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Please oppose provisions in H. 4198 to undermine local property tax authority; Please support Rep. Stephen Kulik’s amendment to the energy bill  

Credit:  Massachusetts Municipal Association | www.mma.org | 25 June 2012 ~~

Dear Representative,

On behalf of cities and towns across the Commonwealth, the Massachusetts Municipal Association appreciates the important work that the House is undertaking to advance renewable energy policy in Massachusetts through its consideration of H. 4198, An Act Relative to Competitively Priced Electricity in the Commonwealth. However, we are writing to express our strong opposition to sections of the bill that would make certain renewable energy systems exempt from the local property tax and undermine the ability of municipalities to negotiate appropriate payments-in-lieu-of-taxation (PILOT) agreements.

Several sections of H. 4198 would make a major change in local tax laws by exempting larger-scale renewable energy equipment from the property tax, and instead inserting a much lower PILOT of 5% of annual gross electricity sales from the developer to the municipality. This represents a dramatic and unnecessary policy shift that would have a harmful effect on cities and towns, removing both local tax authority and the ability of municipalities to negotiate a PILOT that is in their best interest.

Under current law, renewable energy equipment that is behind the meter and serves as the primary or ancillary source of power for the property on which it is located is exempt from taxation. Larger renewable energy developments remain subject to taxation based on assessed value, or municipalities may negotiate at their discretion a payment-in-lieu-of-tax agreement (PILOT) with the renewable energy system developer.

The current system is working – Massachusetts ranks 2nd in the nation in the development of solar facilities, and cities and towns are full partners in this success. There is no good reason to undermine local taxing authority. If the state believes that a new subsidy is needed, it should be paid with state dollars instead of eliminating local revenues that pay for local services. This language in H. 4198 would give solar developers a windfall, and create an unexpected revenue shortfall for cities and towns.

The MMA has heard explicitly from local officials across Massachusetts, and none support this blanket exemption of renewable energy systems or the imposition of a fixed, non-negotiable PILOT. Many are taxing the renewable energy developments in their communities at their assessed values, and many have successfully negotiated PILOT agreements in amounts that significantly exceed the 5% annual gross electricity sales payment that would be required under this legislation. Others have reported favorable PILOT negotiations that enable them to enjoy significant cost savings for the purchase of electricity through Power Purchase Agreements (PPAs).

The MMA strongly supports the amendment filed by Rep. Stephen Kulik to protect the taxable status of renewable energy equipment and to preserve the local authority to negotiate PILOT terms with developers. Rep. Kulik’s amendment would make solar and wind electricity generation equipment taxable for a term of up to 10 years, and subject to a PILOT of up to 10% of annual gross electricity sales for the subsequent 10 years. It gives municipalities the authority to negotiate these terms at the local level, and also enables the municipality and developer to negotiate a PILOT agreement for the lifespan (up to 20 years) of the project if they so choose. This language acknowledges that a one-size-fits-all approach to solar and wind development across the Commonwealth will not work, and it protects the ability of municipalities to negotiate project terms that are in their best interests.

Again, the system is working – the Green Communities Act of 2008, which had the strong support of the MMA, has provided municipalities with a policy framework that includes critical tools and incentives to adopt sustainable and cost-effective approaches to meeting energy needs and environmental challenges at the local level. Our cities and towns are true partners with the Commonwealth in advancing the goals set forth in this commendable legislation. In fact, 334 of 351 municipalities in Massachusetts now host solar energy facilities, and these solar energy facilities generate 115MW of electricity- putting the state well on its way to meeting its goal of 250MW of solar energy installations by 2017. Over 20 municipalities have solar installations on capped landfills, with more than 40 permit applications for solar developments on capped landfills currently pending. Additionally, according to the Massachusetts Clean Energy Council, there are at least 4,600 renewable energy developments on private and municipal property statewide. The renewable energy industry is incentivized at the federal and state levels, and is clearly thriving in Massachusetts.

Other Provisions of H. 4198

The MMA supports Section 6 to expand membership in the Energy Efficiency Advisory Council to include a representative from a municipality. This expansion will create a clear channel for input on successful programs enacted on the local level.

We support Section 24, raising the net metering cap for government entities and municipalities from 2 percent to 3 percent, enabling more cities and towns to qualify for net metering. However, to make additional projects feasible, the Department of Energy Resources may have to enlarge the Solar Carve Out program, which was an incentive for solar development.

Further, the MMA strongly supports the amendment filed by Rep. Jay Kaufman that would allow cities and towns to form new municipal utilities. Investor-owned utilities have demonstrated poor performance, lack of responsiveness, and lack of communication in the wake of several recent storms, causing many municipalities to file formal complaints with the Department of Public Utilities. Municipal utilities are subject to local control and are likely to demonstrate superior customer service, increased communication, and a higher degree of responsiveness.

Again, the MMA appreciates your leadership and is committed to working with you and your colleagues to ensure passage of a strong bill that will enhance the Green Communities Act while protecting municipalities, local taxpayers and hometown decision-making. We urge you to support Rep. Kulik’s amendment to protect the taxable status of renewable energy equipment and preserve the authority of municipalities to engage in local-level negotiations with developers.

If you have any questions, please do not hesitate to have your staff contact John Robertson or Catherine Rollins of the MMA at any time. Thank you very much.


Geoffrey C. Beckwith
Executive Director

Source:  Massachusetts Municipal Association | www.mma.org | 25 June 2012

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