Legal Property Tax Questions – Asked and Answered
The following questions were submitted by local officials, mainly assessors and county real property tax directors. Bear in mind that the answers:
- are an informal expression of our reading of the law,
- are purely advisory,
- may not be equated to formal Opinions of Counsel, and
- are not binding in any way on local governments.
Assessors and other local officials seeking definitive legal advice should consult their municipal attorneys.
Questions and answers
Administrative Complaints (RPTL §§ 512, 522-528)
Q1: A property owner emailed an administrative complaint (RP-524) to the assessor after being advised by a staff person in the assessor’s office that it was permissible to do so. The email was sent to the assessor within the time allowed for the filing of administrative complaints but was quarantined and, therefore, was not seen by the assessor until the property owner called to learn of the determination, which was after the first meeting of the Board of Assessment Review (BAR) was concluded. Is the BAR required to accept the administrative complaint as timely?
A: In our non-binding opinion, it is not. RPTL § 524(1) requires complaints to be “filed” either with the assessor prior to the Grievance Day hearing, or with the BAR at the Grievance Day hearing. We do not believe this requires the assessor or BAR to accept complaints that were sent by email. The BAR is not bound by a representation made by an assessor regarding filing requirements (see 7 Op. Counsel SBEA No. 61), so it is not determinative that a staff person informed the property owner that it was permissible to file via email. Furthermore, RPTL § 104 allows for e-filing of complaints in compliance with standards adopted by the Department and the Department (at the time this question was submitted) has yet to adopt any such standards. Assessing units cannot be required to accept e-filed complaints because the required standards do not yet exist. Note that although the BAR is not obligated to accept the e-filed complaint, it is permitted to do so if it wishes (despite the fact that RPTL §104 standards don’t exist yet). See, e.g., 10 Op. Counsel SBRPS No. 123.
Agricultural Assessments and Exemptions (AML Article 25-AA; RPTL §§ 481 – 483-e)
Q1: A taxpayer who is an oyster farmer has an agricultural exemption on his parcel which is underwater. He also owns a very small parcel (0.1 acres) on the shore, where he stores his equipment and bags up the oysters. He stated that the building on the shore is a separate parcel. He is specifically asking if a parcel adjacent to the already approved parcel can qualify as support land, even though it is a separate parcel.
A: We cannot offer legal advice, only our non-binding interpretation of the law. Ultimately this is the assessor’s call. The emphasized portion of AML 301(4)(c) indicates that “support land” must be part of the same parcel that’s receiving the agricultural assessment. That interpretation is further supported by the regulations at 20 NYCRR 8194.1(af) which says, in relevant part:
(af) Support land means land constituting a portion of a parcel, as identified on an assessment roll, which also contains land qualified for an agricultural assessment, where such land is not actually being used to produce crops, livestock, livestock products or woodland products for sale, but is being used in support of a farm operation or in support of land used in agricultural production (examples include, but are not limited to, farm ponds, swamps used for drainage, land used for erosion control, hedgerows, access roads, land under farm buildings, dikes and levees used for flood protection, drainage ditches and land used for farm waste management). Support land also includes any other land, constituting a minor portion of such parcel, that is spatially integrated within the portion of the farm operation actually used to produce crops, livestock or livestock products for sale, where such land is not qualified farm woodland or nonagricultural land.
That portion of the regulations, at 8194.1(u), defines “qualified farm woodland” in relevant part as:
farm woodland which is part of land otherwise qualified for an agricultural assessment, and which does not exceed 50 acres attributable to any separately assessed parcel. Farm woodland is considered to be part of land otherwise qualified for an agricultural assessment if it is used as a single operation and contiguous with such land. Lands divided by State, county or town roads, energy transmission corridors and similar facilities are to be considered contiguous.
In other words, land can qualify as farm woodland if it’s contiguous with land receiving an agricultural assessment. The definition of “support land” itself, combined with the fact that the definition doesn’t contain the same caveat contained in the definition of “qualified farm woodland,” indicates that land must be part of the same parcel receiving the agricultural assessment in order to qualify. Based on the above, it’s our non-binding interpretation of the law that in order to qualify as agricultural support land the land must constitute a portion of a parcel that receives the agricultural assessment. The pertinent part of the agricultural and markets law states:
c. Land used in support of a farm operation or land used in agricultural production, constituting a portion of a parcel, as identified on the assessment roll, which also contains land qualified for an agricultural assessment. Such land shall include land used for agricultural amusements which are produced from crops grown or produced on the farm, provided that such crops are harvested and marketed in the same manner as other crops produced on such farm. Such agricultural amusements shall include, but not be limited to, so-called "corn mazes" or "hay bale mazes".
The support land must be on the same parcel that is receiving the ag exemption.
Proof of average gross sales value
Q1: Must persons applying for agricultural assessment provide a copy of their Farm Profit or Loss Schedule from their Federal Income Tax Return?
A: No, not if they submit other evidence with their application that demonstrates to the assessor’s satisfaction that the average gross sales value of the farm operation is at least $10,000 (or $50,000 if less than seven acres).
The law does not require any particular documentation to be submitted with an application for agricultural assessment. Since the burden of establishing eligibility for the exemption rests with the applicant, the applicant may choose what information to supply to the assessor. Such substantiation may include Schedule F, bookkeeping records, bills of sale, receipts, other financial records, or any combination of the above. The failure to submit a Schedule F is not, in and of itself, grounds to deny the application. If the information provided substantiates that the land satisfies the gross sales value requirement, and all other qualifications are met, then the agricultural assessment should be granted.
On the other hand, the assessor must be satisfied that the eligibility requirements are satisfied before he or she may grant the exemption. If the assessor finds the documentation submitted with the application to be inconclusive, he or she may make reasonable demands for additional information, including the Schedule F. Ultimately, if after reviewing the information provided, the assessor reasonably finds that the applicant has failed to demonstrate that the land meets the average gross sales value requirement, he or she would be obliged to deny the application.
We would remind all assessors that when they do receive a Schedule F or any other income tax return information, they must treat it as confidential material and do their utmost to protect it from unauthorized disclosure.
Alternative Veterans Exemption (RPTL § 458-a)
Q1: A veteran has a service-connected disability rating of 70%. His letter from the US Department of Veterans Affairs states that he is being "paid at 100% rate because you are unemployable due to your service-connected disabilities." Is he entitled to a 100% rating on the exemption, or just the 70% based on the service connection?
