Local Economic Considerations for Large Scale Solar

[MATT SVETZ] So, I wanna thank you all for coming to our Penn State Extension energy webinar.

I'm your host, Matt Svetz.

And here is our equal access statement.

And welcome to our webinar today, local economic considerations for large-scale solar.

I think it's gonna be a really great one today, so I'm glad you all could join us.

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So, a few things coming up here is harvesting innovation, AI energy, and precision agriculture.

We also have our Penn State Solar Law Symposium coming up here August 21st.

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It will be October 10th.

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So, with all those housekeeping items out of the way, allow me to introduce our first speakers who will talk about, potential, the law and potential recommendations around, assessing solar sites, for local tax purposes and tax proposals for large-scale solar development.

So, we have here with us today to talk about it, Joshua Zen.

He is the current chief assessor and tax claim director of Tioga County, having 15 years of service as an assessor for the county.

He has also served on the Assessors Association of PA's Board of Governors, holding various roles, including President for the 2023, 2024 year, and is also a member of the County Commissioners Association of Pennsylvania Solar Task Force.

Joining him, we have JR Hardester, current project manager for Vision Government Solutions, and the former Chief Assessor of Lawrence County since 2006.

Or, yeah, JR is a member of the Assessors Association of PA, having served as president of the AAP in 2014, and he also currently serves as the co-chair of education, of the Education Committee, liaison to the CCAP board and AAP representative to the International Association of Assessing Officers.

So, I'm excited to have them both here with us today to give us AAP's, recommendations on how to properly, tax solar, large-scale solar development in your counties.

Thank you.

And the floor is yours.

(pauses)

Yep.

[JOSHUA S ZEYN] All right.

Great.

Thank you, Matt, for that introduction.

And hopefully today we'll be able to give the participant pins of this webinar an idea of, you know, if you're approached about a solar development occurring on your property, what are gonna be the tax implicate, implications on that development going in and, you know, how much is that potentially gonna affect your annual tax burden.

This, this presentation here, is something that JR and I have been working on.

You know, this isn't a new issue, but here are some of the topics that we're gonna talk about today.

Gonna go over a little bit about the background, the current laws, case law, and constitutional standards when it comes to property tax and assessment....

Some of the proposed amendments to the Consolidated County Assessment Law.

And again, everything that we're presenting today, our proposals, these are recommendations, to our membership.

We've also provided these recommendations to the County Commissioners Association of Pennsylvania.

At this point, though, they are not statute, they are not law, they are recommendations.

So, we encourage you to please consult with your local county assessor if you're dealing with a project.

That should be your primary source, on these issues.

I'll also get in touch on the Clean and Green Program and how it's impacted by large-scale solar development, agrivoltaics, the Assessment Law Solar Subcommittee through our association, the purchase to value, and then, JR's gonna touch on...

He has a few examples from, the Lawrence County area.

Now, we did have some zoning information in here too, that'll be included in the presentation, but I don't believe we'll have time to really get into those issues, during this webinar today.

So, give you a little bit of background on the Assessors Association of Pennsylvania.

It was formed in 1949.

In 2024, we, celebrate our 75th anniversary.

Primary goal of our association is to improve the assessment practices in the Commonwealth.

We also provide, you know, opportunity for members to collect and disseminate information, improvements to public relations.

You know, assessment taxes is never a popular topic.

Unfortunately, that' that's just the way it is, and what we try to do what we can do educate the public as to what we do and why it's why it's needed.

We also were the primary source of education for the assessors across the Commonwealth of Pennsylvania.

So, a little bit of background on this topic, and, you know, how we got here.

Our association started receiving a lot of inquiries from, county assessors across the state starting around 2020, 2021, assessors with questions.

You know, the statutes are currently silent on this issue, so how are they gonna handle it?

The owners calling assessment offices, "Hey, I'm getting, you know, inquiries about a lease.

What's this gonna do to my annual tax bill?" So, we formed a subcommittee, and one of the things that we looked at, through the Assessment Law Committee, you know, was the various questions, the activities that had been proposed to us.

We looked at the similarities and differences between solar installations and then existing windmill projects, which, you know, there's several of those across the state.

The current legislation for windmills and the requirement for non-proprietary lease information to be submitted to the county assessment offices.

Our primary focus to this point has been on utility and grid scale developments.

Residential or net metered installations might be something that we look at in the future.

You know, an assessment's an appraisal for ad valorem tax purposes.

You pay based on the value of your property, and we set the assessments through a normal appraisal procedure.

And one of the things that we look at with regular residential, is there enough market data to show where, you know, these home installations have impacted the market value of property?

You know, with it being a newer technology and especially in rural counties where you don't see a lot of this happening, you know, that might be something down the road that assessors will start to consider.

You have the solar roofs, things like that.

You know, does that impact the market value of the property?

Then also community solar, which the last I knew, this wasn't permissible yet in PA.

It is in other states.

This might be something that comes down the road as well.

You know, we worked to develop these educational opportunities for our own membership.

We're here talking to you today.

We've been, you know, in front of the County Commissioners Association, and then we've also put forward our recommendations as far as, amendments to the Consolidated County Assessment Law.

