)

None. 

Similar exemptions

Exemption application forms

Form RP-487, Application for Tax Exemption of Solar, Wind, or Certain Other Energy Systems

The New York State Energy Research and Development Authority is authorized to establish definitions and guidelines for the eligibility for exemption of the solar and wind energy equipment and systems, farm waste energy equipment and systems, micro-hydroelectric equipment and systems, fuel cell electric generating equipment and systems, micro-combined heat and power generating equipment and systems, electric energy storage equipment and electric energy storage system, and fuel-flexible linear generator electric generating equipment and systems.

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