MMA letter to Revenue Committee urges support for bills to clarify tax status of solar properties

Printer-friendly versionSend by email

The Honorable Jay R. Kaufman, House Chair
The Honorable Michael D. Brady, Senate Chair
Joint Committee on Revenue
State House, Boston
Dear Chairman Kaufman, Chairman Brady, and Distinguished Committee Members,
On behalf of the cities and towns of the Commonwealth, the Massachusetts Municipal Association appreciates the opportunity to offer testimony on the several bills before the Committee today related to the local taxation of solar and wind energy property. We support two similar bills, House 3310 filed by Representative Gailanne Cariddi, and Senate 1615 filed by Senator Michael Rodrigues, that would modernize the long-standing exemption for renewable energy property to better reflect the impact of new technologies and business practices that were not anticipated when the law was first enacted.
Because of an Appellate Tax Board (ATB) decision last October that created uncertainty about the rules governing local taxation of solar and wind energy property, it has become more difficult to determine the financial aspects of proposed new projects and the status of existing projects. The uncertainty could result in delays in approving new renewable energy projects. In addition, some cities and towns may be facing unanticipated abatements leading to a shift in tax burden to homeowners and businesses and lost tax capacity in the future. This is an urgent issue and we hope that the Committee will release House 3310 and Senate 1615 with a favorable recommendation as soon as possible.
House 3310 and Senate 1615 would rewrite clause Forty-fifth of section 5 of Chapter 59 of the General Laws to re-codify the current exemption from the municipal property tax for solar or wind powered systems. The exemption would be limited to systems that are capable of producing not more than 125 percent of the energy needs of the residential property upon which it is located. Other systems would be subject to local taxation absent an executed agreement with the city or town for a payment in lieu of taxes.
This updated code generally reflects the rules through which individuals, renewable energy companies and cities and towns have successfully approved and developed more than 68,000 solar energy projects statewide capable of producing almost 1,500 megawatts (MW) of electricity, mostly since 2011, and 115 MW of installed wind energy capacity.
In a decision that could affect cities and towns statewide, the Appellate Tax Board (ATB) ruled last October that the personal property of a large solar electricity operation in the Town of Swansea was exempt from local taxation. The ATB decision was based on language in the clause Forty-fifth exemption that is generally understood to apply to small-scale wind and solar electricity generating equipment for power used mainly on-site. With the Swansea decision, it appears that the personal property in large-scale commercial operations may now be able to avoid local taxation in certain common circumstances. House 3310 and Senate 1615 would restore the clause Forty-fifth exemption to its original purpose to benefit small-scale operations.
Thank you very much for the opportunity to submit testimony on this legislation. If you have any questions, please do not hesitate to have your staff contact me or John Robertson of the MMA staff at (617) 426-7272 at any time.
Geoffrey C. Beckwith
Executive Director & CEO