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Connecticut towns are negotiating settlements with solar developers over dozens of disputed property tax assessments on residential solar installations.
Solar companies filed about 200 lawsuits in recent years challenging local assessors’ interpretation of a state law they say was meant to exempt residential solar installations from property taxes. Ambiguous language, however, led some towns to tax systems that feed power to the grid or are owned by third parties.
At least a half dozen of the roughly 20 towns facing such lawsuits have proposed settlements in the works, according to state court records. And the town of Stratford has resolved all of its cases, according to Christopher Tymniak, the town’s chief administrative officer. While details of the settlements have yet to be disclosed in most cases, in those that have been disclosed, towns are agreeing not to tax the systems moving forward. It’s unclear whether they are refunding money already paid by developers.
“All of the towns and all of the plaintiffs have been referred to mediation with Judge Ron Kowalski,” said Benjamin Proto, a lawyer representing several of the towns. “He’s literally taking these town by town and trying to work out an agreement with each.”
The towns and solar developers have been at a legal standoff for the past several years over how to interpret a state statute that grants a property tax exemption to renewable energy sources that generate electricity for “private residential use.”
Beginning in 2017, a small minority of assessors began to interpret that to mean that only solar panels that are owned outright by a homeowner and/or produce power solely for the property are exempt, while those that feed power onto the grid or are owned by a third party are not.
They began assessing property taxes on solar panel systems in which the homeowner relied on leases or power purchase agreements — the vast majority of systems in Connecticut. In some cases, installations were assessed after having previously been exempted.
Solar companies began to sue, arguing that the statute was intended to apply to leased and net-metered systems as well. That position has been supported by Senate Majority Leader Bob Duff, who chaired the Energy and Technology Committee at the time of the exemption’s passage.
Efforts to resolve the issue through a legislative fix have so far failed. Lawmakers are trying a new approach this session.
Previous bills expressly exempted all residential panels moving forward, while at the same time allowing towns to keep the tax revenues they’d already collected on those panels. A bill — HB 6106 — approved last month by the Planning and Development Committee clarifies that the exemption applies to solar installations participating in net metering and/or owned by a third party.
“I do think that the bill has a good chance of making it out of the House because it just basically says that going forward you can’t municipally tax the solar arrays,” said Rep. Joseph P. Gresko, one of the sponsors. “Let the rest of it play out in court. If towns want to settle, they can try to settle.”
Gresko’s town of Stratford is among those doing just that. In one settlement, Stratford and Castello Solar I agree that the company’s solar generation systems will be exempt from tax with respect to the 2020 Grand List — the annual listing of all taxable and tax-exempt properties — and in the future, unless the law changes.
The town also agrees not to “interfere” with passage of HB 6106.
That leaves the matter of the disputed tax payments made on Castello’s solar systems assessed on the 2017, ’18 and ’19 grand lists. The court filing says the parties have entered into a confidential separate written agreement as to how to handle those payments. Tymniak declined to say whether the town refunded any money, noting that other towns are still in negotiations.
“We made an aggressive plan to settle all of our cases and take the uncertainty off our books,” Tymniak said. “The longer you keep going, the bigger the liability is on both sides. We’re still looking for the state to come in and clarify the language because there is a gray area in there.”
Somers, Fairfield, Greenwich, Killingly and Ansonia have negotiated proposed settlements with various developers that are awaiting approval by each town’s board of selectmen before being formally filed with the court.
Adam Stern, the head of CT Solar Leasing, one of the companies suing, said they have reached some “satisfactory” settlements. But he said he remains frustrated by the time and expense of a process that he thinks never should have happened given that “it’s pretty clear that the exemption is there.”
“It’s very upsetting that many of the towns are continuing to spend taxpayer money on litigation, and they’re spending multiples more than they’re ever going to get,” Stern said.
His firm submitted a public records request to the town of Cromwell seeking invoices for the legal fees accrued in his case so far. Copies of those invoices show a total of $17,719 charged as of March. That sum seems like a “misuse of taxpayer funds,” Stern said, given that the property tax allegedly owed on solar panels owned by his company is $1,569 a year, or less than $6,000 to date.
Marianne Sylvester, Cromwell’s finance director, confirmed she had supplied the legal invoices in response to the records request.
Connecticut is one of 33 states that exempt solar photovoltaic systems from property taxes, according to testimony submitted in support of HB 6106 by Meghan Nutting, executive vice president of policy and communications for Sunnova Energy Corp.
She said the widespread policy reflects “a common understanding” that “such tax exemptions encourage and advance the deployment of renewable energy systems.”