A: RPTL § 458-a(2)(c) provides that a veteran with a service-connected disability rating may receive an additional exemption based upon his or her disability rating (also referred to as a compensation rating). Under the circumstances described, we believe the 100% rating controls for purposes of RPTL § 458-a. According to the General Counsel at the New York State Division of Veterans’ Affairs*, the disability ratings are calculated based on a rating system for specific types of injuries. When a veteran has multiple injuries, the percentages are not just added together. Instead, the next disability rating is applied to the remaining efficiency and the numbers are rounded. The bottom line is that under the formula and with the rounding (which is always rounded down), it is very difficult to get to a 100% disability rating, per se. However, with veterans with multiple injuries and disabilities, though they may have only reached a 70% or 80% rating under the formula, they may actually be so disabled that they are unemployable. In such cases, the veterans may apply for a 100% compensation rating from the US Department of Veterans Affairs. If, after examination, it is determined that the veteran really is so disabled that they should be at 100%, the US Department of Veterans’ Affairs overrides the formula and grants compensation at 100%.
In the view of the State Division of Veterans’ Affairs, in a case where a veteran has a letter from the US Department of Veterans Affairs that indicates a disability rating of less than 100% but also indicates that the veteran is being paid at 100% because they are unemployable due to service connected disabilities, that is intended to mean that the veteran has been granted a rating of 100%. Based on their advice, we believe that in such cases a rating of 100% should be used for purposes of RPTL § 458-a.
*Since responding to this letter, the NYS Department of Veterans’ Affairs has been renamed to the NYS Division of Veterans’ Services.
Q2: A veteran served in the Navy from 1976-82 and received an expeditionary medal for his service in Iran. Is he eligible for the alternative veterans exemption even though he didn’t serve during a “period of war” as defined by the statute?
A: To qualify as a veteran for purposes of RPTL § 458-a, the person must have served on active duty during a period of war or have met one of the other qualifications. One of the other qualifications is receipt of one of the medals listed in 458-a(1)(e)(i). Qualification by way of receipt of a medal used to be further limited by specific times/areas the medal was earned. That was changed by the legislature in 1999 (L. 1999, c. 566).
If a veteran has received an armed forces expeditionary medal, navy expeditionary medal, marine corps expeditionary medal, or global war on terrorism expeditionary medal and was discharged or released under honorable conditions, he or she is a veteran for purposes of the exemptions available under RPTL § 458-a.
Period of war
Q3: Can a recent veteran of the war in Iraq be granted an alternative veteran's exemption on the basis that he served during the “Persian Gulf Conflict (on or after August 2, 1990)”? Or, does said veteran have to have received an expeditionary medal to qualify?
A: Assuming this individual was discharged under honorable conditions, service during a period of war OR receipt of one of the named expeditionary medals would qualify the veteran for the RPTL § 458-a exemption.
To qualify as a veteran for purposes of RPTL § 458-a, the person must have served on active duty during a period of war or have met one of the other qualifications. One of the other qualifications is receipt of one of the medals listed in RPTL § 458-a(1)(e)(i). Qualification by way of receipt of a medal used to be further limited by specific times/areas the medal was earned. That was changed by the New York State Legislature in 1999 (L. 1999, c. 566).
If a veteran has received an armed forces expeditionary medal, navy expeditionary medal, marine corps expeditionary medal, or global war on terrorism expeditionary medal and was discharged or released under honorable conditions, he or she is a veteran for purposes of the exemptions available under RPTL § 458-a.
With respect to your question regarding the Persian Gulf conflict and whether the Iraq war qualifies, RPTL § 458-a(1)(a) defines the Persian Gulf Conflict as having a start date of August 2, 1990 but no end date. 38 USC 101(33) defines that Persian Gulf War as commencing on August 2, 1990 and ending on the date thereafter prescribed by Presidential proclamation or by law.
The Congressional Research Service reports the Persian Gulf War began August 2, 1990 and continued through April 6, 1991, when Iraq officially accepted cease-fire terms. Congress passed H.J.Res. 77, Authorizing the Use of Military Force Against Iraq, the same day it was introduced (January 12, 1991), and it was signed by the President on January 14, 1991 (P.L. 102-1). Operation Desert Storm and the air war phase began at 3 a.m. January 17, 1991 (January 16, 7p.m. Eastern Standard Time). Allied ground assault began at 4 a.m. February 24 (February 23, 8p.m. EST). Cease-fire was declared at 8:01 a.m. February 28, 1991 (12:01 a.m. EST). Cease-fire terms were negotiated at Safwan, Iraq, March 1, 1991. Iraq officially accepted cease-fire terms on April 6, 1991. The cease-fire took effect on April 11, 1991. Currently, the Code of Federal Regulations, 3.2 (i) does not list an official end date.
Though there was a cease fire, there has been neither a presidential proclamation or a law setting an end date, and both the USC and the CFR have left the date open. If the state legislature wants to formally and finally close the period out, they certainly can do so. One additional distinction we can point to is that RPTL § 458-a uses the term Persian Gulf "conflict," not "war." That may be a distinction without a difference, or maybe an attempt for the period to be flexible. In any case, we find no compelling evidence that the time period has been closed.
Widow of deceased veteran
Q4: A veteran who had never applied for the alternative veteran’s exemption recently died. His widow is not a veteran but she wishes to apply for the exemption on the basis of her late husband’s service. Is this permissible?
A: In our non-binding opinion, she may indeed apply for the alternative veteran’s exemption, assuming she has not remarried, because she’d be a “qualified owner” under the statute. As RPTL § 458-a(1)(c) states (emphasis added):
(c) "Qualified owner" means a veteran, the spouse of a veteran or the unremarried surviving spouse of a veteran. Where property is owned by more than one qualified owner, the exemption to which each is entitled may be combined. Where a veteran is also the unremarried surviving spouse of a veteran, such person may also receive any exemption to which the deceased spouse was entitled.
To be clear, the Alternative Veteran’s Exemption that she would be receiving would be her own Alternative Veteran’s Exemption, not that of her late husband. She would only be entitled to receive it going forward; it could not be granted on a retroactive basis. To apply, she must provide the eligibility records of the veteran, her late husband.
Apportionment of Assessments (RPTL § 932)
Split occurring after Taxable Status Date
Q1: A parcel of land was split and sold after Taxable Status Date. There is a building on the property that will be demolished this fall. One third of the property was split off as a "highway taking." That portion runs through the building, which was standing on taxable status still and remains intact. The remainder of the lot and building are still owned privately. The private owner suggested that she should only pay taxes on the land as this building is going to be torn down and the New York State Department of Transportation owns the other one third of it. Should the value of the building be disregarded when the apportionment is done?
A: Under RPTL § 932, a person who owns a portion of a parcel may pay the tax on that portion, provided an apportionment of the assessment has been obtained from the assessor after due notice to the parties. In general, any change in the condition of property following taxable status date would not affect the taxable status of the real property parcel for the ensuing fiscal year. See 3 Op Counsel SBEA No. 108.
