100% property tax exemption; payment in lieu of tax required
Note: According to the Ohio Development Services Agency website, the owner or lessee subject to sale leaseback transaction must apply to Development Services Agency on or before December 31, 2015 to qualify for this tax credit.
Ohio's Renewable and Advanced Energy Project Property Tax Exemption, enacted with the passage of Ohio S.B. 232 in the summer of 2010, exempts qualified energy projects in Ohio from public utility tangible personal property taxes and real property taxes*. Before that time, a renewable energy facility in Ohio that sold electricity to a third-party was considered a "public utility" for tax purposes. These utility-based property taxes were replaced by designated payments in lieu based on the size of the facility, type of facility, and other factors, such as each project's energy production level.
Ohio Governor Ted Strickland suspended the normal rule-making procedures on September 28, 2010, in order to immediately implement rules governing the application process for obtaining qualified energy project certification. The emergency rules were adapted and made effective as of January 1, 2011 (OAC 122:23-1 et seq.).
In order to qualify for the property tax exemption, a renewable energy facility must apply to the Ohio Development Services Agency (ODSA) for certification as a "qualified energy project." The facility must be new, have nameplate capacity of more than 250 kilowatts (kW),* begin construction between January 1, 2009 and January 1, 2016, and submit reports to the ODSA regarding construction progress. Applications are due to ODSA by December 31, 2015 and facilities must be placed in service by January 1, 2017. Renewable energy facilities certified are granted the property tax exemption for the life of the facility as long as they comply with the following provisions of the property tax exemption.
In lieu of taxes, the following payments must be made to the county where the renewable energy facility is located:
- Solar energy facilities: $7,000 per megawatt (MW)
- All other qualified facilities employing at least 75% Ohio-based employees during construction: $6,000/MW
- All other qualified facilities employing at least 60% Ohio-based employees during construction: $7,000/MW
- All other qualified facilities employing at least 50% Ohio-based employees during construction: $8,000/MW
The property tax exemption must be approved by local county commissioners if the project is 5 MW or larger. Local county commissioners are allowed to require an additional payment as long as the overall payment does not exceed $9,000 per MW. In addition, the law requires that the renewable energy facility 1) meets certain jobs-creation criteria, 2) provides for road repairs (for projects 5 MW or more), 3) provides training and equipment to local first responders (for projects 5 MW or more), 4) establishes partnerships with universities (for projects 2 MW or more), and 5) makes offers to sell the renewable energy credits to Ohio utilities seeking to buy them.
Cogeneration facilities must be placed into service by January 1, 2019, and have until December 31, 2015 to apply for certification as a qualifying energy project.
Visit the ODSA web site for additional information, implementation documents, program documents and the application.
*S.B. 232 permanently exempted renewable energy facilities up to and including 250 kW from the public utility tangible personal property tax. See DSIRE entry Qualified Energy Property Tax Exemption for Projects 250 kW or Less for additional details.