Solar Leases: Clearing Matters of Title During Solar Developer Due Diligence
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[Farm Law editor’s note: the following piece is in draft pending academic peer review, and written as part of the series Farm Law: Owning, Managing and Transferring Farm Interests, sponsored by the North Carolina Tobacco Trust Fund Project # #583400-10363. Comments to firstname.lastname@example.org are welcome.]
The Solar Lease Opportunity
The decision to permit development of an industrial-scale solar photovoltaic (PV) facility on your land can bring great financial rewards for decades, even across generations. A long-term solar lease term – with extensions – can extend to near forty-five years, with a net present value exceeding $1,000,000. Solar PV facility development in North Carolina has outpaced much of the nation over the past decade, and such sites can be found on numerous parcels across rural North Carolina. Given financial returns far greater than any other land use and the long-term decision presented in term rental value, landowners should have a basic understanding of whether their land is suitable for development of such an opportunity.
Due to changes in North Carolina law in 2017, solar PV facilities are now larger and less geographically dispersed, providing opportunity for fewer landowners, and favoring those owners with large landholdings. (As evident below, due diligence title resolution comes at lower cost when a developer is dealing with fewer owners of larger acreages) As of this writing, the pace of solar development appears to be slowing, and though costs of solar equipment have decreased, increasing reliance on natural gas by energy companies operating in North Carolina reduces utility demand for renewable energy sources. Nonetheless, change is constant, and new renewable initiatives will undoubtedly develop. Whether in the current development climate or the future, for the landowner who finds that their land has been deemed suitable for solar PV development – both in layout and location – there will remain a number of threshold issues that must be addressed to take advantage of the opportunity in the due diligence time frame offered by the solar PV developer.
A Short History of Solar Growth in North Carolina
As noted above, changes in North Carolina law changed our state’s approach to its solar energy development. In 2017, the North Carolina General Assembly passed House Bill 589 which reformed North Carolina’s approach to renewable energy development and procurement – in particular the process for siting solar photovoltaic (PV) facilities. Prior to 2017, any site of favorable topography and proximity to a three-phase power line (the common 4-line power lines running alongside primary roadways) was eligible. While flat and well-drained open farmland was preferable due to lower development costs, facilities were developed on tracts of varying topography throughout the state. A key challenge for the purchasers of the solar-generated electricity – i.e. the utilities – was the inefficiency and “line loss” of electricity transmitted from remote facilities. While the majority of facilities are in eastern North Carolina, they can be found in 74 counties.
North Carolina’s fast growth in solar capacity has been the result of a number of factors, particularly North Carolina’s Renewable Energy and Energy Efficiency Portfolio Standard (REPS) – which required investor-owned utilities (i.e. Duke Energy, Dominion Energy) as well as electric cooperatives and municipal utilities to purchase target percentages of electricity for retail sale from renewable energy sources. Also, state and federal tax credits were offered to developers, and while the federal tax credit was recently extended to 2023, the state tax credit was allowed to expire in 2016.
The REPS – adopted in 2007 – made North Carolina the first state in the southeast to implement a renewable energy portfolio standard. The REPS required all investor-owned utilities to source increasing percentages of their retail energy sales through renewable energy resources – including solar, wind, hydroelectric, and biomass combustion of swine and poultry waste – or energy efficiency measures. Under REPS, renewable energy targets increased over the years from 3% in 2012 to 10% in 2018, and 12.5% for 2021 and beyond. According to the REPS 2020 annual report, all electric power suppliers met the solar set-aside requirements from 2012 to 2019, and remained on track to meet the 2020 solar set-aside requirement.
The 2017 HB 589 law introduced the Competitive Procurement of Renewable Energy (CPRE), which established a system whereby utilities would now have “authority to determine the location and allocated amount” of renewable energy procurement in their respective areas of operation. This system effectively allowed utilities to design the parameters for their needs, and then through CPRE request proposals from solar facility developers for project approval in a series of four tranches. The practical effect was to shift solar development into fewer and larger sites. Though CPRE originally called for four tranches, as of 2021 contracts between utilities and developers have been signed for tranche two, and it remains uncertain when and whether tranche three will be offered.