Corrections of Errors (RPTL §§ 550-559)
Q1: An improvement added 462 square feet to a house. The assessor inadvertently indicated on the property inventory that 1462 square feet had been added to the house. As a result, the assessment was increased more than it would have if the correct square footage had been used. The homeowner did not learn of the error for more than 10 years. Can this be corrected retroactively through the correction of errors (COE) procedures?
A: In our non-binding opinion, this error is not correctable under COE. The only type of inventory error that can be corrected under COE is an “error in essential fact” as defined under RPTL 550(3)(a), (b), (c) or (d), and it appears to us that this claimed error does not fit any of those definitions. That being so, we believe it must be treated as a complaint of overassessment, and the owner’s recourse in a case of claimed overassessment is to file a timely grievance. It is much too late to do so now. However, the property inventory record can, and should, be corrected going forward.
Use of erroneous tax rate
Q2: A school district made an error in the preparation of the tax bills of their district. Due to a transcription error, the tax rate that was used was lower than the tax rate that had been approved, and as a result, the school district is facing a significant shortfall in its tax collections. What can be done to rectify this problem?
A: This type of error may be classified as a "clerical error" under section 550(2)(d) of the Real Property Tax Law. Unfortunately, the statutes that allow for the correction of tax bills (namely, sections 556 and 556-b of the RPTL) are designed to allow the issuance of refunds of credits when tax bills are too high due to a clerical error. There is no comparable provision that would allow the immediate correction of tax bills when they are too low due to a clerical error.
While we understand that some County Directors may have used 556-b in the past to make corrections that involved tax increases, we've never agreed that that's an appropriate use of section 556-b. The wording is not as precise as it could be, but in our view section 556-b is clearly designed to enable tax bills to be lowered, not increased. Consider:
- The text of section 556-b speaks repeatedly of refunds or credits going to the affected taxpayers once the correction has been made; nowhere does it suggest that affected taxpayers might have to pay more.
- Consistent with that observation, section 556-b(2) requires the application to be made “on behalf of all owners of property affected by the clerical error.” That wording confirms that the statutory expectation is that the application will work to the benefit of the affected property owners. An application to increase a person's tax liability clearly is not made on that person's “behalf.”
- If it were permissible to use 556-b to increase tax bills, then as a matter of due process, the owner would have to be given notice of the increase and an opportunity to challenge it. Section 556-b does neither. Rather, it simply provides that when an application has been filed, the County Director conducts an investigation and reports his or her findings to the tax levying body, which makes the final determination. Compare that to section 553, which does allow corrections on the final roll that result in tax increases, but only after explicitly requiring that (1) notice be given to the taxpayer in advance, and that (2) the BAR be reconvened to hear any complaints. The absence of such language from section 556-b is compelling evidence that it was not intended to be used in a similar manner.
- Historically, section 556-b was added to the RPTL in 1978 to supplement the original COE statutes (RPTL §§ 550-559) that were enacted in 1974. Early experience with sections 554 and 556 -- which allow individual taxpayers to seek reductions of their tax bills (§ 554) or refunds of tax payments (§ 556) when an error has occurred -- had shown that when a multi-parcel error has occurred, it is often difficult to obtain applications for correction from all affected taxpayers. Section 556-b was drafted to enable the taxing authorities to remedy such multi-parcel errors by submitting a single application on behalf of all adversely affected taxpayers, rather than requiring each of them to apply individually. Since section 554 is designed to be used to generate tax bill reductions, and section 556 is designed to generate tax refunds (or credits, thanks to a 2002 amendment), then by extension the same would be true for section 556-b.
Though we understand the school district's dilemma, all we can suggest is that the school district may wish to explore whether effective remedies might exist outside the Real Property Tax Law, such as a short-term borrowing to close the funding gap. However, such issues are beyond our expertise, and we can offer no advice thereon.
Eligible Funds Veterans Exemption (RPTL § 458)
Severely Disabled Veterans; necessary land
Q1: A veteran with a severe disability is purchasing a house and will be receiving a grant to adapt the house for the veteran’s severe disability. The 28.75 acre parcel contains a ranch house with attached garage, pool, and a detached 4,000 square foot pole building (not near the house) used by the current owner for his crane operation business. Is the pole building and all of the acreage eligible for exemption under subdivision three of RPTL § 458?
A: Under RPTL § 458(3), severely disabled veterans are generally eligible for a total exemption on their primary residence and the “necessary land.” It is quite reasonable to interpret the “necessary” as a restriction, and also to limit the scope to the portion of the parcel being used for residential purposes. There is nothing we find in the legislative history that leads to a different conclusion. The use of the term "housing unit" in RPTL § 458(3), in permitting an un-remarried spouse to retain the exemption on their residence is further indication that the exemption is intended to apply to the portion of the property being used as a residence.
We do not have an opinion on point for the veterans exemption in RPTL § 458(3) but in the context of RPTL §§ 467 and 458-a, we have opinions that discuss the limitations of an exemption of this genre. See 10 Opinion of Counsel SBRPTS 09.
It would be up to the individual assessor to evaluate the facts and circumstances and make a determination as to how much of the land is part of the residential parcel.
Exemption for Persons with Disabilities and Limited Incomes (RPTL § 459-c)
Income; Capital loss carryovers
Q1. An applicant for the exemption authorized by RPTL § 459-c for persons with disabilities and limited income submitted a copy of his 2019 federal income tax return with a number of schedules/forms attached. His eligibility was evidently based on his 2019 income because at the time he filed his exemption application, his 2018 income tax return was his latest available income tax return. Schedule D, line 1b, shows a capital gain for 2019. Schedule D, line 6, shows a short-term loss carryover from 2018 of a nearly equal amount. The question is whether the 2019 capital gain may be reduced by the short term loss carryover in order to qualify the applicant for the 459-c exemption.
A. In our non-binding opinion, the 2019 capital gain should be included in the applicant’s income, without being offset by the capital loss that was carried over from 2018. This is not just because the federal income tax rules are not determinative as to how income should be determined for purposes of the § 459-c (and § 467) exemptions, though that is true. It is primarily because the language of RPTL 459-c (and § 467) actually forbids considering capital losses carried over from prior years. RPTL 459-c(5)(a) states in pertinent part:
5. No exemption shall be granted:
(a) if the income of the owner or the combined income of the owners of the property for the income tax year immediately preceding the date of making application for exemption exceeds [the applicable limit]. Such income shall include social security and retirement benefits, interest, dividends, total gain from the sale or exchange of a capital asset which may be offset by a loss from the sale or exchange of a capital asset in the same income tax year…. [Identical language appears in RPTL § 467(3)(a).