So, assessment procedures in Pennsylvania are governed by both statute and case law.

You know, the statute outlines what it is we can do as an assessor.

The case law kind of fills in the gaps, and as an assessor, we have to be, you know, knowledgeable of all the court cases that are out there and, precedent that can impact what we do on a day-to-day basis.

The current statutes that, assessors worry about or operate under in Pennsylvania Consolidated County Assessment Law, this covers 95% of the counties in the Pennsylvania.

And then we also have the General County Assessment Law.

And again, neither of these laws currently touch on solar improvements on property or how to handle or value 'em.

One thing that we do have as an assessor, and this is one of our prime standards that govern everything we do, is the constitutional standard.

Article VIII, Section 1 of the Pennsylvania Constitution requires that all taxes shall be uniform upon the same class of subjects within the territorial limits of the authority levying the tax, shall be levied and collected under general law.

So, what does that mean?

Just to boil it down, if you and your neighbor have a similar property, under the constitutional standard, you should be paying the same amount in property taxes if you have a similar property and the properties have the same market value.

You know, this is this constitutional standard really comes into play with counties that haven't done a reassessment in a long time, and that's usually where the focus is on, but that's a discussion for another day.

So, looking at our current law, Section 88.011 of the Consolidated County Assessment Law covers the subjects of taxation.

In here, I have highlighted buildings permanently attached to land or connected with water, sewer, gas, or the portions of steel, lead, aluminum, or other like melding continuous casting structure which encloses, provides shelter or protection from the elements for various machinery, tools, appliances, equipment, materials, products involved in a mine, manufacturer, industrial process.

And then the last one there, all other things now taxable.

It's kind of like a catch-all.

Now, when we were looking at how are we gonna approach doing this?

You know, obviously this subjects of local taxation is very important.

It kind of spells out what we can tax or assess and what we cannot.

So there's currently exceptions under the subjects of local taxation, machinery, tools, appliances or other equipment contained in a mine, manufacturer, industrial establishment shall not be considered or included as part of the real estate.

So basically any type of personal property or equipment is not subject to taxation in Pennsylvania.

We believe that this is the reason why in the mid-2000s when the law was amended to add wind turbines, given the long history of case law, the wind turbines actually got their own exception under number five, stating that no wind turbine generators or related wind energy appliances and equipment, including the towers, tower foundations, shall be included as part of the real property.

So basically they're not taxable.

So that was one thing that our group had to kind of look at and analyze, you know, all different are solar installations versus wind mills.

Ultimately, the conclusion that we came to is, it's a very similar type improvement.

We're both talking about alternative energy, installations, and under the current law, they are not subject to taxation.

What we can do though, in the case of, a wind mill farm on a property, is to value the land lease that the property owner has with the actual wind mill company.

This was added to the statute again when they amended the law excluding the, the wind mill towers themselves from taxation.

But the way we're to handle them is to actually value the land lease.

So JR is going to talk a little bit more in detail about the valuation process on these, but basically we're looking at that rental payment that comes through the landowner for basically leasing out 50, 100, 200 acres of their property, and then we establish an assessed value.

And again, assessments, appraisal done for tax purposes, and if you were to put that property up for sale, any potential purchaser is gonna look at how much money am I gonna generate passively just from having those solar panels on that 50 or 100 acres?

And that would be taken into consideration in that, that process.

So again, this comes down to we have the law that basically lays out what we can do, and then there's a long history of case law, on the subject of machinery and equipment and whether or not it's housed within an industrial establishment.

This here is a landmark case from, Pennsylvania Supreme Court in 1961, which basically held that, you know, we weren't able to tax or assess machinery or equipment within an industrial establishment.

Some of the other things that have been reported to our, our committee were, you know, we had reported lease terms of anywhere from 25 to 50 years.

You know, that definitely puts it in a long term lease category.

Annual payments that range from 300 to 2,000 per acre.

I know recently I seen a billboard, around the Williamsport area.

They were advertising solar leasing and up to $2,000 an acre.

I wish I would have got a picture of that for this presentation.

So as an assessor, we have some case law that we have to consider.

From 1992, Marpol Springfield.

In this court case, the courts ruled that any property encumbered by a long term lease, that long term lease needs to be considered in the appraisal and valuation process.

So typically as an assessor or an appraiser, you're going to look at market data, to utilize and the income approach to value.

However, if it's encumbered, by a long term lease, there's an economic reality test that the courts have kind of spelled out and said, you know, "If they're only getting X number of dollars per unit or per acre, we need to consider that versus, you know, what the market rates are." So it's very important for us to get access to the lease data like it was with the wind mills for these types of projects.

Given the wide range in payments, if an assessor was to estimate that amount, you know, it could result in either an over-taxation or under taxation.

So based on our research, and again, we had a committee with, a number of assessors, lot of years experience that kind of worked on this from across the state, we came up with a list of recommendations, we sent this to the County Commissioners Association in 2022.