As of 2019, there were 601 solar PV facilities in North Carolina with 1 megawatt (MW) or greater, and more than 240 of the facilities are greater than or equal to 5MW, but less than 10MW. Solar photovoltaic projects generally require about 5 acres of land for each megawatt of generation capacity. One MW is generated by an average of 5,068 panels. This represents
Land Generally Suitable for Solar Development
If a parcel lies in a proposed development area, the landowner may be approached by a developer and asked to allow them to begin a due diligence assessment of the property. The beginning of a solar lease is essentially an option in favor of the solar PV developer to perform a due diligence evaluation, and if satisfactory, enter into a long-term lease for the solar PV facility. During the due diligence period, the landowner is offered a series of payments, increasing incrementally each time the developer elects to continue due diligence for a prescribed period (e.g.: first period, 180 days for $250 [for entire parcel]; second period 180 days for $1000; third period 365 days for $5000; and so on). As noted, by granting this due diligence period, the landowner has agreed to remove the land from the market in return for the due diligence payments; the developer may terminate due diligence at any time, ending the matter. However, the option also grants the developer the right to elect to enter into the long-term lease – which will close at a later date – so the lease terms negotiated at the time of the first signature are the terms the landowner has agreed to for the long duration of the lease.
During the due diligence period, the solar PV developer inspects the parcel to evaluate the feasibility of development. Such evaluation takes into account numerous factors about the topography, access to public right of way, and proximity of the land to the power grid access required by the CPRE parameters. Though open farmland has lower development costs, forested tracts are not out of the question (but the landowner must take care to maximize the value of the felled timber in the agreements). Though clear and relatively flat parcels are preferred, advancing technology is allowing development on slopes at least to 35 degrees. Solar photovoltaic projects generally require about 5 acres of land for each megawatt of generation capacity. One MW is generated by an average 5,068 panels.
The Landowner Decision to Proceed
As noted above, the net present value (NPV) of a solar PV facility lease far exceeds any other income source from use of the land. The NPV of the lease far exceeds the present market value of rural property, though of course in payments spread over a long time. As emphasized elsewhere, the terms of the lease – if executed at election of the developer – will not be subject to negotiation at a later date, so the first signature on a due diligence document locks in place the terms for the duration.
A solar lease is a generational decision. Typical solar land leases initial terms can last for as much as thirty years, and with several extensions (e.g. five year) at the option of the developer or its future assignee, such leases can last fifty years. Landowners should consider whether any future use plans for the property must happen in that time frame. In effect, the land under the solar lease will not be used for farming in the present generation, and the far horizon of the site’s decommissioning is likely too far off for any concrete plans for farming. That said, care should be taken to ensure that the site will be thoroughly decommissioned at the expiration of the lease term and exhaustion of any extensions.
Solar leases contain language concerning the decommissioning of the facility. The lease language should address the particulars to achieve the future vision of the land restored to its state prior to development. The contract may dictate restoration of the tract’s suitability for farming or reforestation, which essentially means hauling away all materials including panels and supports, perimeter fencing, pavement, and subsurface. (Though some studies suggest the recyclability of solar panels and infrastructure, developer assurances that any items will have recycled value in exchange for landowner removal responsibility should be rejected outright; that said, nearly a quarter of North Carolina counties are now requiring developer financial assurances on decommissioning, see discussion below). Whatever the intended future use plans, landowners will need to determine whether the developer will agree to, or be financially able to restore, the site so that the land will still be suitable for the landowner’s anticipated future use. Further, if zoning changes are required prior to development, landowners will need to consider whether those changes will make the land unsuitable for the landowner’s anticipated future uses. (For more information on this, see the publication Solar Lease Terms Explained.)