In other words, the law provides that capital gains are to be counted toward income, but they may be offset by a capital loss occurring in the same income tax year. As we see it, the fact that the statute expressly provides an allowance for capital losses occurring in the same income tax year, while providing no allowance for capital losses carried over from one or more preceding income tax years, can only mean that capital losses carried over from a prior year must be disregarded when computing the income of an applicant for the § 459-c (or § 467) exemption.
Judicial Review of Assessments (RPTL Article 7)
Standing of new owner
Q1: Does a property owner who acquired property after Grievance Day have standing to challenge its assessment pursuant to RPTL Article 7? A grievance was filed by the former owner and was denied.
A: On the basis of the submitted facts, we believe that the new owner as a successor in interest has the same right as the former owner has, to challenge the assessment. The new owner is an aggrieved person "whose pecuniary interests are or may be adversely affected." See, People ex rel. Bingham Operating Corp. v. Eyrich, 265 App.Div. 562, 40 N.Y.S.2d 33, at 35 (3d Dept., 1943). See also the case notes under RPTL § 704.
Marriage Equality (Domestic Relations Law § 10-a)
Q1: If an exemption statute makes reference to a "husband and wife", does that mean same-sex spouses are ineligible?
A: No. When administering the provisions of the Real Property Tax Law, assessors and other local officials must recognize marriages between individuals of the same sex if valid and performed in New York or other jurisdictions where such marriages are legal (Domestic Relations Law § 10-a, as added by L.2011, c.95; see also Martinez v. County of Monroe, 50 A.D.3d 189, 850 N.Y.S.2d 740 (4th Dept., 2008)). For example, if an exemption statute refers to a husband and wife in determining eligibility, same-sex spouses must be given the same consideration as different-sex spouses. Local officials with questions on this issue should consult their municipal attorneys.
Definition of Real Property
Q1: A taxpayer is constructing an electric energy storage facility which will contain batteries and battery racks. The facility does not contain any electrical energy generating equipment. Are the batteries and battery racks real property?
A: It is up to the assessor to determine whether the property at issue is real property. One thing the assessor might consider is the definitions of “real property” contained in RPTL § 102(12). Another consideration is the fixtures test described in Metromedia, Inc. v. Tax Commission of the City of New York, 60 N.Y.2d 85 (1983) (“To meet the common-law definition of fixture, the personalty in question must: (1) be actually annexed to real property or something appurtenant thereto; (2) be applied to the use or purpose to which that part of the realty with which it is connected is appropriated; and, (3) be intended by the parties as a permanent accession to the freehold”). Another possible consideration is that the RPTL § 487 exemption includes provisions for electric energy storage systems and equipment, which implies that such equipment is real property.
Filing of RP-5217
Q2: A taxpayer needs to record a deed from 1939 that was never filed. The seller was a corporation; it does not exist anymore. The buyer is still with us and has signed the RP-5217. The law states that both parties have to sign the RP-5217. Can this deed be recorded?
A: The law provides a workaround for pre-1994 deeds. The buyer can sign a separate statement that contains the information required by section 333(1-e)(ii)(1) through (4) of the Real Property Law [not the Real Property Tax Law] as set forth below, and that affirms the accuracy of that information. If that statement is presented to the clerk along with the deed, the deed may be accepted for recording without an RP-5217. That’s based on RPL 333(1-e)(vi), which says:
vi. Any deed executed and delivered prior to July first, nineteen
hundred ninety-four may nevertheless be recorded in the office of the
county clerk providing there is submitted therewith, and in place of
such form, a separate statement signed by the transferor or transferors
and the transferee or transferees or any person having sufficient
knowledge to sign such form which contains the same information required
by the commissioner of taxation and finance as set forth in
subparagraphs one through four of paragraph ii of this subdivision.
The information required by RPL section 333(1-e)(ii)(1) through (4) is the following:
(1) the mailing address of the new owner;
(2) the tax billing address, if different from the owner's mailing address;
(3) the appropriate tax map designation, if any;
(4) a statement of the full sales price relating thereto….
Non-assessing Villages (RPTL § 1402)
Local option exemptions
Q1: If a non-assessing unit village is located in a town that has opted to offer the RPTL § 459-c exemption for persons with disabilities and low incomes, does that exemption also apply to village taxes that are levied on that roll if the village has not itself opted to offer the exemption?
A: No. A non-assessing unit village is still a municipal corporation and the village board of trustees is authorized to grant (or decline to grant) a local option exemption for village tax purposes. The town assessor will administer the exemption on the village's behalf.
See 8 Op Counsel SBEA No. 16 which provides additional information, albeit in the context of a different local option exemption.
Q2: Same question, except in this case the exemption at issue is the one authorized by § 577 of the Private Housing Finance Law for projects of housing development fund companies.
A: Unlike most other local option exemptions, PHFL § 577 provides essentially that when an assessing unit opts in, the exemption applies not just to the assessing unit but also to any other municipality or school district that uses the assessing unit’s roll.
Assuming the project will meet the statutory requirements, we believe the village would be empowered to exempt it from real property taxes under PHFL § 577(1)(a), which empowers the local legislative body of "any municipality" to grant such an exemption. A village is clearly a "municipality" for purposes of this provision (PHFL § 2(16)).
This provision, PHFL § 557(1)(b), indicates additional consequences where a municipality that has opted to grant the exemption happens to be an assessing unit. In these cases, the exemption will apply not just to the taxes of that municipality/assessing unit, but also to the taxes of all other municipalities that use its assessment roll.
For example, a town typically serves as the assessing unit for the county, school district(s) and any non-assessing unit village(s) which it shares territory with, so if such a town opts to grant the exemption authorized by PHFL § 557(1)(a), then the county, school district(s) and non-assessing unit village(s) will be obliged to recognize the exemption as well, whether or not they opt-in for themselves under PHFL § 557(1)(a).
In any event, this particular village does not assess property on behalf of any other municipality (or even for itself). That being so, if and when it opts into the PHFL § 577 exemption, its action will render qualifying projects exempt from village taxes, and only from village taxes.
Non-Profit Exemption (RPTL § 420-a)
Q1: A housing facility for those over 55 years of age is owned by an entity that has a federal income tax exemption under the Internal Revenue Code (IRC) § 501(c)(3). The entity is seeking a charitable exemption pursuant to Real Property Tax Law (RPTL) § 420-a. The assessor is not convinced that the entity truly offers “affordable” housing options. May the property receive the exemption?
A: Initially, it is ultimately the assessor's responsibility under the law to determine whether property is taxable, or exempt based upon the facts before him or her. An exemption determination is very fact specific. Below, we provide some general, non-binding, legal advice that may be helpful.
