Relates to property tax benefits for anaerobic digestion for agricultural waste; repealer

Summary of provisions

Section 1 of the bill amends RPTL § 483-a to include language that clearly allows for the sale of the energy generated by an anaerobic digester through the grid (off-site) or to a farm (on-site), without jeopardizing the tax exempt status of the anaerobic digester, the equipment used to process the waste to energy and the property it is located upon. The amendment includes the removal of the word "agricultural" in reference to the land on which a digester is affixed to ensure the tax exemption even if the land is zoned as other than agricultural

Section 2 of the bill repeals the definitions of "farm waste electric generating equipment" and "farm waste energy system" in RPTL § 487 to remove confusion with the newly amended RPTL § 483-a.

Section 3 of the bill amends the definition of "incremental cost" in paragraph (d) of subdivision 1 of RPTL § 487 to remove references to farm waste energy systems.

Section 4 of the bill amends the section heading and subdivisions 2, 3, 4, 5 and 8 of RPTL § 487 to remove references to farm waste energy equipment and systems.

Section 5 of the bill provides the effective date - immediately, and applicable to the taxable year of 2014 and thereafter

Existing law

In 2013, the Legislature passed S. 4770-A/ A. 7982 (Gallivan/Magee) (Chapter 272 of the Laws of 2013) clarifying that composting and anaerobic digestion of agricultural materials are entitled to a real property tax exemption as "manure storage, handling and treatment facilities" under RPTL § 483-a.

The Courts have since ruled that the existence of similar language is RPTL § 487 is confusing and therefore have allowed the municipality of Covington, NY (Wyoming County) to tax an anaerobic digester as Energy Generation, an outcome unintended by previous legislation.

Justification

In 2013, the Legislature passed S. 4770-A/ A. 7982 (Gallivan/Magee) (Chapter 272 of the Laws of 2013) clarifying that composting and anaerobic digestion of agricultural materials are entitled to a real property tax exemption as "manure storage, handling and treatment facilities" under RPTL § 483-a.

Expanding the implementation of anaerobic digesters has also been priority of Governor Cuomo as he affirmed at the NYS Yogurt Summit held in August of 2012, where he stated " We, as an administration, want to encourage digesters."

Anaerobic digestion of livestock manure and other agriculturally derived organic materials provides multiple environmental benefits including: water quality protection, air quality improvement, reduction of greenhouse gases, energy efficiency benefits, public health protection, natural resource conservation, solid waste reduction and renewable energy generation. While the benefits are many, farmers have been slow to adopt this technology due to the high capital costs and tight financial margins of anaerobic digestion.

To be eligible for tax benefits at least fifty percent by weight of the anaerobic digester feedstock on an annual basis must consist of livestock manure, farming wastes or crops grown specifically for use as anaerobic digestion feedstock. This standard ensures that such facilities maintain an important direct connection to farm operations, helping them with critical nutrient management needs. The RPTL should be revised and updated to include anaerobic digesters as integral parts of agricultural manure management systems.

In light of the changes already made to RPTL § 483-a, which make anaerobic digestion of agricultural materials eligible for a real property tax exemption, the farm waste energy tax exemption in RPTL 487 is no longer needed. Since any on-farm digester seeking a property tax exemption will use § 483-a, keeping the § 487 exemption would be confusing. That confusion could lead other municipalities to tax anaerobic digesters as Energy Generation, potentially bankrupting existing digesters and discouraging the development of new digesters in New York State.

Legislative history

This is a new bill. It clarifies Chapter 272 of the Laws of 2013 to state that composting and anaerobic digestion of agricultural materials are entitled to a real property tax exemption as "manure storage, handling and treatment facilities" under RPTL 483-a.

Fiscal implications

None to the state. This bill clarifies existing state law The clarification will prevent the taxing of anaerobic digesters as energy generation, potentially bankrupting existing digesters and discouraging the development of new digesters in New York State.

Effective date

Immediately, and shall apply to the taxable year of 2014 and thereafter.