Developer Due Diligence
As noted above, the CPRE generally defines the geographic region(s) acceptable to utilities in the next tranche. However, developers must investigate the suitability of individual tracts primarily from a cost perspective. Forested tracts are more expensive to develop, as trees must be cut and the land surface stumped and altered for drainage. Tracts not immediately adjacent to transmission infrastructure require more cost in building out connection from the panels to the grid.
An assessment of a tract’s feasibility also lies in what cannot be seen on the surface, particularly encumbrances to title. It is likely that, prior to approaching a landowner, a solar PV developer has performed a preliminary title search, which will reveal “show stoppers” like a permanent conservation easement, or possibly a generations-old grantor deed without subsequent chain of dispositions, indicating a challenging “heir property” situation. While other blemishes on the title will be evident in a preliminary search, the developer must weigh the cost of resolving title issues during the due diligence period.
Solar PV development is a staged process. The first stage is the developer’s due diligence, which is not an agreement to develop and pay rent, but rather a promise made by the landowner in exchange for a fee to grant the developer the right to build (and pay the landowner rent) if the property is deemed feasible, from both cost and title perspective. The solar PV developer’s due diligence period begins with the landowner’s first written permission, which in effect is the landowner’s agreement that, if the developer so chooses, it will proceed with development upon the terms presented with that first document. This is important. The first document the landowner signs gives the developer the option to develop the facility, thus legally obligating the landowner to accept the terms of a long-term lease. Again, the terms of the lease may effectively be in place for fifty years, so all negotiations must take place prior to signing the first document. A solar PV developer does not wish to expend money and secure financing and its place in the North Carolina Utilities Commission approval queue only to have the landowner balk at signing the lease. Once the developer has completed their due diligence, deemed the property suitable, then the developer will proceed with executing the lease agreement with all attendant agreements and title recordings. If the developer deems the property unsuitable, the landowner is released from any further obligation.
This paper focuses primarily on the title issues discovered during due diligence, and the effort required to resolve them, either by voluntary agreement of all title holders and third-party interest holders, or by court process to extinguish unresolved matters.
Status of Title
The first concern of one’s ability to enter into a solar development lease is the status of their title, and how much work it will take to make it sufficient to transfer a solar PV leasehold. The work to be done can be measured both by the number of present owners or those with a vested remainder interest (as at the termination of a life estate held by the present owner), and the rights to the land (real property) enjoyed by non-owners (known as encumbrances). The fundamental nature of real property is its aggregate of singular rights which can be severed and transferred to others, without causing visible change to the land use and current occupation.
Concerning concurrent ownership, real property is often owned by several people at the same time, particularly property that was devised by a will to several persons (“devisees” or “legatees”) to “share and share alike” or to a devisee “per stirpes” (which splits a predeceased devisee’s share among their descendants, further fracturing title across generations). When land is inherited without a will, this is known as intestacy, and the division of interests among heirs is determined by the state intestacy law. State intestacy law, like a “per stirpes” will distribution, preserves the shares of pre-deceased lineal descendants to be split among their lineal descendants. Either method results in co-tenancy, whereby each owner has a fractional undivided interest, and can only dispose of that fractional interest. Proposals concerning the use of the property must be agreed by all co-tenants. (See the Fact Sheet Understanding Rights in Property). Once a tract of land is owned by co-tenants of different generations and fractional interests, it becomes known as “heir property.”
Concurrent ownership by married persons (where both spouses are on the title) is known as tenancy by the entirety, whereby when one spouse dies, the other becomes the full owner of the property. As such, one spouse cannot dispose of any full interest in the property (even their own) without disposition by the other spouse. Another form of ownership – “joint tenancy with right of survivorship” – is the same in form and function as the entire property, without the requirement that the title holders be married. Thus, jointly-owned real property may be owned by more than two persons, and when one passes, their interest is divided among the remaining owners. Jointly-owned real property is rare outside of married persons, but it may legally exist nonetheless.