It should be noted that when initially seeking an exemption, the burden of proof is on the taxpayer (Matter of Charter Dev. Co., L.L.C. v City of Buffalo, 6 NY3d 578, 582 ) and the basis for the exemption must be clearly established in the law, it cannot merely be a plausible interpretation of the law; it must be “the only reasonable construction” of the law. See Matter of Al-Ber, Inc. v NYC Dept. of Fin., 80 AD3d 760, 761 (2011). When removing an exemption, the burden is on the municipality. According to the facts presented, this is an initial application for an exemption, therefore, it is the taxpayer’s burden to provide facts demonstrating their entitlement to the exemption under the statute.
As is relevant here, in order to be eligible for an RPTL § 420-a exemption, the following conditions must be satisfied:
- the property must be owned by a corporation organized exclusively for one of the charitable purposes enumerated in § 420-a;
- the property must be used primarily for the furtherance of such eligible purposes;
- no pecuniary profit, apart from reasonable compensation, may inure to the benefit of any officer, member or employee of the organization; and
- the enterprise may not be simply used as a guise for profit-making operations. Matter of Maetreum of Cybele, Magna Mater, Inc. v McCoy, 111 AD3d 1098, 1100 (2013).
Although the owner reportedly has an IRC § 501(c)(3) designation for federal income tax purposes, this alone is not enough to indicate that the corporation is organized exclusively for a charitable purpose pursuant to RPTL § 420-a, which does not define charitable purpose exactly the same as § 501(c)(3) does. Therefore, the assessor must make an independent analysis as to whether the organization is organized for an exempt purpose. If the assessor agrees that it is, then he or she must determine whether the property is being used primarily to further that exempt purpose. An examination of the organizational corporate documents for the organization can provide an indication of the purpose of the organization and whether that purpose is one recognized by RPTL § 420-a.
The assessor indicates that this real property is being used for senior housing. This is not enough by itself to qualify as a charitable purpose under § 420-a. It is settled law that providing housing at market rates to elderly people who are not poor is not a “charitable” activity (Matter of Adult Home at Erie Sta., Inc. v Assessor & Bd. of Assessment Review of City of Middletown, 10 NY3d 205, 214 ). “[R]eal property being used as a retirement community for middle-income elderly did not qualify for a charitable use tax exemption under RPTL 420-a”. Matter of Presbyterian Residence Ctr. Corp. v Wagner, 66 AD2d 998 , affd 48 NY2d 885. In this case, property was not entitled to charitable use tax exemption where the tenants, senior citizens, paid substantial admission fees and regular rents and service charges designed to provide income to make the apartments self-sustaining. See Matter of Lake Forest Senior Living Community, Inc. v Assessor of the City of Plattsburgh, 72 AD3d 1302, 1304-1306 (2010). As such, the property owner needs to provide the assessor with proof that the corporation is organized for a charitable purpose and that the property is used for that purpose. Records of rents charged, rent subsidies provided, income levels of tenants and percentage of the tenants receiving public assistance would assist in determining whether the rentals qualify as housing for the poor at below market rents.
Some considerations that may be relevant are:
- whether the owner subsidizes the rents
- whether rentals are less than fair market rates
- the percentage of occupants on public assistance
- whether the lease allows the tenants to stay when their funds are depleted
- whether the property is profitable (although showing a small profit does not automatically defeat the exemption-depends on how those funds are used)
No one factor is determinative. As with any exemption, it is the applicant who must provide evidence of eligibility in the first instance.
Senior Citizens Exemption (RPTL § 467)
Income; Federal Stimulus payments
Q1. Will the stimulus checks issued under the federal Coronavirus Aid, Relief, and Economic Security Act (CARES Act) count as income for purposes of the 467 senior citizens exemption?
A. The definition of income for purposes of RPTL 467 expressly excludes “gifts”. We’d consider this stimulus payment to be a gift, as we did in Opinion of Counsel # 12-11, which concerned the impact of a prior federal stimulus payment upon the senior citizens exemption. As such, in our non-binding view, it wouldn’t count as income for purposes of determining eligibility for the senior citizens exemption.
Income; Amended Income Tax Returns
Q2. An applicant for the 467 senior exemption on the 2020 assessment roll was denied on the basis that her income exceeded the applicable ceiling. Her eligibility was evidently based on her 2018 income because at the time she filed her exemption application, her 2018 income tax return was her latest available income tax return. Sometime after the tentative roll was filed, she filed an amended 2018 income tax return showing that her income was lower than had been reported on the original return. If the amended return had been available and provided to the assessor with her 2020 exemption application, it would have qualified her for a 5% sliding scale exemption. May that exemption be granted?
A. The applicant evidently filed a timely application. If her 2018 income rendered her eligible for the exemption, it should have been granted. The fact that the income tax return that demonstrated her eligibility was amended after she submitted her application is beside the point. The eligibility question is what was her 2018 income, not when was her 2018 income tax return amended. However, once the assessor denied the exemption, the applicant’s recourse was to file a grievance petitioning the BAR to overturn the denial, and then, if unsuccessful, to seek judicial review. There is no remedy under the Correction of Errors procedures for the improper denial of an exemption. (There is a remedy for a “failure to act” on an exemption application, but the intentional denial of an exemption cannot be categorized as a failure to act.)
At this point, Grievance Day has passed, so if the applicant didn’t file a timely grievance, in our non-binding opinion, she has no recourse; the denial of the exemption for 2020 must stand.
Solar Energy Systems (RPTL § 487)
A solar energy system is “real property” once it has been permanently affixed to land or a structure (Real Property Tax Law § 102(12)(b); see also, Metromedia, Inc. v. Tax Commission of the City of New York, 60 N.Y.2d 85, 468 N.Y.S.2d 457 (1983); 8 Op. Counsel SBEA No. 3). Even if the system can easily be removed, it may still be considered real property if the evidence indicates that the installation was intended to be permanent (Matter of Cornell Univ. v Board of Assessment Review, _ A.D. 3d _, _ NYS.3d _, 2020 NY Slip Op 04636, 2020 WL 4876486 (4th Dept, 2020)). As such, it is taxable unless it qualifies for an exemption (Real Property Tax Law § 300).
There is an exemption statute that applies specifically to solar energy systems: Section 487 of the Real Property Tax Law (RPTL). Section 487, which also covers wind power systems and farm waste energy systems, generally provides a 15-year exemption from real property taxation for the increase in value resulting from the installation of a qualifying system. A number of questions have recently arisen concerning the application of this exemption statute.
- Local option
- Related statutes
If a local law, ordinance or resolution opting out of the exemption is adopted, a copy must be filed with the New York State Department of Taxation and Finance and the New York State Energy Research and Development Authority (NYSERDA). See Matter of Laertes Solar, LLC v Assessor of the Town of Harford, 182 A.D.3d 826, _ N.Y.S.3d _, 2020 N.Y. Slip Op. 02302, 2020 WL 1886279 (3d Dept., 2020).
Q1: Must every municipality offer the § 487 exemption?
