Solar projects and New York property taxes
New York property taxes must be paid on a solar project on land owned by Cornell University, a court said.
Cornell leased land in Seneca, New York to a private solar developer, Argos Solar, that put up a solar facility and entered into a long-term contract to sell the electricity to the university. The contract has a term of 20 years. Cornell can extend it for two additional five-year terms — bringing the contract term to 30 years —and can continue the arrangement after that on a month-to-month basis by continuing to take and pay for the electricity.
The developer argued that it should not have to pay property taxes on the project.
A New York superior court agreed. It said the solar facility was not “real property” and, moreover, the university had “beneficial ownership” of it. Universities, like Cornell, are not subject to property taxes.
The appellate division of the superior court disagreed.
The New York property tax statute defines “real property” as “[b]uildings and other articles and structures, substructures and superstructures erected upon, under or above the land, or affixed thereto.”
The court said whether the facility is permanently affixed to land does not turn on how easy it would be to remove it, but rather whether the parties intend for it to remain in place “permanently over the life of the agreement.” The facility has nearly 1,600 piles driven directly into the ground and another 400 embedded in concrete footers. Racks of solar panels are bolted to the piles, and an inverter and other equipment are on a concrete slab.
The court also said the private developer, not Cornell, is the facility owner.
The case is Cornell University v. Board of Assessment Review. The court released its decision in late August.
The solar company should have explored a PILOT lease arrangement as a way to reduce property taxes. Under such arrangements, title to a project is put in municipal hands and then an amount of “payments in lieu of taxes” is negotiated with the municipality.