It was also sent to the, Pennsylvania Local Government Commission, but we recommended adding an exception for the grid scale, solar farms under the section basically that the, the panels themselves will be exempt from taxation, requirement for the non-proprietary lease and income information be submitted to the assessment office by September 1st.

Again, this follows the same procedure that the wind mill companies need to follow currently under the statute.

This was added to the CCAP platform in, 2023 as one of their, one of the things that they support.So Then we take a look at, okay, with these solar installations, a lot of them come along and install these battery, storage facilities.

So looking at this, under the current law, you know, the, the exterior, the shell of the building, we can actually assess.

All the machinery and equipment within the building, that's not subject to taxation.

Normally what counties do will, they'll include this, create a separate property record card and bill these improvements directly to the, the owner, like the, the solar company or the operator of those, those panels.

Here's another installation.

This was in Pennsylvania.

In this case, you know, an assessor was looking at, you know, those solar panels are actually canopies.

Are they taxable, you know?

Could they assess them as canopies?

In this case, the answer to that was no.

Again, that's considered machinery or equipment that's producing energy.

So as far as the Clean and Green Program, it does currently authorize that solar can be installed on clean and green.

That is a permit, permitted under, agricultural use, agricultural reserve, and forest reserve properties.

As long as the majority of the energy is utilized on the track, there's no violation to clean and green.

Most of these large grid scale projects, all the energy's going to the grid.

So at this point in time, any type of development on a clean and green property would, would or could potentially result in a violation.

Again, that's gonna be up to the individual county assessor in your county.

Here's an example.

This was a three-acre, smaller development on a larger, agricultural property.

This was a commercial, hog barn facility, actually located within our county, and that, that installation, more than 50% was used on the track.

There was no violation in that example.

We had another instance with another hog barn in the county, another three acres.

This happened to be on another parcel, so the energy was not utilized on the track.

They were two separate clean and green applications, same ownership with two separate applications.

This one did result in a violation.

The remaining 10 and a half acres of this property was eligible to be re-enrolled in the program.

The three acres was considered ineligible for the clean and green, program.

Then there are some other questions that come along.

At the present time, you know, like it's mentioned, these grid scale are gonna result in a violation in clean and green.

The remaining acreage can be eligible, to be re-enrolled.

And then as far as decommissioning, can that area be put back in the clean and green program?

In most cases, yes.

But again, that'll be up to your county assessor and, you know, what actually occurs on the property.

Here's an example of a reclamation that took place in our county, with a, a gas well just a few years ago and has went from, you know, that gas, development site now back to agricultural purposes.

But then ultimately, your leases are gonna determine if there's any other uses, concurrent uses that are possible.

Agrivoltaics, this isn't something that we've seen or I'm aware of occurring in Pennsylvania.

Some installations across the United States are kind of in the pilot or test phase, where there's crops being, you know, farmed in between solar panels.

Obviously there's added expense, infrastructure to raise those panels off the ground.

I don't know if that's something that we'll see in Pennsylvania in the future or not, but again, that's gonna be something that, you know, assessors are gonna have to look at and, you know, you as a property owner, you know, be aware of this could be a possibility, you know.

It's just, right now, it's not really spelled out in the law, so it'd be up to each assessor to make that determination.

So I'm gonna turn it over to JR.

He's gonna kind of go over our solar subcommittee and talk about the valuation.

[JR HARDESTER] All right.

Thank you, Josh, and thank thank you, Penn State, again, for allowing Josh and I to, participate.

(clears throat)

I know him And I are gonna be throwing a lot of information out to you in this, 25 to 30 minute presentation.

So him and I will put our contact information in the chat, so you feel free to reach out to us with any questions, that we may have went over rather, quickly to get through this material.

So primary part of my presentation is to talk about the evaluation of, of the, these solar farms or utility-scale solar.

So it's important for the assessors, as Josh mentioned, for us to get copies of the lease so we can kind of determine the actual long-term whether we gotta comply with Moorpool Springfield and use the actual rent or we have to use market rent we do understand that sometimes this information is proprietary and solar companies, just like the oil and gas companies, did not want the leases to get out, because neighbors do talk So that is why we have really pushed the issue of, copying the windmill legislation and propose that since they are similar and it'll help us treat all property owners uniformly, which as Josh mentioned, Article 8, Section 3 of our constitution is what we guide all of our valuation by.

So it also will identify the uses, lease terms, rental payments, and expenses.

And as you can see, this is a copy of a section of a lease that will identify who is responsible for the payment of taxes.

It is important for us to know that 'cause when we start to develop an income approach evaluation, it'll help us identify the, rate of expenses or vacancy and credit loss that we attribute, to the, income approach to valuation.

So by reading this, it'll help us identify what expenses the property owner is responsible for or what expenses the solar company is responsible for when it pertains to the real estate taxes.

In my opinion, in my experience, not opinion, of the leases I have seen, at least in Lawrence County, most of the solar companies were willing to pay all the property taxes attributed to the development of the utility scale project, as well as any rollback taxes that were charged.

So assessment offices sometimes, based off of a land lease, will, separate the project.

If it is a 400-acre farm and only 100 acres is being developed for solar, based off the municipal planning code, they could separate that 100 acres, assess the lease so that that bill can go directly to the solar company if they are the one responsible for the bills.