A: No. Each municipality may decide for itself whether to offer the exemption. Unlike most other local option exemptions, however, this exemption applies within a municipality unless the municipality has taken action to disallow it.
Q2: How does the local option feature work?
A: The local option that’s attached to the § 487 exemption is structured as an opt-out, not an opt-in. This means that the exemption is automatically in effect within a municipality unless it has adopted a local law, ordinance or resolution providing that the exemption shall not be available therein. In municipalities that have taken no action one way or the other, the exemption is in effect. If a local law, ordinance or resolution opting out of the exemption is adopted, a copy must be filed with the New York State Department of Taxation and Finance and the New York State Energy Research and Development Authority (NYSERDA).
Q3: May an opt-out be made retroactive?
A: No. If a municipality opts out, it is effectively disallowing the exemption to solar energy systems where construction had not begun by the effective date of the applicable local law, ordinance or resolution (or by 1/1/1991, if later). See § 487(8)(a). If system’s construction had begun by that date, it is not impacted by the opt-out and is entitled to the exemption if otherwise qualified (though it may be obligated to make PILOTs under certain circumstances; see PILOT questions below).
Note that for purposes of the § 487 exemption, the construction of a solar energy system is deemed to have begun upon the execution of a contract or interconnection agreement with a utility or, if applicable, upon the payment of a deposit thereunder. The owner or developer must give written notice to the appropriate municipalities when such a contract or agreement is executed. See § 487(8)(b).
Q4: If a municipality has opted out, may it restore the exemption later?
A: Yes. If a municipality that had opted out wishes to begin offering the exemption later, we believe it may do so by repealing the local law, ordinance or resolution that opted out. This is not stated explicitly in the law, but we believe such authority is implicit in statutes of this nature, absent language to the contrary. A copy of any local law, ordinance or resolution restoring the exemption should be filed with both the Department of Taxation and Finance and NYSERDA.
Q5: A school district opted out of the exemption as of April 9, 2018, and repealed the resolution opting out as of February 10, 2020. Several exemptions were granted at the town and county levels while the opt out was in effect. Should those properties now receive the RPTL 487 exemption for school district purposes, or are they limited to the exemption at the town and county levels?
A: Our non-binding interpretation of the law is that facilities that began construction after the school district opted out of the exemption, but before the repeal of the opt-out resolution, are not now eligible for the exemption as a result of the repeal.
Under RPTL 487(8)(a), a school district may by resolution provide that no exemption shall be applicable within its jurisdiction with respect to any solar energy system (and certain other energy systems) which “began construction” subsequent to the effective date of such resolution.
Based on the facts presented to us, the school district passed such a resolution on April 9, 2018. After that day, no 487 exemption was applicable for school district purposes. On February 10, 2020, the school district repealed that resolution with the effect that any eligible energy system that began construction after that day could qualify for the exemption upon application. In our non-binding view, to qualify for the 487 exemption for school district purposes an energy system would either have to have been receiving that exemption prior to the April 9, 2018, opt-out, or would have to apply for the exemption based upon having “began construction” on or after February 11, 2020. RPTL 487(8)(a).
Although not directly on point, we did address the retroactivity issue in question 3 (above). There, we stated that an opt-out may not be made retroactive and if a municipality opts out, it is effectively disallowing the exemption to energy systems where construction had not begun by the effective date of the applicable local law, ordinance or resolution. Although we believe that a municipality may repeal its opt-out (as is discussed in question 4, above), we do not believe it may do so retroactively. In other words, the repeal was not effective until the resolution enacted on February 10, 2020 – energy systems that began construction between the opt-out date (4/9/2018) and the repeal date (2/10/2020) are not eligible for the exemption for school district purposes.
Q6: May a municipal opt out of the exemption for commercial property while leaving it in place for residential property?
A: No. If a municipality does opt out – i.e., if it adopts a local law disallowing the exemption– it must do so for all properties. It cannot allow the exemption for one type of property while disallowing it for another, because § 487(8) states that once a municipality has opted out, “no exemption under this section shall be applicable within its jurisdiction” (emphasis added). If a municipality does not opt out, however, the law may allow it to treat commercial and residential properties differently when deciding what their PILOT obligations should be. See May different PILOT requirements be imposed upon commercial and residential systems? below.
Q7: An assessor is seeking confirmation of the allowable term length (duration) of the solar exemption (RPTL Sec. 487). It seems clear in the statutory language that this is a 15 year exemption, but the point of confusion relates to the fact that there is a deadline for construction completion of January 1, 2025. The assessor is wondering if that January 1, 2025 deadline serves as any sort of sunset for benefits under this statute. This particular exemption starts in 2020 and ends in 2028. This is a 15 year exemption. If the exemption begins in 2020, when is the final year in which the exemption will apply?
A: We can only offer our non-binding interpretation of the law, which is that as long as the energy system is constructed prior to January 1, 2025 (and meets the other requirements of the exemption), the 15-year exemption period applies.
RPTL 487(5) says the exemption “shall only be applicable to [certain energy systems]…constructed prior to January 1, 2025.” (emphasis added). In other words, as long as the system is constructed prior to January 1, 2025 (and meets the other requirements of the exemption), the exemption is applicable.
RPTL 487(2) says real property “approved in accordance with the provisions of this section shall be exempt from taxation to the extent of any increase in the value thereof by reason of the inclusion of such [energy system]…for a period of fifteen years.” In other words, as long as the exemption is approved, it lasts for 15 years.
It is our non-binding opinion that, when read together, those provisions make it clear that, although a qualifying energy system must be constructed prior to January 1, 2025 for the exemption to apply, so long as the exemption does applies and is approved by the assessor, the exemption lasts for a period of 15 years. Even if a qualifying energy system is constructed, for example, on January 1, 2024, an approved exemption would still apply for a 15 year period. In contrast, under the existing law the same energy system constructed on or after January 1, 2025 would not be eligible for the exemption at all.
Real Property Tax Law Section 487 was enacted in 1977 and amended numerous times. Below are the citations to the original enactment and all the amendments (See attached legislation):
(Added L.1977, c. 322, § 2. Amended L.1977, c. 618, §§ 1, 2; L.1979, c. 220, § 2; L.1990, c. 121, §§ 1 to 5; L.1992, c. 316, § 8; L.1993, c. 440, § 11; L.1996, c. 263, § 1; L.2002, c. 515, § 3, eff. Sept. 17, 2002; L.2002, c. 608, § 1, eff. Oct. 2, 2002; L.2006, c. 129, § 1, eff. July 5, 2006, deemed eff. Jan. 1, 2006; L.2010, c. 56, pt. W, § 1, subd. (b), eff. June 22, 2010; L.2010, c. 366, § 1, eff. Aug. 13, 2010; L.2013, c. 272, § 2, eff. July 31, 2013; L.2014, c. 344, §§ 1 to 3, eff. Sept. 4, 2014; L.2016, c. 57, pt. P, § 3, eff. April 13, 2016; L.2017, c. 336, §§ 1 to 4, eff. Jan. 1, 2018; L.2018, c. 325, §§ 1 to 3, eff. March 1, 2019; L.2019, c. 59, pt. AA, § 1, eff. April 12, 2019.)
