Yes. The model and discount rates will be updated annually, and assessors will use them to generate the value for every solar and wind project with a nameplate capacity of one megawatt or larger.
No. The model is designed for projects of one megawatt or larger.
No. Those projects are typically much smaller than one megawatt. Assessors will continue to value those installations as they have in the past.
A typical solar installation of one megawatt would cover five to ten acres of property.
You will use the same model for all projects of one megawatt or larger. The same discount rate is used for all solar projects regardless of size.
No. The law requires the methodology to be used to value projects that generate at least one megawatt or more of electricity. Incomplete projects that do not generate electricity are outside the scope of the law.
RPTL 575-b requires the use of the discounted cash flow (income) approach.
No. RPTL 575-b requires the assessor to use the new methodology to value all projects of one megawatt or larger. The law also authorizes the Tax Department to annually update the discount rate and to update the model periodically, as appropriate.
The assessor will apply the local level of assessment to the value each year. Therefore, there should not be an impact on the equalization rate.
The renewable energy industry is evolving and changing. Those changes will impact the forecasts built into the model’s income approach. In addition, as solar and wind projects mature, new and revised information may affect the model.
The discount rates will also change annually to reflect economic changes.
The typical warranty period for a renewable energy project is 25 years.
The present value of cash flow is calculated over 25 years. The models include a column for each year to display the components of the present value of cash flow.
The date of operation is the date operation began or, if operation has not begun, the date construction was completed.
No. The periodic replacement of portions of a solar array constitutes maintenance and is already reflected in the values produced by the model.
After equalizing the value, the assessor should follow their usual procedure for rounding.
No. The value of the plant is the same regardless of whether it crosses over multiple parcels. The assessor should run the model for the entire plant and apportion the value among the parcels.
We anticipate that battery storage in support of a solar or wind plant will be addressed in the future when there is more information about the inventory and economics of the storage.
The development of the current model was mandated by legislation. At this time, the Tax Department does not plan to develop a model for smaller plants.
The assessor is responsible for calculating the tax load for the project. The tax load is the overall full value tax rate for the property where the plant is sited. This rate should reflect all property taxes applicable to the property, including town, county, village, school district, and special district tax rates.
To calculate the tax load.
For an example of a tax load calculation, see the User Guide.
The assessor should weight the tax rates based on the portion of the plant in each school district.
The income approach generates the estimated value of an investment based on its expected future cash flows. PILOT agreements are negotiated and, therefore, do not necessarily reflect market value. Market taxes should be used in the calculation of market value.
The user has the opportunity to enter the annual amount of a land lease into the model.
To arrive at a land value for the assessment roll, the assessor should value the land via standard appraisal methodology and apply the level of assessment to that value.
If the portion of the parcel is leased for the plant, the assessor should enter the lease payment in the Annual Ground Lease Payment field. The model will produce a value for the improvements only. The assessor should value all of the land using the standard appraisal methodology.
If the lease payment isn’t available, the model will produce a value of the plant and the land to support the plant, and the assessor should use the standard methodology to value the excess land.
Enter $O for the Annual Ground Lease Payment so that the model will include the value of the land. To determine a land value for the assessment roll, use the standard appraisal methodology and apply the level of assessment.
In the income approach, the land value is inherent to the concluded value. Therefore, the model does not account for value for acre as an input. For instance, assessors typically use the income approach to value an apartment building and the land below it.
The answer depends on the terms of the existing PILOT agreement. If a PILOT under the agreement is calculated based on the assessed value of the project, the publication of this model will change the PILOT because the assessed value of the property will likely change. If the PILOT agreement sets the PILOT at a specific amount(s) without regard to the assessed value of the property, the model may have no impact on the PILOT.
PILOT agreements are private contractual agreements, and the Tax Department cannot provide guidance on their negotiation. However, municipalities may wish to consider the values produced in the model when considering PILOTs.
You should consult your municipal attorney regarding potential legal issues specific to your municipality.
The new methodology applies to all projects of one megawatt or larger.
You should consult with local counsel on the agreement(s) in your municipality.