January 5 is the Deadline in New York City to File for the RPTL § 487 Property Tax Exemption for the Solar, Wind, and Energy Storage Projects
For renewable energy project developers with projects in New York City, January 5 is an especially important date because it is the City’s “Taxable Status Date” (unlike many towns that operate under a March 1 deadline). This deadline controls when developers must submit their tax exemption application (RP-487) to obtain the benefit of New York’s renewable energy facility tax exemption under Real Property Tax Law (“RPTL”) § 487. Although state law (RPTL § 302(1)) sets March 1 as the taxable status date, New York City Charter § 1507 overrides that provision and sets January 5 as the taxable status date. Other cities, along with Nassau and Westchester counties, and villages that maintain assessment responsibilities separate from their towns, also operate under different deadlines. Therefore, developers should check the taxable status and assessment dates for each applicable municipality.
The RP-487 application should be filed even if one or more of the taxing jurisdictions has opted out of the RPTL § 487 exemption. That is because the opt-out applies to each taxing jurisdiction separately, and the property is entitled to an exemption in any jurisdiction that has not opted out prior to the start of construction (as defined in RPTL § 487(8)). The RP-487 application does not need to be filed if the project is obtaining financial assistance through an Industrial Development Agency (“IDA”). Although some IDAs do not provide real property tax exemptions, and so filing of a separate RPTL § 487 exemption application is required even where IDA financial assistance is being received.
Developers should also consider pursuing the exemption for partially constructed projects. Where a project is partially constructed as of the Taxable Status Date, the assessor can place a value on the tax roll representing the value of the partially completed assessment. 4 Op. Counsel SBEA No. 103 (Feb. 25, 1975). If a project has been fully constructed but not yet operational, the assessor may assign the full value on the tax roll. It is the condition of the property, not its operating status, that determines value.
Tax exemption issues may also be relevant to Payments-in-Lieu-of-Taxes Agreements (“PILOTs”) under RPTL § 487. Absent a properly filed exemption application under RPTL § 487, any executed PILOT is invalid for that tax year because there is no authority to enter into a PILOT as the property is not tax-exempt. Some communities, as part of their PILOT negotiating strategy, have suggested they will not grant a tax exemption unless an agreeable PILOT is reached. But there is no authority to condition the granting of the tax exemption (nor zoning approval) on the successful conclusion of a PILOT negotiation, as the qualification for a real property tax exemption is not dependent on a PILOT agreement.
For those who have already applied for the exemption and are awaiting a determination, there is a limited window of time to challenge a denial of their exemption application. In New York City, the deadline to challenge is typically in the first week of March. Those who fail to file in a timely manner will lose the opportunity to challenge the denial. The final assessment roll is published on May 25. Those who did not prevail on their assessment grievance must file a lawsuit by mid-October to challenge the assessment valuation or exemption denial.
If you have any questions about the application of tax exemptions to renewable energy projects in New York City or New York State, or the requirements under RPTL § 487, please contact Daniel Spitzer (716.848.1420), Amy D’Ambrogio (315.506.8908), or Henry Zomerfeld (716.848.1370). If you received this alert from a third party or from visiting our website, and would like to be added to our renewable energy mailing lists or any other of our mailing lists, please visit us at: https://forms.hodgsonruss.net/hodgson-russ-subscription-center.html.
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