A life estate is an example of a consecutive interest, whereby the current title holder(s) (grantor[s]) deed their interest in the land to one or more persons (grantees), reserving for the grantor(s) the right to occupy and use the property for their life, whereupon full ownership interest instantly succeeds to the grantee(s) (known as a “remainderman”). Neither a life tenant nor the future remainderman can dispose of the tracts of a leasehold interest long enough to support a solar PV facility on their own. To illustrate by using an otherwise unlikely event: if a solar developer signed a lease with a life tenant only, their lease term would end upon the death of the life tenant, because the life tenant only had a lifetime interest to lease. All said, a simple title search during the developer’s due diligence would discover such consecutive titles.
In either of the concurrent and consecutive interest scenarios above, no one interest owner can convey a sufficient leasehold interest to support a solar PV development. All co-tenants, joint tenants, spouses, life owner and remaindermen – as the case may be – must sign documents conveying the leasehold interest. Indeed, no one owner can execute preliminary letters of intent or option agreements for the project to proceed on their land.
[Note that among married persons, real property purchased during marriage is presumed to be marital property provided certain conditions are met. And though only one spouse’s name may appear on a deed to property acquired by purchase during marriage, an estranged spouse may have a right of claim to the property under North Carolina’s equitable distribution statute. An exception is inherited property, whereby one spouse may own real property by themselves as non-marital property. This is common where one spouse inherits real property during their marriage, and to join the other spouse in ownership, the owner spouse must deed the property to themselves and their spouse. In the case of single-spouse ownership, though considered ‘non marital property’ there is still a possibility that a surviving spouse may elect to take a life estate interest in all of their deceased spouse’s property, even that which has been leased to a solar PV facility. A solar PV developer, like most purchasers of non-marital property, will require the additional signature of the non-owner spouse, in the event she comes into an ownership interest she will have quit any claim against the lessor’s (the owner of the solar PV facility) lease interest.]
Generally, if a tract of land is owned in an “heir property” situation, the work required to secure clean title is considerable. If all heirs can be located, they must all agree in writing to the due diligence and lease terms offered by the developer. Sometimes, heirs are unwilling to respond, or are unknown. Given that clearing heir property title for disposition is often lengthy and success speculative, heir property may eliminate the tract from consideration.
As for third-party encumbrances, an evaluation will reveal whether any party has a lien on the property. A lien is a third party’s right – depending on the type of lien – to force a sale of the property to pay off an unpaid debt. The most common liens are mortgages – referred to Deeds of Trust in North Carolina – securing a loan, whereby the land serves as collateral for the loan that purchased the land, or as collateral for a farm operating loan. While purchase liens typically attach only to the land purchased, operating loan liens generally cover all landholdings of the borrower, whether or not the land is used in production. Such liens show up as a Deed of Trust in the title on the land, searchable in the county register of deeds database. Other liens may be unpaid property taxes, or an unsatisfied judgement related to an unpaid debt.
A solar PV developer – in order to ensure that a foreclosure and sale does not disrupt their solar operation – must require that all current lenders subordinate their security interests to the lease, so if the land is sold, the new buyer is still subject to the lease. (Priority refers to the order in which proceeds from a liquidation are applied to debts). Commercial lenders holding a lien have the flexibility to subordinate their liens to the lease. Care must be taken to ensure that execution of a lease that removes land from agricultural production is not a default on an operating loan, causing its call-in to be immediately paid in full. As for other liens such as tax or judgement, these must be satisfied (paid off) before execution of the lease, and depending on their amounts, may be satisfied by the developer. Such lien issues will surface in a developer’s due diligence (see below).
Other third-party encumbrances may include easements across the tract. Easements come in many forms: a roadway across one parcel allowing another parcel’s owner to reach a public right of way, or a utility easement supporting above ground power lines or a subsurface conduit such as a pipeline, or a restriction on use. Access and other easements may pose an obstacle if the owner of the dominant tract (the parcel that benefits from the easement) is unwilling to modify or extinguish the easement at the request of the owner of the servient tract (the parcel burdened by the easement). Even where an easement is not recorded, one may be proven in court under several legal theories, including necessity – where the dominant tract cannot access the public road without an easement – and prescription – where the dominant tract has used the easement for a minimum 20 year period (along with other factors).
