Any hopes the Board of Selectmen and Harvard Solar Garden representatives had of quickly resolving taxation for Harvard’s first community shared solar project evaporated at Tuesday’s BOS meeting in light of new information from Harvard’s Regional Tax Assessor, Harald Scheid.
Scheid introduced two recent wrinkles in how towns assess solar projects that left the selectmen with little choice other than to take no action on the solar garden’s proposal for a PILOT—payment in lieu of taxes—agreement.
At the end of a cordial meeting and with their own set of limited options, Harvard Solar Garden (HSG) representatives said they would pursue tax exemption by way of a home rule petition, a strategy they had come to the meeting willing to give up. Their petition appears as Article 48 in the 2014 Town Meeting warrant.
Garden offered 4 percent of generated energy
In a letter distributed before the meeting, HSG proposed giving the town 4 percent of the electricity generated by the community shared solar project’s 250 kilowatt array. Karl Schwiegershausen, representing HSG, said their preference would be to transfer net metered energy credits, the same way shareholders will be compensated, but they would pay cash if the town found energy credits unacceptable. Schwiegershausen estimated 4 percent of output would be a little over $2,000 annually at the current cost of electricity and would rise or fall with electricity prices.
Early preliminary discussions with Scheid, HSG, and town representatives had coalesced last June around a potential PILOT of $3,125 annually, a figure Scheid based on a $12,500 per megawatt assessment used in PILOT agreements for commercial systems elsewhere in the state.
In answer to a question by Selectman Ron Ricci, Scheid confirmed that solar panels installed on Pizza Bella or Appleworks for use by those businesses would be tax exempt.
“We hope [to establish community solar] as a viable alternative for Massachusetts residents that are unable to install solar on their own properties.”
—Karl Schwiegershausen
In contrast, commercial systems that sell energy to a utility or to solar customers are not exempted.
Schwiegershausen told the board the garden all along had been seeking parity with home and business owners whose solar installations are exempted from tax valuations for 20 years. He said that although legislated tax exemption opportunities for shared solar were on the horizon, the group was willing to give up future tax exemption rights in exchange for the certainty of fixed costs through a PILOT.
After some discussion of the HSG proposal, Scheid surprised almost everyone with new information.
According to Scheid, at a meeting last week with the Department of Revenue (DOR), assessors were told to consider any taxable solar project as subject to a regular assessment. According to the DOR, PILOT agreements should be translated into an equivalent evaluation that would become part of a town’s total valuation, which is used to set tax rates. He then elaborated on a set of complexities and ambiguities in the DOR’s advice.
In effect, Scheid said DOR was tightening review of PILOTS, and there was no latitude to vary from full tax equivalence.
On another front, Scheid described a recent case in Westborough in which the town had assessed at full value a solar array installed on one lot to net meter electricity to five other properties, all owned by a single property owner. In November, on an appeal filed by the property owner, the Massachusetts Appellate Tax Board ruled in the taxpayer’s favor. Westborough has asked for findings of fact in the case. According to Scheid, DOR guidance advises municipalities to wait on exemption questions until the findings of fact are published.
Legislation wanted
“Frankly, it’d be nice if somebody wrote some legislation that just” –laughter interrupted Scheid as all eyes turned to Senator Jamie Eldridge, who had come to listen to the discussion—“was to everybody’s liking instead of all of us struggling.”
After a lengthy discussion on the evaluation possibilities and what they might mean for the town, Selectman Leo Blair summed up: “Based on all the things going on here, if I’m sitting over there [HSG representatives], I’m going as hard as I can for exemption. If I’m sitting here [BOS], we’re taking no action on this because we don’t want to get ourselves in trouble.”
BOS Chairwoman Marie Sobalvarro asked Senator Eldridge if he wanted to comment.
Eldridge briefly told the board the state Senate had passed a bill last summer that would have established a range for how solar is taxed across Massachusetts, including exemptions, but heavy lobbying by the Massachusetts Municipal Association had forced removal of the provisions, in order to pass an urgently needed increase in the net metering cap.
According to both Sobalvarro and HSG project manager Worth Robbins, after the Senate legislative effort failed and with community shared solar in legal limbo—neither on residential or small business property for the property owners’ use nor commercial entities selling to utilities or customers—Senator Eldridge and Rep. Jen Benson recommended last fall that HSG file a home rule petition for exemption.
Solar tax question will once again
return to the town
HGS representatives said they will pursue tax exemption through the citizens home rule petition that is now on the warrant for Town Meeting. “We hope the vote at ATM will be yet another step toward establishing community solar as a viable alternative for Massachusetts residents that are unable to install solar on their own properties,” Schwiegershausen said after the meeting.
Residents will have the opportunity to weigh in at the Annual Town Meeting on whether the town should recognize community shared solar installations as distinct from commercial systems and taxable on par with residential systems.
Sydney Blackwell, who writes conservation and environmental topics for the Press, has a 5 kilowatt share in the Harvard Solar Garden. Worth Robbins, HSG program manager, is a co-owner of the Harvard Press.
