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Solar Payment In Lieu OF Taxes
(PILOT)

A Payment In Lieu Of Taxes agreement (PILOT) as it relates to solar energy in New York is regulated under section 487 of the Real Property Tax Law (RPTL § 487)

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When a solar panel system or other renewable energy system is installed, it increases the value of the property. This means that the property should be assessed and therefore taxed at a higher rate.  If a taxing jurisdiction (a town, or a county or a school district) PARTICIPATES in a PILOT program, then they agree to NOT initially tax the OWNER the extra value added by the solar or renewable energy system for an initial period of up to 15 years. This encourages solar and renewable energy systems which benefits the owner of the property. The land owner doesn't pay any more taxes because the solar company pays them instead.

Solar Power Farm

By opting out of PILOT, the increased value of a property created by solar panels means that the property owner needs to pay the tax.  If a jurisdiction stays in PILOT for renewable energy, then the developer pays the increased taxes, not the property owner

Instead of the OWNER paying additional taxes, a jurisdiction that PARTICIPATES in a PILOT program can charge a fee or a "Payment In Lieu Of Taxes" TO THE DEVELOPER to make up for the taxes that they would have collected from the owner of the property. Participating means the solar or renewable energy developer pays instead of the property owner.  The fee to developer can't be more than what would have been collected from the property owner and usually only lasts a limited number of years after installation. Once the abatement period ends, the owner then pays taxes again on the full value of the property.

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Opting out of PILOT means that owners have to pay taxes on the increased value of their property when they install solar panels.  Opting out makes home owners with solar panels pay instead of solar companies, which discourages people from installing solar.

A jurisdiction can "opt out" of the PILOT program (RPTL § 487) which means that ALL property owners are "on the hook" for the extra tax value of their property. A jurisdiction can't "partially opt out" for people who put solar panels on their houses because they want to punish big land owners who lease to solar developers. Either the jurisdiction collects property taxes on all the increased value of all property with a renewable energy system or none of it. A jurisdiction can't tax a landowner who rents his property for a solar farm without also taxing a homeowner that puts solar panels on their roof.

 

The government in Rush has opted out of PILOT programs as a way to fully tax land owners who install solar systems. The thinking is that more money is available to the town from a full valuation and taxation of their property than fixed payments from the developer for a period of time and then a taxation of the land owner once the abatement ends. Since the "opt out" of  the PILOT program (RPTL § 487) applies to both large and small scale renewable energy systems, opting out of PILOT taxes both the large land owners that lease to developers as well as small homeowners.

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Here's the text of the PILOT Opt Out Law 3 of 2019 passed October 9, 2019

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See https://www.nyserda.ny.gov/solarguidebook for more information on PILOT and other solar issues in New York State

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Read a Document from NYS a bout RPTL § 487

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