Utility rights of way effectively remove a particular area from solar development; for example, while pipeline right of way leases allow farming uses on the surface, pipeline leases prohibit structural development on the easement. Pipeline easements are a common feature. Sometimes, though a right of way is negotiated and recorded, it is never developed for use (i.e. it is only discoverable in the chain of title). North Carolina now has a statutory process for extinguishing rights of way that have gone undeveloped for a period of twenty years.
It is possible that a third party may hold a subsurface mineral right, whereby they have leased or purchased the subsurface of a tract for mineral extraction purposes. For example, if the tract of land is located in the northern Sandhills area (Moore, Lee, and southern Chatham Counties) or in the Sauratown foothills (Rockingham and Stokes Counties), there may be unextinguished gas extraction (hydraulic fracturing or “fracking”) leases and other encumbrances recorded during a period of interest in 2012 and 2013 in exploiting the small shale plays in those areas. There may be even older subsurface title separations from the surface estate. Though mineral rights do not grant rights to the surface, a holder of subsurface rights may be able to reasonably access deposits through the surface, which would interfere with solar PV facility function.
Though the North Carolina Marketable Title Act is designed to extinguish older property interests, it contains an exception for mineral interests. And though by statute there is a distant point in the past where unused and untaxed interests are extinguished, there is also a process by which such interests could have been preserved that is difficult to detect (it does not show up in the chain of title for the tract). As a practical matter, a title insurance company may except (remove from policy coverage) such interests and issue a title policy sufficient to allow the development financing to proceed.
Conservation Interests and Options Held By Third Parties
Third-party interests in the parcel may be related to conservation programs, whereby the landowner has been compensated for temporarily or permanently restricting use to all or parts of the land, or installing crop and conservation improvements with public funds. Such commitments are not easily swept aside to provide a clear title for solar development.
If the land is under a permanent conservation easement, it is unlikely that the land may be developed for a solar PV facility. Conservation easements are permanent legal agreements whereby the owner has transferred (by deed) their right to subdivide and develop the property, or otherwise permit uses of the property that are incompatible with the conservation values of the tract, including the installation of non-permeable surfaces (e.g. paved roads, concrete pads, etc.). The transfer of these rights from a restriction, and the holder of this right is legally bound to enforce the restrictions outlined in the deed. The holder of the restriction is a third party, either a non-profit such as land trust or conservancy, or a county under management of its Soil & Water Conservation District. While the landowner still holds title to the property, he is restricted by the terms of the conservation easement. The holder of the restriction is responsible for enforcement of the restriction, and may not legally allow or acquiesce to a modification of the terms of the conservation easement to allow solar development. Under a permanent conservation easement, the tract of land is essentially removed from the market for solar development.
Other conservation programs are term-limited, but nonetheless present a financial cost. A Conservation Reserve Program (CRP) contract is an example. CRP is a program authorized by the Farm Bill and administered by the USDA Natural Resources Conservation Service (NRCS), whereby a landowner contracts to receive payments for retiring land from production or installing conservation features to improve soil and water quality. Such contracts typically run 10 to 15 years. If a landowner “fails to maintain” conservation practices – i.e. executes a lease that results in development – and the contract is cancelled, the landowner must pay back the annual payments made to him plus interest, plus liquidated damages. Other term-limited programs – including Conservation Security Program (CSP) and Wildlife Habitat Improvement Program (WHIP) – though eliminated in the 2018 Farm Bill, may still have live contracts with similar repayment schemes to CRP.
Landowners should check with the NRCS and Farm Service Agency (FSA) offices in their county or region for contracts concerning their land. In the event a solar PV opportunity is presented, the relevant office should be able to calculate the amount of repayment and damages owed in the event the solar PV developer wants to move forward. It is important that the landowner negotiate with the developer to ensure they take responsibilities for the early contract termination payments.
