Clean Energy Systems Exemption - DOF

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Clean Energy Systems Exemption

As the climate crisis intensifies, it is critical that we make a rapid transition to clean and resilient energy. Energy storage will play a key role in this by providing backup power in the event of an emergency - and by making renewable power from solar and wind available when it is most needed.

The Clean Energy Systems Exemption offered by New York State Real Property Tax Law (RPTL) Section 487 encourages the installation of certain energy systems in residential, commercial, institutional, and industrial applications, including solar, wind, and energy storage, among other eligible technologies. The tax exemption relieves property owners of any increase in property taxes that directly results from the installation of an eligible energy system for a period of 15 years.

While the law allows municipalities to require a Payment in Lieu of Taxes (PILOT) agreement to recoup some portion of the foregone tax revenue, the City of New York has determined it will not require a PILOT for energy storage systems that seek tax benefits under RPTL 487 at this time.

Eligibility

Eligible projects will utilize an alternative energy system to produce, retain, maintain, and disperse energy separate from existing public infrastructure dependencies. While the energy systems identified within the Eligible Energy Systems section are recognized as eligible property uses for the exemption, alternative energy systems may qualify in other forms as well.

Level of Benefit

The increase in assessed value attributable to the eligible energy system is the monetary value considered when calculating the Clean Energy Systems Exemption. The incremental cost is the increased cost of the eligible energy system or component which also serves as part of the building structure, above the cost for similar conventional construction, which enables its use as an eligible energy system or component. When a property owner installs one of the eligible technologies in a participating jurisdiction, the incremental increase in property value will not be included in property tax calculations for a period of 15 years.

Application Instructions

This is a New York State-governed exemption benefit program. Please thoroughly review the RP 487 instruction sheet to ensure that you are following the program rules and guidelines.

Eligible Energy Systems

Solar or wind energy system: solar or wind energy equipment designed to provide heating, cooling, hot water, or mechanical, chemical, or electrical energy by the collection of solar or wind energy and its conversion, storage, protection, and distribution.

Farm waste energy system: farm waste electrical-generating equipment required for the process of producing, collecting, storing, cleaning, and converting agricultural waste biogas into forms of energy such as thermal, electrical, mechanical, or chemical and by which the biogas and converted energy are distributed on-site.

Micro-hydroelectric energy system: micro-hydroelectric energy equipment designed to provide electrical energy using flowing water.

Fuel cell electric generating system: equipment designed to produce electrical energy through chemical reaction, including but not limited to hydrogen, oxygen, methane, and natural gas.

Micro-combined heat and power generating equipment system: equipment designed to produce electrical energy and heat for a residential customer on such customer's premises.

Electric energy storage system: equipment designed to store electrical energy in electric energy storage equipment and release electric power later.

Fuel-flexible linear generator electric generating system: fuel-flexible linear generator electric generating equipment designed to produce electric energy from linear motion created by the reaction of gaseous or liquid fuels, including but not limited to biogas and natural gas.

Complete definitions of the eligible energy systems can be found at Real Property Tax Law Section 487(1).

How to Apply

File your “Notice of Intent to Construct Clean Energy Systems” with the Department of Finance. Sample language:

To Whom It May Concern,
New York Real Property Tax Law Section 487 requires that the developer or owner of a clean energy system "provides written notification to a taxing jurisdiction of its intent to construct" a clean energy system. Pursuant to the requirements of Section 487, this notice shall serve as written notification to the taxing jurisdiction (the New York City Department of Finance) that [Company Name] intends to construct a clean energy system at [Property Address, Borough, and ZIP Code]. Upon entering into an interconnection agreement with the applicable utility, [Company Name] shall provide the New York City Department of Finance with a second notice that construction has commenced.

Review the RP 487 Instruction Sheet.

Complete the RP 487 Application for Tax Exemption of Solar, Wind, or Certain Other Energy Systems

Submit your application on or before January 5 for an exemption effective date starting in the following tax year. For example, an application filed January 1, 2023, will allow for a July 1, 2023, effective date. An application filed January 15, 2023, will have a July 1, 2024, exemption effective date.

Be sure to follow the NYS instructions in filing two copies of the application: one copy for the New York State Energy Research and Development Authority, and one for the Department of Finance.

For additional information on this New York State-provided benefit, please visit the New York State Energy Research and Development Authority.

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The Department of Finance has made the data for all NYC properties available on the NYC Open Data portal for download. Visit the Open Data page for more information.