So moving on, three approaches to value that all assessors have to deal with, and appraisers.

We have to consider all three, but we are not required to develop all three.

And right now, because solar is so new in Pennsylvania, we really do not have enough data on sales.

Not many of these, completed solar projects have been selling, so we really can't use a sales comparison approach at this point.

The cost data is kind of skewed a little bit 'cause there is a lot of personal property in that cost data.

So the primary approach that assessors and appraisers are gonna use, and again, based off the legislation that we are trying to get amended, is the income approach to value.

So if we go to the income approach to value, and we're gonna skip a couple slides, Josh, in the saving of time.

The income approach to value is the present worth or future benefit that someone can get on a return on investment.

So we have a seven-step process to do the income approach.

So you estimate the potential gross income.

You would then subtract any vacancy and credit and rent loss.

Estimate expenses and then subtract them, develop a cap rate, and then develop or divide our net operating income by the cap rate.

Now I'm gonna go through an example of this in a case study shortly, so when I do that, it'll make a little more sense to you.

But in front of you on the screen is a case study that occurred in Lawrence County during my tenure as a chief assessor.

So this is actually a 455-acre, solar solar project.

Now it spans over 16 parcels.

So we have a South parcel dataset and we have a North parcel dataset.

So one of the big, concerns a lot of proponents that are against solar are arguing is the pulling of prime farmland out of production and being used for solar production.

So on the map, we actually identified the, yield and class of the soil that is being proposed in this project.

So as you can see, based off of the color code of our GIS map, you can tell if it's a high yield, a very high, medium.

So you can see some of this project, at least in parcel number three, which is 128 acres, is some pretty good farmland that's being taken out of production.

So when we created this case study, we didn't want...

we wanted to be transparent, showing everyone what is being affected by this proposed project.

So that's why the map is the way it is.

You can see this North or South dataset has three parcels, 128 acres, a 48 acre, and a 17 acre.

So the next slide will show the, North dataset.

Now there's a bunch more parcels in this dataset, but as you can see, a lot of them are a very small 1.67 acre, track.

We have almost eight parcels, nine parcels up there that are 1.67 acres.

So same thing, we identified the soil type.

But what we did here, and I did on the North, is we were able to determine the current assessment of the property and all these properties are enrolled in our Clean and Green Program.

So we're gonna...

We were doing a comparison on what the amount of taxes are if it's in the Clean and Green, and if it is not in the Clean and Green, meaning they're paying on their current market value assessment.

So we did that analysis for everyone so that we can see when we complete this, the tax burden, how much it is gonna shift, and how much more beneficial it is gonna be to each of the taxing bodies for this type of a project based off of real estate taxes.

So the other thing that we tried to do is determine how much it was per... price per acre, so that when we are done with the income approach, we can tell you how much the land leases valued at a price per acre and compare that to the market in the Clean and Green.

So right now, we are averaging anywhere between $1,200 to $2,000 price per acre on the market value in the current assessment.

Clean and Green will be anywhere between $600 to $1,000 per acre, price per acre that it's being valued or paying taxes on.

If you go to the next slide, you'll see the only exception to that are those very small lots, and that's based off of the economy of of scale.

Those 1.67 acre lots are all buildable lots, so they have a higher value because they have a home site value on them.

So those would probably be more beneficial to......

sell individually as building lots rather than any type of a solar or farming, project.

(clears throat)

Excuse me.

So just to round this up, round out the actual case study, it was a 455-acre, solar project.

Based off of my research, we're averaging in the county about $1,000 per acre.

So you take the number of acres, multiply it by the price per acre, and you get 455,000, which is your potential gross income.

We then go ahead and subtract vacancy and credit loss.

It's pretty common standard in the appraisal, industry that 5% is, used for this.

Now, this could be up to the appraiser's opinion based off what he or she reads in the lease.

But we're gonna use, for this case study, 5%, so that's 22,750.

We subtract that from the potential gross income and you get effective gross income of 432,250.

The next step is to determine any of the expenses.

And based off of the lease, there is very minimal expenses that the solar company or the, or I'm sorry, the landowner is responsible for in this case.

And that is pretty much holding a attorney or someone on retainer, some minimal other stuff.

So we did a very low expense rate of 10%.

Again, a lot of that information will be obtained from the appraiser in the lease.

So we subtract 10%, which is 43,225, and we get an operating income of $389,025.

So that's what we're saying that they're making, pretty much per year, net operating income.

So a cap rate is a way to convert income into value.

So the higher the cap rate, the more risky the investment is.

The lower the cap rate, the less risky.

So we kind of chose a little lower on the end, cap rate, because these projects are long term, little risk that we are aware of at this point, so we chose a cap rate of eight.

A real low cap rate of four or six would pretty much say that there isn't very little or no risk involved at all.

So we're a little above that for 8%.

So in in order to convert that income to value, we take the net operating income, divide it by 8% and we get a current market value of this 455-acre solar farm of about $4.8 million.

Because Pennsylvania has a base year assessment system, we have to back the current market value into an assessment.

