Matter of Solar Advocate Development, LLC v Assessor for Town of East Bloomfield, et al.
Attorneys and Parties
Brief Summary
Property tax treatment of solar energy projects and whether a county's local law opting out of a renewable-energy tax exemption remained valid even though there was no proof it had been filed with the New York State Energy Research and Development Authority (NYSERDA).
Supreme Court held that the County of Ontario had not effectively opted out of the exemption under RPTL 487 (2) [provides a 15-year property tax exemption for the increase in property value attributable to a solar energy system] because the county failed to show filing with NYSERDA as referenced in RPTL 487 (8) (a) [allows local governments to opt out of the exemption and directs that a copy of the local law be filed with the Department of Taxation and Finance and NYSERDA].
The Appellate Division overturned the judgment granting the amended petition against the County, including the order directing that the property be entered on the County assessment roll as exempt and that taxes be refunded.
The court held that RPTL 497 (2) [states that when an exemption statute requires filing a local option law with state agencies other than the Department of State, failure to make that filing does not invalidate the law unless the statute expressly says the law cannot take effect until filed] controlled. Because RPTL 487 (8) (a) does not expressly make filing with NYSERDA a condition of effectiveness, the County's 1997 opt-out law remained valid, and the petitioner was not entitled to the exemption.
Background
Solar Advocate Development, LLC bought property in the Town of East Bloomfield in 2018 and soon built a $3.1 million solar energy system on it. In 2021, it applied for a partial property tax exemption under RPTL 487 (2). The application was denied because Ontario County had adopted a local law in 1997 opting out of that exemption. The County had filed the local law with the Department of Taxation and Finance (DOTF) and with the Secretary of State, and the law appeared on the DOTF public list of opting-out jurisdictions, but the record contained no proof that it had also been filed with NYSERDA. Petitioner then brought a combined proceeding under Real Property Tax Law (RPTL) article 7 and CPLR article 78, although the Appellate Division noted that the proper vehicle was an RPTL article 7 tax certiorari proceeding.
Lower Court Decision
Relying on Matter of Laertes Solar, LLC v Assessor of the Town of Harford, Supreme Court concluded that an opt-out law under RPTL 487 (8) (a) was ineffective unless filed with both DOTF and NYSERDA. Based on that reasoning, the court granted the amended petition insofar as it related to the County's assessment roll, directed that the property be entered on the 2021-2022 County assessment roll pursuant to RPTL 487, and ordered a refund of any tax overpayment.
Appellate Division Reversal
The Appellate Division unanimously reversed and dismissed the amended petition against the County. It held that the County's argument was reviewable and, even if not fully preserved, should be reached in the interest of justice. On the merits, the court concluded that RPTL 497 (2), enacted before this proceeding began, clarified that a failure to file an opt-out law with NYSERDA did not invalidate the law because RPTL 487 (8) (a) does not expressly say the opt-out is ineffective until such filing occurs. The court also found that RPTL 497 (2) was clarifying and retroactive in effect, especially because the Legislature specifically stated that Laertes would remain binding only on the parties to that case. Since Ontario County had adopted its opt-out before petitioner built the solar system, petitioner could not claim the exemption.
Legal Significance
This decision limits the effect of Laertes in the Fourth Department and confirms that, under RPTL 497 (2), filing defects in local opt-out laws for tax exemptions are generally directory rather than conditions precedent unless the governing statute expressly says otherwise. It also reinforces that challenges to denial of a partial property tax exemption ordinarily must proceed as RPTL article 7 tax certiorari cases, not CPLR article 78 proceedings.
A municipality's failure to file a solar tax-exemption opt-out law with NYSERDA will not invalidate the opt-out unless the statute expressly makes filing a condition of effectiveness; therefore, Ontario County's long-standing opt-out barred the solar developer's claimed RPTL 487 exemption.