Edgartown assessors asked questions of the selectmen Tuesday about whether a proposed solar power development on town land is taxable.
Edgartown is well along a path to building utility-scale solar arrays, as part of a complex agreement involving the Cape and Vineyard Energy Coop (CVEC) and a yet-to-be chosen private developer.
The agreement takes advantage of a unique and temporary window of federal and state tax incentives. The town’s energy committee believes the utility-scale solar installation could save the town more than $100,000 per year in electricity costs, $3 million over the life of the project. The plan incorporates large federal and state subsidies, but no funds from Edgartown taxpayers.
Assessors believe that the enterprise will be taxable, as a utility, and taxable as a structure, even though it will be on land leased by the town. Town counsel Ron Rappaport, who was at the Monday meeting, agreed.
In order to take advantage of valuable government incentives, the solar generation facility must be owned by a private company. CVEC is currently in the process of awarding a bid.
“There’s a lot of money on the table in tax credits,” assessor Alan Gowell said. “We ought to be paying attention to how the money moves around. If we let an entrepreneur operate on our property and make a great deal of profit, then we’re missing a chance to share in it.”
Selectman Art Smadbeck expressed concern that the tax issue could be so onerous to a developer that it stops the project. He said a developer is likely to pass the tax expense through to the town.
“At the end of the day, it doesn’t matter,” Mr. Smadbeck said. “It’s money we would be paying ourselves. Common sense would dictate you’re probably better off saving the $3 million and foregoing the tax, than not saving the $3 million and not having the tax to forego.”
Adding to the complex issue is the valuation of the proposed facility. If built, it will be one of the first such solar generation plants in the state, and assessors say it is very difficult now to determine its value.