The legislation does not terminate in 2028 or in any other year. The date contained in subdivision 5 of section 487 establishing when the project must be constructed by to be eligible for the exemption has been amended several times, the last being in 2014 extending the date to January 1, 2025 (See Ch. 344 L.2014 and below). Therefore, as long as the project is constructed by January 1, 2025, it is eligible for a full 15 year exemption. The enabling act does not contain a sunset or expiration.
If the legislature does not extend it, that could be a problem. This legislation is extended every 15 years which is where our ending date of 2028 comes from. It has never not been extended from the very first time it was adopted. So you do not have to worry that your exemption might go away but maybe your counsel should check on the origin of the legislation. If the 15 year term is extended by the NYS Legislators in 2028 then the term ending date will change to the new ending date for the next 15 year term.
The exemption granted pursuant to this section shall only be applicable to (a) solar or wind energy systems or farm waste energy systems which are (i) existing or constructed prior to July first, nineteen hundred eighty-eight or (ii) constructed subsequent to January first, nineteen hundred ninety-one and prior to January first, two thousand twenty-five, and (b) micro-hydroelectric energy systems, fuel cell electric generating systems, micro-combined heat and power generating equipment systems, electric energy storage equipment or electric energy storage system, or fuel-flexible linear generator electric generating system which are constructed subsequent to January 1, 2018 and prior to January 1, 2025.
Q8: May solar panels receive the § 487 exemption if they are not owned by the owner of the underlying land or building?
A: Yes. There is no ownership requirement in § 487, so solar panels that otherwise qualify are entitled to the § 487 exemption even if they are owned by a third party.
Q9: Solar panels will be installed on property that is owned either by a municipality or by a public or private college. The panels themselves will be owned by a private entity, which will sell the electricity to the municipality or college at a discounted rate. Due to the 15-year limit on the § 487 exemption, it has been suggested that the panels may be granted a permanent exemption under the exemption statutes that apply to municipal corporations or non-profit educational organizations, rather than under § 487. Is this permissible?
A: It depends. The real property tax exemptions that apply to municipalities and non-profit educational organizations are embodied in RPTL §§ 406 and 420-a, respectively. Each statute provides that in order to qualify for the exemption real property must be both (1) “owned by” the eligible owner (i.e., the municipality or educational organization) and (2) used for qualifying purposes. Since these panels will be used to generate low-cost electricity for the municipality or college, it may reasonably be argued that these panels will be used for qualifying purposes.
However, the use requirement is just one of the requirements that must be satisfied to qualify for exemption under § 406 and § 420-a. In each case, the property must also be owned by the exempt entity in order to qualify for exemption. Record title is not necessarily required to qualify leased solar panels for the exemption. The courts have recognized that “indicia of ownership” may suffice, depending on the facts. See e.g. Colleges of the Seneca v. City of Geneva, 94 NY2d 713 (2000); United Health Services Hospitals, Inc. v. Assessor of the Town of Vestal, 122 AD3d 1177 (3d Dept. 2014); c.f. Spectapark Associates v. City of Albany Dept. of Assessment and Taxation, 12 AD3d 800 (3d Dept. 2004). Even so, an agreement which only gives the exempt entity “some minor incidents of ownership” may not suffice to qualify the system for exemption if the facts otherwise indicate that the incidents of ownership are held predominantly by a private party (Matter of Cornell Univ. v Board of Assessment Review, _ A.D. 3d _, _ NYS.3d _, 2020 NY Slip Op 04636, 2020 WL 4876486 (4th Dept., 2020)). We suggest you review these cases with your municipal attorneys prior to making any determinations about the taxable status of solar panels leased by or to a nonprofit organization.
Note that this analysis does not require the removal of the § 406 or § 420-a exemption from the land or buildings to which the solar panels will be attached. If that land or those buildings will remain under the ownership of the municipality or college, we see no reason why the § 406 or § 420-a exemption should be removed from the land or buildings in these cases.
If a municipality does not opt out – i.e., if it leaves the exemption in place – then qualifying solar energy systems constructed in the municipality will be exempt from taxation for a period of 15 years. However, the municipality then has the option to require the owners of such systems to enter into contracts to make payments in lieu of taxes, which are generally referred to as “PILOTs.”
Q10: If a municipality leaves the exemption in place and requires owners to pay PILOTs, how much should those payments be?
A: That is largely a local decision, except that the statute sets limits on how large these PILOTs may be, and on how long they may last. Specifically, it provides that the PILOTs may not exceed the taxes that would have been payable if the property were not exempt under § 487. It also provides that the period over which the PILOTs are to be paid may not exceed 15 years. See § 487(9)(a). In effect, then, if a municipality leaves the exemption in place and imposes the maximum allowable PILOT obligation, the owner will be making payments to the municipality in the same amount as if the property were fully taxable. The primary difference is that those payments will have the legal status of PILOTs rather than property taxes.
Q11: What is the maximum PILOT for a solar farm built on vacant land?
A: We have heard it suggested that if a solar farm is built on vacant land, the PILOT may not exceed the amount of taxes that were payable on the vacant land immediately before the solar farm was built. In our view, that is not correct. The limit on the PILOTs in such an instance is the amount of taxes that would have been levied on the parcel as it now exists – that is, the land with the panels – if the municipality had opted out of the exemption.
Q12: May different PILOT requirements be imposed upon commercial and residential systems?
A: While it is clear that a municipality may not opt out of the § 487 exemption for one type of property while leaving the exemption in place for another type (see Q5), it is less clear whether it may impose different PILOT requirements on different property types. RPTL § 487(9)(a) states simply that the municipality may require “the owner of a property” that qualifies for the exemption “to enter into a contract” to make PILOTs (emphasis added). This wording, which arguably frames the PILOT question as an individualized determination rather than a collective one, provides no guidance as to how owners should be treated relative to one another. While principles of equal protection would clearly preclude a municipality from drawing arbitrary distinctions between similarly-situated owners when setting their PILOT requirements, we believe the law may reasonably be read as leaving open the possibility of treating owners of different types of property differently, as long as there is a rational basis for doing so. Accordingly, if differential treatment is desired, we suggest that the issue be directed to the municipal attorney, who would have to be satisfied that any such differentiation could successfully be defended in the event of litigation.
