Do solar arrays qualify for current use tax benefits?
ADDISON COUNTY — As new solar arrays pop up around Addison County, and a litany of others await Public Service Board approval, some town officials and residents are wondering how much tax revenue these solar projects will generate.
One question many have is whether the land used for solar arrays can be enrolled in “current use,” a designation that decreases the assessment value of farm and forestland, and thus lowers property tax bills.
Current use, formally called the Use Value Appraisal Program, was created by the Legislature in 1978. It allows the value of farmland to be assessed based on its agricultural use, rather than the fair market value. The goal is to keep open land free from buildings and sprawl.
According to the Vermont Department of Taxes, some 2.3 million acres, comprising a third of all the land area in the state, is enrolled under current use.
For 2014, agricultural land under the program was valued at $279 per acre. Normally, an acre of land would be valued anywhere between $3,000 and $7,000, depending on location and quality of the land.
Thus, taxes on land enrolled in current use are significantly lower than land assessed at market value.
If a solar array is put up on agricultural land that is enrolled in the current use, will it be taxed at a higher rate because it is a commercial use, or will it be taxed at the current use rate?
The state’s current use regulations don’t address solar arrays, which some call “solar farms.” Statute defines agricultural land as land used for livestock, crops, maple production and fruit trees that totals 25 acres or more, with minor exceptions. Officials who administer the state’s current use program did not return calls asking for their interpretation of whether solar farms qualify for current use status.
New Haven selectboard chair Kathleen Barrett said that while taking land out of current use may benefit the general fund in Montpelier, it does not have an impact at the local level. This is because the state pays towns for the property tax revenue they lose when properties are taxed based on current use value rather than fair market value.
“I’m not sure it would really make a difference in real estate taxes,” Barrett said. “The state pays the town the difference, so it’s really just a matter of what pocket it comes out of.”
NEW HAVEN ARRAYS
Solar companies doing business in Addison County say land use for solar projects most likely does not qualify for current use.
GroSolar, a solar energy company based in White River Junction, hopes to built two 5-megawatt solar arrays in New Haven — one off of Sawyer Road and one near Route 7 and Town Hill Road. Each would occupy about 40 acres, and would be among the largest solar projects in the state.
At 5 megawatts, each array would produce more than twice as much energy as the 2.2 megawatt Cross Pollination array on Route 7 in New Haven near Open View Farm. The arrays would also be 16 times larger than the largest array the New Haven Town Plan permits, at 300 kilowatts.
Rod Viens, the executive vice president of operations for GroSolar, said the projects will be a boon for town coffers because they will bring in additional tax revenue. While the land on which the arrays would be built is presently enrolled in current use, Viens said that most likely, that would change.
“We believe that the acres used for the project will have to be taken out of current use by the owner of the land, and thus taxed as if it were regular land,” Viens said. “Which in turn would mean extra tax revenue for the town.”
In general, Viens said GroSolar views solar arrays as a commercial rather than agricultural use.
“It should be noted that there are facilities in the state that have sheep that graze within the array, thus there is or could be an agriculture component to the project,” Viens said. “I think we will see more collaboration moving forward between agricultural purposes for these projects.”
Viens said that while, if approved, the two 40-acre solar arrays in New Haven would not be an agricultural use, the land would be preserved for future farming use. The cost of decommissioning the arrays is built into the projects to ensure that fields are returned to the condition they were in before the arrays were installed.
SunCommon, a solar firm based in Waterbury, last month received approval to build a 150-kilowatt, one-acre array in New Haven, and plans to build more in the county.
Company co-founder James Moore said while current use regulations do not directly address solar arrays, SunCommon does not believe land use for arrays is eligible for current use designation.
“Our understanding is that it would need to come out of the current use program at that point,” Moore.
The company has installed solar panels on about a thousand homes in Vermont, and Moore said the one 150-kilowatt array it has built to date is not enrolled in current use.
Moore added that in addition to paying municipal taxes to towns based on the value of the array, taxing the land on which arrays sit at the regular rate will ease the burden on taxpayers.
“Any time land is pulled out of current use, whether for solar or anything else, it then increases the local tax base,” he said.
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