And we do that by multiplying it by the current common level ratio.

So at the time I, I did this case study, we had a common level ratio of 82.8%.

So we take the current market value and multiply it by 82.8 and we get $4,026,400 in assessment, which equals about $8,850 per acre.

If you remember what I mentioned a few minutes ago, the price per acre on market was roughly, between, 1,200 to $2,000 per acre, and in the clean and green, from six to 100,000.

So now we're at 800 and 8,850 per acre.

So you can see the substantial increase that that land lease, gave value to that property.

So here is the tax implication of this project.

So you're seeing currently, because the property is enrolled in the clean and green, they're paying about $7,000 in taxes, 7,700 in taxes.

If they weren't, it would be 19,600.

But with the land lease and the value increase from the solar farm, they are paying close to $97,000 in property taxes based off of the value of that land lease.

So that kind of summarize it.

I know I went through it rather quickly based off of time.

Again, Josh and I will put our contact in the chat for you guys to reach out if you do have any further questions on that.

We'll be gladly glad to help and reach out on on, on the side.

So thank you again, and I hope it was informative and not too fast for any of you.

[MATT SVETZ] Yeah.

And yeah, thank you Joshua.

Thank you, JR.

It was great having you come on and talk about this.

I know this has been an issue I've heard from a lot of, you know, people in local government thinking about how to do this.

So, I think everybody here can appreciate you coming on and sharing your expertise.

All right.

With that, I think, we'll introduce our next speaker.

It is I welcome Donald Fisher.

He is a valuation services director or Colliers Valuation Advisory Services.

Donald has valuation experience in numerous types of real estate property, including all types of agricultural and rural properties with a great deal of experience in assessing the impacts of solar development on property values for both local governments and solar developers.

This experience includes a peer-reviewed paper he authored on solar's effects on property values, which is set to be published in the 2025 American Society of Farm Managers and Rural Appraisers Journal, and was awarded the Golden Quill Award for best paper of the 2025 journal.

We're excited to have him on today.

And with that, I'll give you the floor, Donald.

Thank you for joining us.

[DONALD FISHER] Oh, good morning, everyone.

You know, thank you, Matt.

So Matt has asked me to talk about some of the appraisal work and market study research work I've done to analyze, impacts of solar farms on nearby residential properties.And The, like what Josh and JR were just talking about, the, the larger scale, solar farms, solar arrays, we're usually finding in the rural areas and suburban areas.

We don't really find the big ones in urban areas that much because we don't have the land area for, a large, solar farm.

So most of my research has been in these rural and suburban areas and what impact I have found on surrounding residential values.

And, there are there's probably about a dozen, and I'll cover them eventually, a dozen different factors I look at in evaluating the impact of a solar farm on surrounding properties.

But the primary one that we do study is the, changes in residential prices before and after the value of, or I'm sorry, the installation of a solar farm.

So the first thing we want to do, when we're, and we're, we're asked to do this for proposed developments, and I can be asked to do this, this type of study by the solar developer himself or possibly the municipality, if they're going through a public hearing process for this application.

And so in order to do that, we need to find nearby solar farms that have already been developed so we can study that before and after time period.

And we need something that's already been in existence for one to two years so there's that sufficient after period of time to analyze, sale prices in.

So when we find one, the first, factors I need to know is, when was the application made for this developed solar farm and when was it commissioned or put online?

So that's the, that's the interim period I need to look at my market data before that application period and then after the commission, date.

And depending on the area that I'm in and how many residential properties there are, in that area, it's going to depend, it's going to have an effect on the time period I need to look for for my market study.

And that can range from maybe six months if it's in a suburban area and there's lots of sale activity, to maybe one to two years in the more rural areas where the sales activity is at a lower rate.

And so, I'm looking at different databases.

I'm, I'm located in New York and I have databases such as RealInfo or ImageMate or SalesWeb or Multiple Listing Services where I can, gather data on sales of residential properties.

I put that together And I'm gonna show this to you in a couple of minutes.

I put that together into a spreadsheet, actually two spreadsheets.

One would be the collection of sales for my designated time period before the application date, and then a second set of sales after the application date.

Now, the first thing I'm sure you're all thinking about, well, there's...

What about appreciation during that interval, that time?

So we do factor in appreciation rates.

We, we do a, a separate economic trend study between the two, time periods so that we know what kind of a time trend adjustment we need to apply to the first set of sales, the before set of sales.

I also, I should say, I break these sales down into a dollar per square foot basis.

So I look at the average and median sizes of the houses in my dataset and the average and median sale prices so I can get an average and a median dollar per square foot of building area numbers.

And when we break it down into a unit of comparison like dollar per square foot, that's pretty widely recognized as the universal unit of comparison for residential properties and for many types of, improved properties.

But by breaking it down into this type of unit of comparison, that really eliminates the need to adjust for, other factors or elements of comparison in a, in an appraisal analysis, such as location.

Location, we're all in the same locations.

That's not an issue.

But, building size, numbers of bedrooms and bathrooms, age of buildings and, and like that, that, it, it tends to even out, those other elements to comparison.