Q13: May a municipality enter into a PILOT agreement that requires the owner of a solar energy system to provide the municipality with energy at a discounted rate, or that bases the PILOT payments upon the amount of energy produced by the system or the value of the system?
A: Nothing in § 487 prohibits a municipality from structuring a PILOT as described above. However, as noted above (see Q8, Q9), § 487(9)(a) states that PILOT agreements may require annual payments in an amount not to exceed the amounts that would have been payable if not for the exemption. Therefore, no matter how the arrangement is structured, the PILOT obligation imposed upon the owner must comply with this limitation.
Q14: Our municipality received a notice stating that the sender of the notice intends to construct a solar energy system within our municipality. What is the significance of this notice?
A: In some cases, a municipality that has not opted out of the § 487 exemption may need to take action to preserve its rights to collect PILOTs on exempt property. The law now provides that the owner or developer of a solar energy system may notify a municipality in writing that it intends to construct such a system. If an owner or developer does so, and the municipality wishes to collect PILOTs on that system, then within 60 days of receiving the notice of intent, the municipality must notify that owner or developer that it intends to require it to enter into a PILOT contract. See § 487(9)(a). Note that the law does not require an owner or developer to use a specific form or include specific language when giving a municipality notice of its intent to construct a solar energy system.
Business investment exemption
Q15: There is a separate “business investment exemption” under RPTL § 485-b. Do solar energy systems qualify for this exemption? If so, can a solar energy system receive both the § 487 and § 485-b exemptions?
A: RPTL § 485-b arguably could apply to a solar energy system, but the statute is imprecise and there is room for disagreement on the correct interpretation of the law. Ultimately, the assessor must decide whether the RPTL § 485-b exemption applies. The business investment exemption cannot be granted concurrently with or subsequent to any other real property tax exemption (including the RPTL § 487 exemption) granted to the same improvements. The only exception is that if PILOTs or other payments were made in an amount in excess of what would have been owed had the § 485-b exemption been granted, in which case the exemption is allowed less the number of years the property would have been previously exempt.
The RPTL § 485-b exemption applies to real property constructed, altered, installed or improved for the purpose of commercial, business or industrial activity. The exempt property must be “used primarily for the buying, selling, storing or developing goods or services, the manufacture or assembly of goods or the processing of raw materials."
The Court of Appeals in Long Is. Light. Co. v Bd. of Assessors of County of Nassau, 81 NY2d 1029 (1993), held that the 485-b exemption did not apply to transmission and distribution equipment because that equipment is used primarily to carry and conduct natural gas and electricity and is not used primarily to sell services as that term is used in the statute. Notably, the court did not hold that providing gas and electricity is not a “service” within the meaning of 485-b. Rather, it held that the utility poles, wires, and gas mains involved were not used primarily to sell a service – that property was essentially used to carry and conduct natural gas and electricity, not to sell it. The court could have held that electricity and gas are not “goods” as that term is used in the statute, but it did not. The court could have held that providing gas and electric service are not “services” as that term is used in the statute, but it did not.
In Niagara Mohawk Power Corp. v Town of Watertown Bd. of Assessors, 216 AD2d 885 (4th Dept. 1995), the Fourth Judicial Department took the Long Island Light decision one step further and denied the § 485-b exemption to an electrical substation on the grounds that “the substation is not used to manufacture or produce electricity.” This implies that if the property had been “used to manufacture or produce electricity” the court would have found it eligible for § 485-b. If some other system that manufactures or produces electricity could qualify for the § 485-b exemption there does not seem to be a logical basis for denying the exemption where it is a solar farm that is manufacturing or producing the electricity.
Based on the cases cited above, it seems that there is sufficient authority for assessors to conclude that a solar farm could satisfy the requirements of the RPTL § 485-b exemption on the basis that the production of solar electricity constitutes the developing of a service within the meaning of the statute. Furthermore, we have found instances where § 485-b exemptions were granted to non-solar electric generating plants in a number of assessing units in the State. That finding provides further support for the notion that the generation of electricity may reasonably be considered to be an eligible use under 485-b. We see nothing in the text of section § 485-b to suggest that generating electricity from solar energy is any less of an eligible use than generating electricity from non-solar energy.
Notwithstanding the case law cited above, and despite the fact that some assessors have granted the § 485-b exemption to non-solar electric generating plants, it is not necessarily unreasonable or incorrect for an assessor to determine that the § 485-b exemption does not apply to electric generating facilities (including solar energy systems). The assessor must be satisfied that the applicant is entitled to the exemption. RPTL § 485-b(4).
Residential conservation improvements
Q16: There is a separate exemption statute for “residential conservation improvements,” namely, RPTL § 487-a. Do solar energy systems qualify for this exemption?
A: No. RPTL § 487-a states in its entirety:
“Insulation and other energy conservation measures hereafter added to one, two, three or four family homes, which qualify for (a) financing under a home conservation plan pursuant to article VII-A of the public service law, or (b) any conservation related state or federal tax credit or deduction heretofore or hereafter enacted, shall be exempt from real property taxation and special ad valorem levies to the extent of any increase in value of such homes by reason of such addition.”
It is undeniable that solar systems offer many benefits, but energy “conservation” is not among them. A conservation measure leads to the use of less energy. Examples include installing better insulation or upgraded thermostats, replacing leaky windows or inefficient furnaces, etc. Those are the types of improvements that § 487-a was enacted to exempt, as the legislative history indicates (see, e.g., L.1977, c.858, § 1, “Legislative Findings”).
Solar systems are in a different category: They lead to the use of clean, renewable energy in place of energy generated from fossil fuels, but they do not necessarily lead to the use of less energy overall. In fact, solar systems may actually lead to the use of more energy, since beyond the fixed cost of installation, the electricity they produce is essentially free.
Moreover, it is a broadly-accepted principle of statutory construction that specific legislative language takes precedence over general language. While § 487-a generally applies to “insulation and energy conservation measures,” § 487 specifically applies to solar energy systems (as well as wind and farm waste energy systems). In fact, both statutes were enacted in the same year, just a few weeks apart (L.1977, c.322 and c.858). It only stands to reason that § 487-a must have been intended to apply to improvements other than solar energy systems.
We are aware that in 1980, three years after § 487-a was enacted, solar energy systems were added to the list of improvements that could qualify for financing under a home conservation plan pursuant to Article VII-A of the Public Service Law (L.1980, c.557). An indirect effect of that amendment was to render solar energy systems eligible for the § 487-a exemption for as long as that financing was available. However, the Article VII-A home conservation financing program was terminated on June 1, 1986 by § 135-c(1) of the Public Service Law. That being so, we believe the 1980 amendment that briefly extended this financing program to solar energy systems has no legal significance today.
Accordingly, we do not believe that the § 487-a exemption may properly be extended to solar energy systems.