Matter of NY Farmington I, LLC, NY Farmington II, LLC, and NY Farmington III, LLC v Assessor for Town of Farmington, Board of Assessment Review for Town of Farmington, and Town of Farmington
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Attorneys and Parties
Brief Summary
Property tax treatment of commercial solar energy systems and whether a town's delayed filing of its opt-out law with the New York State Energy Research and Development Authority (NYSERDA) made the opt-out ineffective.
Supreme Court held that the Town's 2016 opt-out under Real Property Tax Law (RPTL) 487 (8) (a) [permits a municipality to opt out of the solar energy system tax exemption] was ineffective against petitioners' systems because the Town did not file the local law with NYSERDA until 2021, and it therefore ruled that petitioners were entitled to the exemption under RPTL 487 (2) [real property including a solar energy system shall be exempt from taxation to the extent of any increase in value caused by the system for 15 years] for the Town and school district portions of the 2023 assessment roll.
The appellate court overturned the ruling insofar as it granted petitioners the RPTL 487 (2) exemption for the Town's portion of the 2023 assessment roll and dismissed the petition except for the remaining claim concerning the Palmyra-Macedon Central School District portion.
The Fourth Department rejected the view that NYSERDA filing was a condition to effectiveness. It held that RPTL 487 (8) (a) does not expressly state that an opt-out local law becomes effective only upon filing with NYSERDA, so the Town's late NYSERDA filing did not invalidate or delay the Town's opt-out.
Background
Petitioners own land in the Town of Farmington where they built solar energy systems. In February 2023, they sought tax exemptions for the 2023-2024 tax year under RPTL 487 (2) [real property including a solar energy system shall be exempt from taxation to the extent of any increase in value caused by the system for 15 years]. The Assessor and Board denied the applications because the Town had adopted a 2016 local law opting out of that exemption under RPTL 487 (8) (a) [permits a municipality to opt out of the solar energy system tax exemption]. Petitioners then brought a hybrid challenge arguing that the Town's opt-out was invalid as to their projects because, although the Town filed the law with the Department of Taxation and Finance and the Secretary of State, it did not file the law with NYSERDA until 2021, after petitioners had already constructed their systems.
Lower Court Decision
Supreme Court, relying on Matter of Laertes Solar, LLC v Assessor of the Town of Harford, concluded that the Town's failure to file the opt-out with NYSERDA until 2021 rendered the local law ineffectual as to petitioners' already-constructed solar facilities. The court granted petitioners summary judgment in part on their first cause of action, held respondents' refusal to grant the exemption was unlawful for the Town and local school district portions of the 2023-2024 assessment roll, denied respondents' cross-motion under CPLR 3211 [rule permitting dismissal of a pleading] or for summary judgment, and denied the requested declaratory relief on the remaining causes of action.
Appellate Division Reversal
The Appellate Division first stated that a declaratory judgment action was not the proper vehicle and that the matter should be treated only as an RPTL article 7 tax review proceeding. It then modified the order and judgment by denying petitioners summary judgment on the first cause of action insofar as it sought the exemption for the Town's portion of the 2023 assessment roll, and by granting respondents summary judgment dismissing the petition except to the extent the first cause of action sought an exemption for the Palmyra-Macedon Central School District portion of that roll. The court held that the Town's delayed filing with NYSERDA had no effect on the validity of the 2016 opt-out law.
Legal Significance
This decision aligns the Fourth Department with its contemporaneous ruling in Matter of Solar Advocate Dev., LLC v Assessor for Town of E. Bloomfield and rejects the reasoning of the Third Department's Laertes line on this issue. It establishes that, for purposes of RPTL 487 (8) (a), filing an opt-out local law with NYSERDA is not a statutory condition precedent to the law's effectiveness unless the statute expressly says so.
A municipality's opt-out from the RPTL 487 solar tax exemption remains effective even if the municipality filed the local law with NYSERDA late, because the statute does not say the opt-out takes effect only upon that filing.