The one that isn't necessarily evened out though is, if there's a significant difference in building sizes in my before and after data sets.

So if there's more than, say, 100 square feet of difference between my average building sizes, between the before and the after data sets, then I'm going to adjust for that building size.

So I'm gonna start sharing a screen here.

And this is, this is a table that's, if, if any of you are familiar with the Marshall Valuation Service, this is one source where they develop a, a table of factors to adjust for differences in building sites.

So this table right here is actually out of that data source, that Marshall, Valuation Service.

So it's, if I've got a difference, if I got a thousand square foot building and I'm gonna, [MATT SVETZ] Excuse me, Don.

[DONALD FISHER] Go ahead.

[MATT SVETZ] Sorry to interrupt.

We are not seeing your screen.

[DONALD FISHER] Oh, I am sorry.How About now?

[MATT SVETZ] Yep, we're all good.

Thank you.

[DONALD FISHER] Okay.

Apologize for that.

So, to take the first line here, if I've got a thousand square foot building, average building size in my before set of data, but the average building size in the after set of data is 1,200, then I'm going to apply this adjustment right here to, to get to the building size.

So having said all of that, let's skip down to an example.

So here's, here's a set of sales, for a specific solar farm that occurred in the two-year period before the application for that solar farm was, made.

So I have, I have my locations, I have my building size, the house style, the building, or the site acreages, my data sale, my sale price, and my dollar per square foot.

So this gives me, I have my average and median building sizes.

I'm looking at the site sizes to make, to make sure we're staying somewhat consistent with site sizes.

And then, our average and median sale prices and our average and median overall, dollar per square foots.

The in, you'll see this in the next slide, but there's no significant difference in building sizes, so I have a 1.0 adjustment factor for my house size adjustment.

But there is, there was a significant time trend between the midpoint of the before set of sales and the after set of sales, which, from my economic trends analysis was a 12.5% time adjustment.

So I'm applying that adjustment to these numbers here, to get to these numbers here.

And then, think about that $98 and $101, and here's my after set of sales.

And, I go through the same type of analysis.

I got location, building size, house style, site size, date, sale price, and price per square foot.

Comparing my average and median prices here, I'm at $100 per square foot for the average and $96 for the median price.

Now looking at, comparing these to the before sales, I'm about 2% higher on the average, but about 4% lower on the median.

What that tells me is there's no significant difference in the marketplace after considering site size and a time adjustment between the before and after sale prices.

Now, one of the reasons I look at my house style category is if I have enough sales in the, both the before and the after data sets, so that I can break out building styles, then I'll do that.

And I've done that here.

Here's a, there's a couple of examples.

These are the old style before sales in this table, and these are the old style sales in the after table.

And look at this.

We have quite a difference here in our before and after values, where the after values are significantly lower for this house style, for whatever reason.

And I don't have an answer for that yet, but let me show you my next set.

I've looked at my ranches.

I only had one ranch in the before, but comparing that to the ranch sales in the after, I actually have the reverse kind of a trend.

I have a significant positive trend for ranch styles.

So I would do this for different building styles when there's, significant differences, or a significant number of sales in a building style, as well as the overall market in the area.

And I'll do, I'll do this, usually a typical study will involve four or five of these, market, before and after market studies between, the before period and the after period for four or five, solar farms that have already, been developed.

And I'll put all that together into a table to show what those overall trends are.

(clears throat)

But, in addition to looking at before and after sets of sale prices, I'm also going to look at other factors that are, that, solar farms have been, addressed as far as affecting the neighborhood or the environment in their, in their new locations.

And one is references harmony in use and compatibility, and that is, does the does the solar farm itself, is it compatible with the surrounding uses?

And if we have, if we're in a rural area where most of the surrounding uses are rural residential and farms of various types, then we're in an area where, the solar farm is not usually sticking out, as an unusual property type in that area.

And that can be, minimized, that effect can be minimized with other factors I'll address, coming up.

Other, one of the other concerns with solar farms are hazardous materials, because there are, some materials in the construction of a solar panel that could be, if they, get leached into the soil, could be considered hazardous.

But a solar panel, properly constructed, is a self-contained unit.So, It is meant to withstand all elements of the weather.

You know, hailstorms, rain and snow obviously, ice and hail, and they're meant to withstand that.

So, unless there's damage to a panel, we usually don't see a hazardous situation, surrounding the, installation of a solar farm.

The appearance is another issue that is a concern in many municipalities.

And solar panels, ground arrays...

Now, Joshua had a couple of examples of some newer developments in solar farms with vertical panels or panels on raised pedestals so you can farm the land underneath or between them.

And that's relatively new.

But the traditional solar farms are usually on shorter pedestals where they don't have a height of more than maybe 12 to 15 feet above ground.

Well, 12 to 15 feet is less than the height of a one-story building, whether it's a residence or a barn, a dairy barn or a greenhouse or, or any other type of, structure like that.

And they're certainly lower than the typical height of trees, so usually appearance is not an, in, a long-term issue, in our research.

Stigma is another concern, and stigma is, defined as factors outside of a, of a property or within a property that could have an adverse impact on market value.