It is possible that a tract’s title may be encumbered by an option agreement in favor of a third party. Such option agreements come in several forms, but generally grant a right to a third party to purchase the tract on their own election at a future date, or in response to a pending transfer of interest in the tract (which could include a long-term lease). Sometimes these grant a right of first purchase at fair market value, other times they are the nature of a “right of first refusal,” either reserved in the original grantor of the tract, as a stand-alone document, or as part of a lease agreement. Though such options are a right of exercise, they need to be released by the option-holder in the due diligence process to eliminate uncertainty and provide a clean title.
Finally, land that has been enrolled in an Enhanced Voluntary Agricultural District (EVAD) – in counties that have adopted such an ordinance – must remain undeveloped until the expiration of the ten-year irrevocable conservation agreement term associated with such enrollment. Under state statute, such agreements – unlike those required for basic enrollment in a [non-enhanced] Voluntary Agricultural District (VAD) program – may only be modified or revoked by action at the Council of State (the body comprised of the elected chief executives of state agencies) upon showing in a conservation benefit analysis that the modification results in a net benefit. Presumably, termination of an EVAD conservation agreement for development of a solar PV facility would not meet this test. (Note: regardless of the minimum 10-year term, a landowner still must file a termination notice prior to end of term, otherwise an EVAD irrevocable agreement automatically renews for a period of three (3) years.)
Farm Tenants and Lessors
If a solar development opportunity emerges, consideration must be given to the status of an agricultural tenant on the land. Much depends on whether the tenant has a written tenancy agreement (i.e. a lease), and if so, the length of the term. If there is no lease, a landowner may not – under North Carolina statutory law – remove a farm tenant who is farming with no written agreement, and must give the tenant notice to vacate the property within 30 days prior to the end of the crop year, which is either January 1 or December 1, depending on the county.
If a solar developer approaches the landowner during an annual statutory term, it is likely that the developer’s due diligence time frame will allow the farmer to vacate at the end of the crop year.
However, the landowner must remember to give the farmer notice of termination, otherwise the tenancy automatically renews for another crop year. However, the landowner may not have the authority to allow a solar developer to enter upon the farmer’s tenancy for land evaluation, particularly not that which will interfere with farming operations or damage crops. If the tenancy is for livestock grazing, a landowner should not create a liability situation for the farmer by allowing an entry upon the land to wander among livestock.
If the tenant is under lease, and the termination date of the lease falls within the developer’s window, there may be no issue. However, if the landowner is approached in year one of a three-plus year lease, arrangements must be made with the lessee for an early termination, which will likely require a buyout. Such buyouts are measured by the farmer’s reasonably anticipated loss of profit on future crops, plus any investments in the land that cannot be removed by the lessee, such as a lime application or other soil enhancement.
Zoning and Special Use Permits
Most rural solar PV development proposals are not consistent with the existing zoning overlay of the target parcel. Counties in North Carolina are authorized by state statute to zone the unincorporated (municipal) areas in their jurisdiction. Most counties have elected to zone the entire county, others partially. Solar PV facilities are generally considered to be light industrial use, and such zones in a county are usually limited in geography. Chances are, the land targeted is zoned for residential purposes, for which solar development is not allowed as a matter of right. Furthermore, though an operating farm may designate its land as a “bona fide farm” exception to zoning restrictions, solar PV facilities do not qualify. Though farms now have this exception to zoning restrictions, some counties may still have a zoning district identified as “agricultural-residential (A-R)” with farming as a redundant permitted use.
Zoning ordinances – commonly known as Unified Development Ordinances (UDOs) – are essentially mapping schemes to coordinate uses of real property in a county, to ensure uses are compatible with the purposes of a particular zoning district, promote conservation and water protection, and eliminate private and public nuisances. Each UDO lists a series of zones (R for residential, B for business, I for industrial, O for office, etc.) with a table of allowable uses enjoyed by the property owner as a matter of right, alongside those uses which may be allowed with public approval, and those uses which are outright forbidden. Each zone overlay also specifies particulars of lot size, building setback requirements (how close a structure can be to the lot boundary), number of structures, height limitations for buildings, etc. In short, a solar PV facility may be an allowable use in a “light industrial” district, a permitted conditional use in a rural “residential-agricultural” district, or a prohibited use in a small lot “residential” district.
