Massachusetts Laws Adopts Property Tax Reform For Photo voltaic, Wind, Vitality Storage And Gas Cells | Foley Hoag LLP – Vitality and Cleantech Advisor

As discussed in several posts here, on January 4, 2021, a conference committee of the Massachusetts House and Senate issued a far-reaching “Omnibus” energy bill, “A Next Generation Roadmap Act for Massachusetts Climate Policy (S2995). . “The bill is still pending Governor Baker’s signature. Among the many features of the legislation, it would make several significant changes to the Massachusetts Act regulating the taxation of cities and towns on wind, solar, energy storage, and fuel cell property, which falls within the scope of the existing “forty-fifth clause” state tax exemption of wind and solar projects according to MGL Chapter 59, Section 5 as well as the practice of concluding payments instead of tax agreements or “PILOT” agreements according to Chapter 59, which specify contractually agreed annual payments instead of cities and municipalities and taxation of projects in the normal course .

The changes will take effect 90 days after the law comes into force.
Among other things, the law:

(1) CodifiedTo some extent, the Massachusetts Appellate Tax Board’s (“MA ATB”) Forestall decision overriding a city that refused to grant the exemption and granting a taxpayer the forty-fifth exemption for a solar project run on one The projects installed his own packages, which generated billing credits, he requested for the energy consumption of other, unrelated packages that he owned. In Section 61 of the Act, Clause 45 is fully amended and adapted to require that an exempted project generate no more than 125% of the annual electricity needs of the property on which it is located, but “non-contiguous real estate in the same parish in what there is a common property interest. “

(2) Overrides the MA ATB’s KTT ruling, which established the forty-fifth exemption for its solar project in a city in favor of a taxpayer’s approval, in which tax credits were given to taxable real estate by banks in other surrounding cities. The changes in Section 61 appear to no longer allow such a taxpayer to exempt their scheme simply by assigning billing credits to other taxable properties.

(3) Extended the exemption from the tax exemption of real estate by abolishing the requirement in the existing forty-fifth clause that an exempt wind or solar installation must cover “the energy requirements of real estate taxable under this chapter”. Nowhere in the new language of the forty-fifth clause added by Section 61 of the Law does that language appear. Instead, the new language simply says that an eligible project “cannot produce more than 125 percent of the annual electricity demand of the property on which it is located …”. It says nothing more about the tax treatment of such real estate projects. The removal of this requirement appears to extend the exemption to solar projects that meet the “energy needs” of real estate owned by tax-exempt nonprofits such as government buildings, schools, universities, nonprofit hospitals and the like, as long as the projects meet the 125% restriction on their campus.

(4) Extended the exception and PILOTs for energy storage and fuel cells.

(5) Protects existing PILOT agreements. The law stipulates that parties to PILOTs that were closed before the law came into force “are not obliged to change, modify or renegotiate such a PILOT”.

(6) Makes additional changes to PILOT processes. The law apparently moves out of Section 59H of Chapter 59 and into the new Clause 45 of Section 5 of Chapter 59, the authority for wind, solar (and now storage) assets to enter into PILOT contracts. It also clarifies the treatment of personal and real property in line with previous Ministry of Finance (“MA DOR”) guidelines.

(7) Asks MA DOR to issue guidelines on PILOT and assessment practices. In particular, the law stipulates that the MA DOR “in consultation with the Department of Energy Resources”. . . Issue guidelines for communities and owners of solar, wind and energy storage systems that include, but are not limited to: (i) assessment of solar, wind and energy storage systems; (ii) standardization of contractual terms; and (iii) where possible, standardizing tax policy in the absence of agreements on payments in lieu of taxes. The guidelines will be issued no later than 9 months after the effective date of this Act. “While 9 months can be a long time and it is unclear how the new DOR guidelines go beyond previous guidelines, standardizing PILOT terms, processes and non-PILOT assessment methods can be a welcome change.