When we think of stigma, like, petroleum spills or a house that had a murder in it or something unusual, some, some odd things like that.

But, with the stigma, again in our, our market research, the long-term impact of a solar farm into a neighborhood, we just have not found any market evidence that stigma is a factor here.

Another item that's been addressed is odor.

Is there any odor coming from this?

Now, if you think of agricultural properties, especially livestock farms, beef, hog, dairy, poultry, there certainly can be some odor elements, that might affect those agricultural operations.

We don't have any odor issues with a solar farm.

Noise is another element.

Solar farms don't produce any noise.

Now, if you're on site and you are hearing, are, are close to the equipment that's collecting the energy, you might hear a a, a low, low audible hum, during the period that the solar, is being produced, the solar energy is being produced.

But you're outside of the property, you're not going to hear any noises.

Reflection or glare off of panels is another element, and that, that certainly can be, obnoxious, but it's also very short-term.

And, we're gonna talk about, landscaping in a minute, but landscaping can usually minimize the, glare to surrounding properties from the, sunlight, reflecting off of the solar panels.

Now again, that, that period of reflection is usually restricted to morning and evening when the sun's low in the sky and it's gonna cause that, glare to, to spread around the, the neighborhood.

But usually if there's a tree boundary around it, it's, either nominal or minimal at at any endpoint, any point in time.

And even if it happens, it's, it's a very brief interval of time when it would happen because of the movement of the sun.

Traffic is another element we've been asked to address.

After the solar farm's been constructed, there's very little traffic.

Maybe once a month, maybe once or twice a month coming in to mow the grass or check, check the equipment, monitor maybe some maintenance issues.

But after the construction, there's very low traffic.

Now, on top of that, if the solar farms are used for, pasturing...

In in New York we've seen a lot of sheep pasturing on solar farms, where the sheep farmers are leasing their livestock out to, the solar developers that bring the sheep in for the growing season, and they basically keep the grass down.

So that even eliminates the monthly or bi-monthly, visits, for a lawnmower onto that property.

The other issue, is the distance from solar, from the solar panels, the perimeter of the solar farm, to surrounding residences.

Now, a lot of municipalities I've worked within require at least a minimum of 100 feet from the perimeter of a solar farm to the boundary of the property, and then if you think about the width of a road and the front yard setback for any nearby houses, it easily can be two, three, or more hundred feet away, from the solar farm.

So, that, that factor, as far as distance from solar panels, doesn't seem to be, an issue, and with the market studies, the before and after market studies that we've done, we just haven't found that to be an issue with, these after-sale prices of of nearby residential properties.

The last, last two topics I wanna talk about, this this first one is one of the major ones That I, I really like and it's the landscaping issue.A Lot of the municipalities are requiring that the solar developer, put landscaping around the solar farm.

Usually a combination of maybe a berm that could be two to four, five or six feet high, a dirt berm, and then plant multiple rows of trees on that berm, alternating the, the planting of the trees so that you fill in the gaps, between the different rows of the trees.

And that and within a short period of time, that can produce a native vegetative screen or barrier between the solar panels and the surrounding residential properties.

And as I said, I've seen a lot of, municipalities requesting that be done, as part of the, installation of the, of the solar farm.

The other, final issue is, and this, I would include Joshua and JR, on the list of doing this, is to talk to people.

Talk to brokers and talk to assessors in the areas where solar farms already exist to see if they've encountered any resistance from property owners because of the existence of a solar farm.

Now, I have several quotes from brokers and assessors who have stated that they have just not found any negative impact, from a solar farm.

Or, they do have a caveat, they said if there was a negative impact, it was usually a very short term, like, just after the, the commission date, there might have been a small period of time where there would have been some negative commentary, and then that just ends up disappearing.

So those are, and there's almost a dozen different categories that I've addressed, but those are things that we typically look at in a market study when we are asked to address impacts on residential values before and after.

And I'd just like to, I'd like to show a couple of examples of some of what I've talked about here.

This is, these photographs right here, these are greenhouse complexes.

So, and these are going to, have a height of between 14 and maybe 20 feet tall.

These are generally going to be higher than what a solar array is going to be, as far as heights goes.

These next two, the one on the left is a dairy barn complex, and the one on the right's a poultry farm.

And between that we're, we're not seeing a lot of tower silos, tower silos being developed anymore, but we do see a lot of grain bins.

And, like, this complex right here, this is a grain bin, complex, and that's gonna be over 50 feet tall, between all the, the elevators and the grain bins themselves.

Certainly taller than what a typical solar array is going to be above the ground.

So, we, we include examples like this in our market studies as well, for, to, to give a little, emphasis on the visual impact of a solar farm.

So, Matt, that's, that kind of concludes what I wanted to cover.

I guess if you wanna open it up to questions?

[MATT SVETZ] Yeah.

So, I think our presenters can stay for a few minutes past noon here, but I will open it up to what questions we have left here that, JR hasn't been answering.

But, again, before we get to that, I wanna thank you, Donald, for coming on.

And I thought that was a lot of good information to have.

And if you need to reach Donald, you can reach out to me and I can forward your questions, emails, to him.