A solar PV proposal will often require the developer (with cooperation of the landowner, a required agreement) to pursue a conditional use permit (CUP) for the property during the due diligence period. Such permits – allowed per the UDO – require a process of public notice and hearing, and then approval by the zoning board and county commissioners. This is the opening by which neighbors pose challenges to solar facilities not benefitting their land, based on arguments of unsightliness, glare, drainage, noise, traffic, and loss of farmland to a community.
Note that North Carolina counties increasingly require – when approving a solar CUP – that the developer have firm plans to decommission the site when the lease has run its term. Such requirements now appear in 24 county ordinances, with the majority requiring a timeline and financial assurance (i.e. a bond) equal or greater than the projected costs of decommissioning the site and restoring it.
Property Tax Issues
A solar PV facility will change the tax status of parcels, particularly those enrolled in the North Carolina Present Use Value (PUV) program. A solar PV facility, though commonly called a “solar farm,” is not considered “agriculture” for purposes of qualification for PUV tax deferment. As such, the event will disqualify the tract as agricultural land ending its PUV status, and triggering a “roll-back” representing a payment of three years of deferred taxes, plus interest. The deferred taxes are calculated by applying the county tax rate to the difference between the highest and best valuation and the lower PUV valuation (For more detail on PUV, read “A Primer on North Carolina’s PUV Program”). It is imperative that the landowner – in negotiating the lease terms – place responsibility for all PUV-related payments on the developer.
Properties not enrolled in PUV may nonetheless increase in value. Note there is an abatement on property taxes for solar PV facilities, but it belongs to the owner of the facility, and is abated from the personal property tax assessed on the value of the personal property (solar panels, wiring, converters, etc.)
(Though as noted above development of a solar PV facility disqualifies land for PUV enrollment, it is possible that the land may be re-enrolled under a compatible qualifying (agricultural) use. Indeed, the NC Department of Revenue’s Present Use Value Program Guide – while not legally-binding on county tax assessment decisions – contemplates a scenario whereby impacted acreage may be re-enrolled, using sheep grazing under the panels – for both agriculture production and as weed maintenance – as an example. Note, however, that re-enrollment for agriculture may only occur at a minimum in the fourth year following removal from PUV, showing annual agricultural receipts of $1000 gross for the previous three years.)
For more information on this topic, refer to Solar and Wind Energy Development Opportunities: Tax Implications.
Again, securing a solar PV facility lease is a lucrative and long-term commitment. A particular landowner may not survive an entire lease term, but will leave a legacy of payments for successors. As a practical matter, the opportunity may come once. The issues outlined above will largely be handled by counsel for the solar PV developer with the landowner’s cooperation.
Dickerson, Z., A Solar Farm in My Backyard? Resident Perspectives of Utility-Scale Solar in Eastern North Carolina, masters thesis Department of Geography, Environment and Planning, East Carolina University (2018)
Van der Hoeven, G., Solar and Wind Energy Development Opportunities: Tax Implications (NC State University 2016)
An article addressing these issues was previously published in 2014 by Theodore Feitshans, Extension Professor, and Molly Brewer, Extension Research Assistant. The present author invites comments and suggestions, contact Andrew Branan, email@example.com.
This information is not intended to constitute legal advice. While every effort has been made to ensure the accuracy of this information, its accuracy cannot be guaranteed. Readers are encouraged to consult a private attorney for their individual legal questions. Since this information is changing rapidly, readers should note the publication date. This factsheet is a working paper and represents research in progress. For any comments, please contact Andrew Branan, firstname.lastname@example.org.
Content loaded to Agricultural and Natural Resource Law portal, including narratives, workbooks, and presentations, is supported by The North Carolina Tobacco Trust Fund Commission (TTFC) (Grant award 2019-001-16), titled “An Heirs Guide to Farmland”).