Provides for the amount of tax abatement for solar generating systems in cities of one million or more.
TITLE OF BILL: An act to amend the real property tax law, in relation to a solar electric generating system tax abatement for certain properties in a city of one million or more persons
SUMMARY OF PROVISIONS: This bill would amend subdivision one of section 499-bbbb of the Real Property Tax Law (RPTL) by adding a new paragraph (c) and would amend subdivision one of section 499-cccc of the RPTL.
If the solar electric generating system is placed in service on or after January 1, 2013 and before January 1, 2015, the amount of the tax abatement would be 2.5% of eligible solar electric generating system expenditures in each year of the four-year compliance period. However, the benefit in each tax year would be limited to the lesser of the amount of taxes payable or $62,500. "Eligible solar electric generating system expenditures" include reasonable expenditures for materials, labor costs properly allocable to on-site preparation, assembly and original installation, architectural and engineering services, and designs and plans directly related to the construction or installation of the solar electric generating system.
REASONS FOR SUPPORT: The City of New York strongly supports this legislation, which would extend an existing incentive program to encourage the installation of solar electric generating systems, in connection with class one, class two and class four properties in the City.
This program is aligned with the Mayor's long-term sustainability plan, PlaNYC, first issued in April 2007, which set a 30% greenhouse gas emission reduction target for 2030 and committed to providing cleaner, more reliable power for every New Yorker. These goals will be achieved through efforts to improve energy efficiency and clean our energy supply. In the near term, the City will still rely heavily on conventional energy sources, such as electricity generated by natural gas. However the installation of solar energy can play an important role in the transition to cleaner energy.
Of all the renewable energy sources, solar currently has the greatest potential to generate electricity within New York City. The technology is commercially available and there is ample space for solar systems on the City's rooftops. Furthermore, because solar energy production is greatest during hot summer days when energy demand is at its peak, it is useful as a load management tool and can help to reduce harmful air emissions from peaking power plants. Despite these benefits, solar energy is not yet competitive with conventional sources of electricity on a market basis, and for this reason, the City committed in PlaNYC to work with the State to provide targeted incentives for solar energy and eliminate barriers that inhibit growth.
The intent of 2008 legislation creating the tax abatement was to accelerate growth by helping to mitigate the cost premium for installing solar in New York City relative to the rest of the metropolitan region. At the time, it cost nearly 30% more to install solar in New York City than it did in Westchester County. This cost premium stemmed from higher labor costs, as well as higher transaction costs related to the City's extensive interconnection, permitting and inspection requirements.
Since creating the tax abatement, New York City has experienced significant growth in installed solar capacity. Nearly 150 abatements were awarded through City Fiscal Year 2011 and another 244 applications are currently being considered in 2012. The City went from having 2 megawatts (MW) of installed solar capacity in 2008 to 8.4 MW today. This 300% growth rate was nearly double that of Westchester County over the same period. Overall, the solar property tax abatement has leveraged tens of millions of investment with relatively little cost to the City.
The tax abatement program has helped to improve the economics of installing solar in New York City and mitigate the cost premium. Last year, installed costs in the City were 16% higher than Westchester County, and in 2012 the differential appears to be closer to 10%. This narrowing likely resulted from an influx of new solar developers who were attracted by the City's abatement program, thus creating a more competitive marketplace for consumers. The City and Con Edison have also streamlined the process for permitting and interconnecting solar, which has helped to lower transaction costs. Finally, all U.S. consumers benefited from lower capital costs thanks to technology innovation and global productivity in the solar sector.
To reflect the increased cost competitiveness of installing solar in New York City, the City seeks to renew the abatement at a level of 10% of total capital costs, down from the current 20% rate. The City believes that a 10% total abatement rate will continue to serve as an effective incentive while controlling the fiscal costs of the abatement as demand for it grows.
Renewal of the property tax abatement will foster continued growth in New York City's solar energy supply and stimulate economic development throughout the City and State. The City remains committed to investment in solar as an alternative energy source and believes that continuation of the program is vital to achieving that objective.
Accordingly, the Mayor urges the earliest possible favorable consideration of this proposal by the Legislature.
STATE OF NEW YORK ________________________________________________________________________ 7711 IN SENATE June 14, 2012 ___________Introduced by Sen. LANZA -- read twice and ordered printed, and when printed to be committed to the Committee on Rules AN ACT to amend the real property tax law, in relation to a solar elec- tric generating system tax abatement for certain properties in a city of one million or more persons THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Subdivision 1 of section 499-bbbb of the real property tax law, as added by chapter 473 of the laws of 2008, is amended to read as follows: 1. The amount of such tax abatement shall be as follows: (a) if the solar electric generating system is placed in service on or after the effective date of this title and before January first, two thousand eleven, for each year of the compliance period such tax abate- ment shall be the lesser of (i) eight and three-fourths percent of eligible solar electric generating system expenditures, (ii) the amount of taxes payable in such tax year, or (iii) sixty-two thousand five hundred dollars; or (b) if the solar electric generating system is placed in service on or after January first, two thousand eleven, and before January first, two thousand thirteen, for each year of the compliance period such tax abatement shall be the lesser of (i) five percent of eligible solar electric generating system expenditures, (ii) the amount of taxes paya- ble in such tax year, or (iii) sixty-two thousand five hundred dollars; OR (C) IF THE SOLAR ELECTRIC GENERATING SYSTEM IS PLACED IN SERVICE ON OR AFTER JANUARY FIRST, TWO THOUSAND THIRTEEN, AND BEFORE JANUARY FIRST, TWO THOUSAND FIFTEEN, FOR EACH YEAR OF THE COMPLIANCE PERIOD SUCH TAX ABATEMENT SHALL BE THE LESSER OF (I) TWO AND FIVE-TENTHS PERCENT OF ELIGIBLE SOLAR ELECTRIC GENERATING SYSTEM EXPENDITURES, (II) THE AMOUNT OF TAXES PAYABLE IN SUCH TAX YEAR, OR (III) SIXTY-TWO THOUSAND FIVE HUNDRED DOLLARS.EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD16199-01-2 S. 7711 2
S 2. Subdivision 1 of section 499-cccc of the real property tax law, as added by chapter 473 of the laws of 2008, is amended to read as follows: 1. To obtain a tax abatement pursuant to this title, an applicant must file an application for tax abatement, which may be filed on or after January first, two thousand nine, and on or before March fifteenth, two thousand
[thirteen]FIFTEEN. S 3. This act shall take effect immediately.