Tax board rules against town in solar property case

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In a decision that could affect cities and towns statewide, the Appellate Tax Board ruled in October that the personal property of a large solar electricity operation in Swansea is exempt from local taxation.
The ATB decision was based on language in a long-standing statutory exemption that was generally understood to apply to small-scale wind and solar electricity generating equipment for power used mainly on site. The Swansea decision appears to indicate that the personal property in large-scale commercial operations may now be able to avoid local taxation in certain common circumstances.
The facts outlined in the ATB decision describe a roughly 65-acre parcel on which solar panels and supporting equipment were constructed. The owners of the operation entered into a “net metering agreement” with a regional bank, through which 98 percent of the electricity generated on the parcel would be “credited” to reduce electricity bills for four of the bank’s branch offices, with the remaining 2 percent used to offset the electricity bills at the owner’s residence. In turn, the bank agreed to pay the owners 95 percent of the “dollar value for the credited electricity appearing on the bank’s electricity bill.”
In using the exemption language in the 45th clause of Section 5 of Chapter 59 of the General Laws, the ATB decision was based on a simple test to determine if the exemption would apply in the Swansea case. The clause 45 exemption would apply if the property is “(1) a solar or wind powered system or device; (2) utilized as a primary or auxiliary power system for the purpose for heating or otherwise supplying energy; and (3) utilized to supply the energy needs of property that is subject to the Massachusetts property tax.”
The ATB rejected the argument of the local assessors that the exemption should apply only if the electricity is used on the property where it was generated or on contiguous property and that the Legislature had not intended the exemption to apply to commercial use.