Monday, January 7, 2019

Tax exemption could cut towns statewide from solar-farm revenue

Tax exemption could cut towns statewide from solar-farm revenue

Cities and towns statewide, who count on big tax revenue from commercial solar farms, could come up short because a state appeals board is granting tax exemptions to solar companies.

Some solar developers have used Clause 45th of state law Chapter 59 to argue they are tax exempt and the state Appellate Tax Board has agreed.

What some are calling a tax “loophole” is causing an array of confusion in assessors’ offices across the state.

Worcester County is home to 721 nonresidential solar projects with a total installed capacity of 468 megawatts, according to the state Department of Energy Resources. Statewide, 4,751 installations have a combined capacity of 1,718 megawatts.

An Appellate Tax Board decision forced Barre to refund personal property tax it collected from a solar developer. Charlton and Oxford await the tax board’s decision on appeals that could put at risk more than $1 million in revenue.

Talk of the matter in Charlton ramped up in November at a selectmen’s meeting when resident H. Laurie Degnan called for citizens to be aware and get involved.

“When I found out about the huge loophole called Clause 45th, I was alarmed,” she said. “This is not just affecting Charlton, it’s affecting every town in Massachusetts.”

Ms. Degnan said large solar farms were developed along the Route 20 commercial corridor in Charlton with the promise of tax revenue. Those installations, she said, displace for at least 20 years other business development that could have brought solid tax revenue to the town.

State legislation filed to close the loophole, she added, has been stuck in the Statehouse for three years.

“It’s happening more and more that the Appellate Tax Board is siding with the (developers). Oxford has 17 megawatts that they’re going to have to go to court for,” Ms. Degnan said, noting the plight in Barre resulted in a refund check.

Oxford Assessor Chris Pupka said he is awaiting an ATB hearing date on its largest solar installation - BlueWave Capital LLC, also known as BlueWave Solar.


If the tax board grants an exemption to BlueWave, he said, the town will lose annual tax revenue of $369,000. It is not yet decided if the town would appeal a tax board decision that favors BlueWave.
Barre Town Administrator Andrew Goals said Quabbin Solar LLC prevailed in its appeal to the ATB and the town had to refund $65,178.

“We had assessed them as personal property taxes. Going forward we entered into a PILOT (Payment in Lieu of Taxes) agreement with them,” he said. “It wasn’t much of a net loss. It amortizes the payment over 20 years.”

The ATB opinion on Quabbin Solar, published Nov. 2, 2017, found the solar output was being used as primary or auxiliary power for heating a property taxable under state Chapter 59, and it therefore qualified for the exemption provided in Clause 45th. The plain meaning of which requires solar output to supply the energy needs of an entity that pays property tax. In this case, Quabbin was supplying Honey Farms Inc.

Charlton Town Administrator Robin L. Craver recently said the town is in jeopardy of losing its taxing authority over its arrays unless a change is made to the law or the tax board’s interpretation of the law.

“This is a big deal for Charlton as we could stand to lose nearly a million of tax revenue,” she said. “It’s important that people understand that this matters.”

The Charlton Board of Assessors is fighting a tax appeal filed by 38 Degrees North LLC, also known as Zero Point Solar.

“If we lose, which we anticipate we will, it’ll cost the town thousands of dollars to appeal, which the selectmen have already voted to do,” Ms. Craver said.

Charlton has 21 operational solar farms with seven more in permitting. The tax revenue collected last year, she said, was $679,570.00. Next year, with a full build out, the generated tax revenue is expected to exceed $1 million.

Deborah Ceccarini, Charlton director of assessing, said in an interview last week that her office, has been working on the matter for a while in conjunction with the Massachusetts Association of Assessing Officers.

Ms. Ceccarini said the association is pushing for new language in the “very old, antiqued law” adopted in the 1990s meant to regulate individuals developing solar on their personal property.

R. Lane Partridge, of MAAO, said the state Department of Revenue doesn’t recognize commercial solar installations as tax exempt, but the ATB has ruled otherwise.

“We have put in legislation for the last three sessions to try it get the confusion straightened out,” he said. “We’re going to submit a bill with the language that was approved by the Senate in the last session.”

The Massachusetts Municipal Association is also in the fight to protect tax revenue for its member communities.

The MMA has written to state lawmakers advocating for the modernization of the long-standing exemption for renewable energy property to better align with the new technologies and business practices that were not anticipated when the law was enacted.

John Robertson of the MMA said in an interview that the tax board decisions to allow exemptions has led to uncertainty about the rules governing solar energy, making it difficult for cities and towns to determine the financial prospects of new projects and the status of existing projects.

Mr. Robertson said he expects to see a multitude of new bills filed in the state House and Senate for the new legislative session now underway.

Regarding the 38 Degrees North move to be declared tax-exempt, Ms. Ceccarini said the town has hired a lawyer from Boston to fight.

“We’re going to go to appellate and they’re going to turn us down. We will appeal to a higher authority,” she said.

Ms. Craver and Ms. Ceccarini are calling on their state representatives for help.

State Rep. Peter J. Durant, R-Spencer, called the matter a “double-edged sword.”

“Solar farms offer a lot of good benefits, but they should not be exempt from paying taxes like everybody else,” he said in an interview. “We have subsidized this industry enough. We should not continue subsidizing them by punishing the towns.”

State Sen. Anne M. Gobi, D-Spencer, is set to meet in Charlton with the Board of Assessors at 6 p.m. Tuesday.

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