Or if you also want to put your email in the chat just in case.

But, So we have, one question here.

"if I can plow and fertilize to the edge of the, of my property line, why can't I build my array to that same plow line?" If anybody wants to take that [JOSHUA S ZEYN] I would typically, the building setback requirements in your municipality might govern that.

That would be more of a planning, planning issue, or if there's a, you know, zoning ordinances that handle that, that would be my opinion on it.

[MATT SVETZ] And, also, "Has Pennsylvania passed legislation at the state level where the state can approve solar farms and supersede..." I'm just gonna go ahead and answer this one.

There is a proposal in, the Lightning Plan by Governor Shapiro that would move some of the solar, depending on the size, to a more state-based, power siting board example, but we haven't seen that yet.

Yes, Mark Conley just commented, I think.

Yeah, House Bill 502, might be 504, but, yes, that is something that could happen but hasn't happened yet.

Hey.

I think...

I don't see any new questions, but, do we wanna take a shot, I think this one was probably useful for the whole audience.

But, if a solar lease is taxable, what about, farm acreage leases?

If you wanna answer that for the rest of the audience.

[JR HARDESTER] I think I might have hit privately on accident when I, sent it, Matt.

But, an appraiser or an assessor has to consider the highest and best use of a property, and they would look into the farm lease to determine if that would be the highest and best way to value it based off the income.

Not saying that we don't do it or not saying that we will do it that way, but it is considered as income, and it can be valued that way if the appraiser feels that is gonna net the highest return on investment if someone were to sell it.

So, in other words, is someone gonna buy it because they are making enough money on that farm lease to make it worth their, worth their while?

[JOSHUA S ZEYN] Yeah.

And [JR HARDESTER] Mm-hmm.

[JOSHUA S ZEYN] I kinda added to this, I did reply to that same question as well, but from my experience, most times farms that have those leases are relatively minimal dollar amounts per acre, and those leases are reflected in the sale data within the county, when they're going through their reassessment, conducting the mass appraisal to revalue all the properties.

That's, those leases are present within the marketplace and, you know, whenever we talk about appraisals and adjustments, you need that market evidence, kinda like Donald was talking about, that shows that there's a difference whether you have an agricultural lease and whether you don't have an agricultural lease, and that's done through that paired sales analysis process.

But to touch on what JR said, the valuation of land leases is included under the Consolidated County Assessment Law, and I did put the section, it's 8820, that talks about the assessment of real estate subject to ground rent or mortgages.

[MATT SVETZ] Yeah.

Okay, so another question I see here, "Are ag leases seen by the assessor too?" [JOSHUA S ZEYN] It gets recorded in the recorder's office.

We usually are not aware of those unless we see them maybe advertised in a sale listing.

But I see very few agricultural farm sale listings where they advertise, oh, this farm's getting $100 per acre per year for the, the lease of the, the farmland on the property.

I can tell you, we do have a windmill installation in our county, and all of those leases were recorded and put on public record.

[MATT SVETZ] Okay.

[JOSHUA S ZEYN] Yeah.

[MATT SVETZ] I [JR HARDESTER] Just to add to that real quick.

A lot of the time all we will see is the memorandum of the lease that [JOSHUA S ZEYN] Sure.

[JR HARDESTER] Identifies there is a lease on the property, but it will not go into the specific financials.

That gives the title searcher something to back up that there is a lease on the property.

[JOSHUA S ZEYN] It's a good correction.

It's kind of like any type of utility easements, you know, they want, the companies want those on record to know that the, that way if there's a title search, they can find out that the property has been encumbered.

[MATT SVETZ] All right.

It looks like we're, just about, past where I think we were gonna keep it for questions.

But again, you can reach out to the presenters who put their emails in the chat, or I put my email in the chat right now.

So, if you missed that or need to reach out, email me and I can connect you with our presenters to answer any more questions you might have for them.

[JOSHUA S ZEYN] Matt, I see one other question come up here. - [MATT SVETZ] Sure, if you wanna take it.

[JOSHUA S ZEYN] As, as far as the, best method for a developer to reach out before construction.

Our recommendation, definitely reach out to your county assessment office, whatever county you're working in, and I don't know if I specifically said this during our presentation, but you know, our goal is we wanna provide uniform treatment of these types of installations, not only for assessment offices and property owners, but also the companies that are gonna be working in these counties.

'cause the last thing we want to see from our association's standpoint is one county handling it one way and another county doing it a completely different way.

So, that's where it's important to have this legislation addressed and kind of spell out and put in black and white what counties should be doing with these.

[MATT SVETZ] All right.

Yeah, and with that, I again, wanna thank all our speakers for coming on today and providing us with, I think, a lot of helpful information that townships and counties can use to hopefully, you know, have better practices when it comes to solar development and, you know, having the best for, you know, both the industry and communities going forward.

So, I wanna thank you all for joining us today.

I hope you got a lot out of it.

And with that, I think I'll let us all go.

So, thank you again for joining us at the Penn State Extension Energy Team and for joining us on this webinar.

We hope you'll come to our programming in the future.