BILL NUMBER:S7711

TITLE OF BILL:
An act
to amend the real property tax law, in relation to a solar electric
generating system tax abatement for certain properties in a city of one
million or more persons

SUMMARY OF PROVISIONS:
This bill would amend subdivision one of section
499-bbbb of the Real Property Tax Law (RPTL) by adding a new paragraph
(c) and would amend subdivision one of section 499-cccc of the RPTL.

If the solar electric generating system is placed in service on or
after January 1, 2013 and before January 1, 2015, the amount of the
tax abatement would be 2.5% of eligible solar electric generating
system expenditures in each year of the four-year compliance period.
However, the benefit in each tax year would be limited to the lesser
of the amount of taxes payable or $62,500. "Eligible solar electric
generating system expenditures" include reasonable expenditures for
materials, labor costs properly allocable to on-site preparation,
assembly and original installation, architectural and engineering
services, and designs and plans directly related to the construction
or installation of the solar electric generating system.

REASONS FOR SUPPORT:
              

The City of New York strongly supports this
legislation, which would extend an existing incentive program to
encourage the installation of solar electric generating systems, in
connection with class one, class two and class four properties in the
City.

This program is aligned with the Mayor's long-term sustainability
plan, PlaNYC, first issued in April 2007, which set a 30% greenhouse
gas emission reduction target for 2030 and committed to providing
cleaner, more reliable power for every New Yorker. These goals will
be achieved through efforts to improve energy efficiency and clean
our energy supply. In the near term, the City will still rely heavily
on conventional energy sources, such as electricity generated by
natural gas. However the installation of solar energy can play an
important role in the transition to cleaner energy.

Of all the renewable energy sources, solar currently has the greatest
potential to generate electricity within New York City. The
technology is commercially available and there is ample space for
solar systems on the City's rooftops. Furthermore, because solar
energy production is greatest during hot summer days when energy
demand is at its peak, it is useful as a load management tool and can
help
to reduce harmful air emissions from peaking power plants. Despite
these benefits, solar energy is not yet competitive with conventional
sources of electricity on a market basis, and for this reason, the
City committed in PlaNYC to work with the State to provide targeted
incentives for solar energy and eliminate barriers that inhibit growth.


The intent of 2008 legislation creating the tax abatement was to
accelerate growth by helping to mitigate the cost premium for
installing solar in New York City relative to the rest of the
metropolitan region. At the time, it cost nearly 30% more to install
solar in New York City than it did in Westchester County. This cost
premium stemmed from higher labor costs, as well as higher
transaction costs related to the City's extensive interconnection,
permitting and inspection requirements.

Since creating the tax abatement, New York City has experienced
significant growth in installed solar capacity. Nearly 150 abatements
were awarded through City Fiscal Year 2011 and another 244
applications are currently being considered in 2012. The City went
from having 2 megawatts (MW) of installed solar capacity in 2008 to
8.4 MW today. This 300% growth rate was nearly double that of
Westchester County over the same period. Overall, the solar property
tax abatement has leveraged tens of millions of investment with
relatively little cost to the City.

The tax abatement program has helped to improve the economics of
installing solar in New York City and mitigate the cost premium. Last
year, installed costs in the City were 16% higher than Westchester
County, and in 2012 the differential appears to be closer to 10%.
This narrowing likely resulted from an influx of new solar developers
who were attracted by the City's abatement program, thus creating a
more competitive marketplace for consumers. The City and Con Edison
have also streamlined the process for permitting and interconnecting
solar, which has helped to lower transaction costs. Finally, all U.S.
consumers benefited from lower capital costs thanks to technology
innovation and global productivity in the solar sector.

To reflect the increased cost competitiveness of installing solar in
New York City, the City seeks to renew the abatement at a level of
10% of total capital costs, down from the current 20% rate. The City
believes that a 10% total abatement rate will continue to serve as an
effective incentive while controlling the fiscal costs of the
abatement as demand for it grows.

Renewal of the property tax abatement will foster continued growth in
New York City's solar energy supply and stimulate economic
development throughout the City and State. The City remains committed
to investment in solar as an alternative energy source and believes
that continuation of the program is vital to achieving that objective.

Accordingly, the Mayor urges the earliest possible favorable
consideration of this proposal by the Legislature.