Enacted in 2021, RPTL §575-b was intended to promote clarity and predictability in the valuation of solar and wind energy system. The statute created a state-wide procedure for the tax assessment of solar and wind energy systems, directing that the valuation of such systems "shall be determined by a discounted cash flow approach," using a model appraisal formula (the "Model") and discounted rates promulgated by the Department of Taxation and Finance (DTF). Discounted cash flow (DCF) is a form of income-based valuation method which uses the property's projected net income, along with a discount rate, to estimate present-day value. A discount rate is a measurement of risk – a riskier investment is discounted at a great rate, leading to a lower present value, because the risk lowers the expected return. See: Real Property Taxation of Solar and Wind Energy Systems in New York State: Update – Farrell Fritz; and see: Real Property Taxation of Solar and Wind Energy Systems in New York State – Farrell Fritz
The DTF Model and RPTL § 575-b were struck down as unconstitutional in the matter of Airey, et al. v. State of New York, et al. (Index No. 903991-2024). The Albany County Supreme Court held that DTF's decision to exclude renewable energy certificates and investment tax credits from the DCF Model revenue calculation was arbitrary and capricious, and that meant RPTL § 575-b was an unconstitutional delegation of the legislative power to tax to a state administrative agency. See: Real Property Taxation of Solar and Wind Energy Systems in New York State Update: Court Declares RPTL § 575-b Unconstitutional in Airey v. State – Farrell Fritz
The State promptly appealed and, on joint application brought by the parties, the Appellate Division, Third Department, rendered a decision confirming that an automatic stay under CPLR 5519(1) applied, prohibiting enforcement of the decision in Airey v. State, until such time that the appeal is finally resolved. The stay confirmed that, pending appeal, all local assessors across the state remained obligated to utilized the DTF's Model for valuing solar and wind facilities.
Now, the Senate and Assembly passed a proposed amendment to RPTL 575-b. A. 8332/S. 8012, 246th Sess. (2025) (NY State Senate Bill 2025-S8012). The amendment would codify the Department's decision to exclude renewable energy certificates and investment tax credits from the model's definition of revenue. Proposed RPTL § 575-b(1)(e) states that "federal investment and production tax credits granted by the internal revenue code and environmental values, including but not limited to, renewable energy credits, shall be deemed intangible assets and not included as revenue streams." The amendment was proposed in response to the Airey decision, in part, and the sponsor's memorandum reaffirms the Legislature's commitment to incentivize clean energy by creating predictable and stable taxation for renewable energy projects. Sponsor's Memorandum, NY State Senate Bill 2025-S8012. The bill has not yet been delivered to the Governor, which if signed, the appeal would become moot and RPTL § 575-b would remain the law of New York State.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
