Solar and Wind Energy

September 26, 2014NC DOR

Tina StoneMichael Brown

Considerations for ValuingSolar and Wind Farms

• Real Property– Market Value

• Present-Use Value• Business Entities• Deferred Taxes

• Personal Property

Market Value Considerations• Change in use of the property—has the value

been effected. Review your current SOV.• You should consider the lease when valuing the

property. The value of the property may be higher/lower than prior value depending on location. For rural properties the value may go up.

• For next general reappraisal, consider developing a land line code in your CAMA package for solar/wind properties.

Market Value

• Properties leased for solar farms range from $400 to $1,000 per acre a year. Most common figures heard are in the $600 to $800 range.

• Research you county and others as well to obtain best available information for these properties.

In PUV— Individually Owned

• Land owned by an individual that is converted to a solar farm and is still being used to raise animals can still qualify.

• To continue in the program the statutes contemplate land that is in actual production.

Animals Commonly Used

• We are aware of situations where the sheep are being raised for the production of wool and meat. At this time, we are only aware of sheep being used in conjunction with a solar farm.

Animals Commonly Used

• We are not stating that certain animals do not qualify.

• We suggest that you review any changes to a property on a case by case basis.

• Goats we have been told may eat/damage the equipment.

Animals Commonly Used

• We have been told that cows have been used around solar panels.

• They have to be raised to a greater height. Additional cost to install is likely.

In PUV—Business Entity

• For property owned by a business entity that may convert some of the property to a solar farm remember that the "principal business" requirement still applies.

• If animals are in production with solar farm the property can still possibly qualify under PUV as a business entity.

In PUV—Business Entity• As a part of the ownership test, the income from

the farming operation and the solar farm may need to be reviewed to determine if the property still qualifies for present-use value.

• One test would be to review a income and expense report of the business entity to determine if more than 51% of the income was from either agriculture, horticulture or forestland .

PUV—Deferred Taxes• Where land has been converted to a solar

farm and the land is no longer being farmed the deferred taxes would become due.

• This would include the area that has been fenced off and is now being used as a solar farm. The remainder of the property would still able to qualify, assuming all other requirements are met.

PUV—Deferred Taxes• For wind farm—land that is no longer in

production of agricultural, horticultural or forest land the rollback will be due. This could be any fenced off area or base area of a wind turbine.

• Deferred taxes for the current year, and three prior years with interest would be due.

Just to clarify…

• Fencing around the perimeter of the solar farm is okay. Fencing which prevents the animals from grazing under the panels is not.

• Solar panels should be high enough off the ground for animals to freely graze under.

• Review properties on a case by case basis.

N.C. Wind Farms Issues

• House Bill 484 / S.L. 2013-51—establishes a permitting process for wind energy facilities• DENR• Military

• Power purchase agreements

Wind Power Facts• Tower height: range from 200 to 300 feet

• Blade length: range from 66 to 130 feet, or more, usually having three blades

• A 1.5 MW turbine is 260 ft. tall. The rotor assembly (blades and hub) weighs 48, 000 lbs. The nacelle, generator component weights 115,000 lbs. The concrete for the tower is 58, 000 lbs. of reinforcing steel and 250 cubic yards of concrete. The base is 50 feet in diameter and 8 ft. thick near the center.

• Source: Wikipedia

Source: http://www.appstate.edu/~js77542/REI-Broyhill-wind.html

PERSONAL PROPERTY

• 80% of a appraised value of a solar energy electric system is to be excluded, under 105-275(45).

• Taxpayer must list all improvements with the tax office during regular listing period.

• Single application required under 105-282.1

Personal Property—Recent Appeal

• Thermal Solar Energy Equipment• 200 Solar Panels, 2 Heat Exchangers, piping, 2-

10,000 gallon storage tanks, sleeves, bracers & connectors

• Produces Hot water used solely for the textile manufacturing process

• Equipment is not used to provide heating and cooling for the facility

Personal Property—Recent Appeal

• Taxpayer requested county to recognize 105-277 (g) in the appraisal of this equipment

• County appraised the property as Business personal property

PTC Decision

• PTC upheld the counties value • 105-277 (g) does not apply to the solar

energy system of FLS was not relevant to this subject property

• Taxpayer could possibly appeal decision of PTC

• PTC decisions do not set precedent

Contact Information

NC Department of RevenueLocal Government Division

919.814.1129

Michael Brownmichael.brown@dornc.com

Tina StoneTina.Stone@dornc.com