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Volume 9 - Opinions of Counsel SBEA No. 114

Opinions of Counsel index

Real property, definition of (wind turbine) - Real Property Tax Law, § 102(12)(b):

A wind turbine, which is power-generating apparatus, is taxable real property when the intent of permanence of installation can be inferred from its use in generating electricity to be sold to a utility company.

Our opinion has been requested as to the taxable status of wind turbines used in generating electricity to be sold to a utility company. The turbines have the capability to generate significant amounts of electricity and are necessarily anchored to the ground.

All real property in New York State is subject to taxation unless specifically exempted by law (Real Property Tax Law [RPTL], § 300). “Real property” is defined in paragraph b of subdivision 12 of section 102 of the RPTL as including:

(b) Buildings and other articles and structures, substructures and superstructures erected upon, under or above the land, or affixed thereto . . .

Also, paragraph (f) of the same subdivision defines “real property” as including:

(f) [P]ower generating apparatus . . ., but shall not include movable machinery or equipment . . ., owned by a corporation taxable under article nine-a of the tax law. . . .

In Consolidated Edison Company of New York v. City of New York, 44 N.Y.2d 536, 378 N.E.2d 91, 406 N.Y.S.2d 727 (1978), power-generating apparatus, machinery and equipment used in the generation and distribution of electrical power was classified as real property, regardless of its movability, and was, therefore, taxable pursuant to section 102(12)(b). The Court of Appeals found that, because the property in issue came within the definition in section 102(12)(b), there was no need to analyze it in the context of paragraph (f) (see also, 9 Op.Counsel SBEA No. 42, where we conclude that a cogeneration plant is taxable real property if it falls within the definition portion of paragraph (f)).

In reaching its decision, the Court used common law principles in its analysis. Those principles were clearly enunciated in Metromedia, Inc. v. Tax Commission, 60 N.Y.2d 85, 455 N.E.2d 1252, 468 N.Y.S.2d 457 (1983); to be considered real property, an item must:

1) be actually annexed to the real property or something appurtenant thereto;

2) be applied to the use of the real property; and

3) be intended as a permanent accession to the freehold.

The first two tests appear to be satisfied here, because the wind turbines are actually anchored to the ground and they are used to generate electricity, which is one of the uses of the real property. With respect to the third test, the Court in Metromedia held that, although the advertising signs at issue, which were bolted to frames on elevated railways, were easily removable, the test was the intent of permanence as evidenced by whether any had actually been removed. Since none had been removed, the signs were held to be intended as a permanent accession and, hence, real property.

Although in the present case the wind turbines may only have been in place for a few months as of taxable status date, by the very nature of the items, i.e., as generators of electricity for a major utility, it may be inferred that there is an intent that they will be left in place for a considerable time, probably the useful life of the units.

Accordingly, in our opinion, the wind turbines are taxable real property.

January 27, 1993