Reality check on Ross’s Stop Solar Claims

1. Solar will increase our School district’s real estate property tax receipts

The Mason County PVA office says Mason County has 150,712 acres taxed as agricultural, and that this land has an assessed value of $119,818,147. Thus the average value per acre is $795.01.

The KY Dept of Revenue tells us they use the income approach with a 7% capital rate to access the value of a utility-scale solar acre. The income approach is a real estate valuation method that uses the annual income the property generates to estimate fair value.

To determine the assessed value using the income approach one divides the net operating income by the capitalization rate. In solar’s case, the landowner’s income is the annual lease payment.

I am using $650 lease rate for my calculations as I have personally seen some solar options with that lease rate.

$650 / 0.07 = $9,285.71  assessed value per acre

Since I have heard options with lease rates that range anywhere from $500 to $1000 per acre per year solar land could be assessed anywhere

from $500 / .07 = $7,142.88

to $1000 / .07 = $14,285.71

When solar assessments replace agricultural assessments each local tax district will apply their tax rate to the new solar assessed value per acre of $9,285, not the current average agricultural value of $795.01. Stated another way in our $650 example each tax district will receive 11.7 times more real estate tax revenue from each acre that converts to solar. Depending on the actual lease rate the range would be from 9 to 18 times the tax revenue per acre of solar versus the same acre being taxed at the agricultural rate.

If Mason County installs 6,000 acres of solar, then over 30 years, local tax districts will receive $14 million extra dollars. $14 million seemed like enough reason to not even delve into explaining the complexity of the potential tangible property tax revenue available from solar.

So you see it really is not complicated. Solar raises the assessment of the real estate it is installed on and real property taxes are calculated based on the assessed value.

See detailed explanation of calculations

2. Increased tax receipts will help Kentucky taxpayers educate our next generation

No one disputes that land being taxed at solar property values versus current agricultural property values will increase the school tax district’s revenue. Rather Mr. Ross’ argument is that increase will not be available to spend as part of Mason County School’s budget.

The local school budget comes from two sources, local tax receipts and state SEEK funds. To level school funding across the state, KY reduces SEEK funds as local tax receipts increase.

6000 acres assessed based on solar usage instead of agricultural usage will increase the county’s taxable real estate property value by approximately $50,430,000. This property value raise will increase property tax payments to Mason County School District by $270,000 per year.

Mr. Ritter of KY Department of Education tells us that all other things be constant this increased property value will drop KY’s SEEK payment to Mason County Schools by $251,569.

Mr. Ross ignores the $270,000 that will help KY taxpayers to educate our state’s youth and instead complains that his budget only receives a net increase of $26,586. 

SEEK money comes from we Kentucky taxpayers and 6,000 acres of solar will provide $270,000 each year to educate our future. I guess the question is do you view these figures from the taxpayers and parents’ perspective or that of an administrator focusing on increasing the budget he manages.

3. Solar will not hurt neighboring property values.

In match pair analysis, you try to isolate one variable at a time and extract the market reaction for that variable from the market.

To test the impact of solar, one finds properties that sold at approximately the same time. Then one looks if any of those properties are similar except for their proximity to a solar installation. When such pairs are found, they are called a “matched pair.” Finally, you compare the change in the value on each side of each matched pair. This allows us to isolate proximity to solar and understand its effect on property value.

Matched pair analysis in multiple reports shows that solar has no long-term impact on nearby property values. Closer by here is an excerpt from page 18 for the PSC Kentucky Siting board’s case 202-00206 final order“Having reviewed the record, the Siting Board finds that there is sufficient evidence to conclude that the proposed AEUG Fleming solar facility will more than likely not have any adverse impact on nearby property values.”

Based on Mr. Ross’s statement, and PVA records, he paid $145,000 in Dec 2013, spent another $100,000 on improvements, and sold the property for $250,000 in Oct 2021. Even if we do not question spending $100,000 on a $145,000 property and assume Mr. Ross got good value for his $100,000 of improvements, he sold the property for $5,000 more than his cost. My math training says selling something that cost $245,000 for $250,000 means he made 2%. Mr. Ross, on the other hand, claims he lost 14% (because he measures from his first asking price.) I leave it to you to decide which type of commercial math you hope our county’s schools teach our children.

PVA record of property Ross is discussing

In conclusion, Mr. Ross’s example does NOT demonstrate solar caused him any loss in property value.

Complete YouTube recording of Nov 18, 2021, public meeting