Title 44
Taxation

Chapter 5
Levy and Assessment of Local Taxes

§ 44-5-3. Ratable property of a city or town — Definitions.

(a) The ratable property of the city or town consists of the ratable real estate and the ratable tangible personal property (which do not include manufacturer’s manufacturing machinery and equipment of a manufacturer) and the ratable tangible personal property of manufacturers consisting of manufacturer’s manufacturing machinery and equipment of a manufacturer.

(b)(1) For the purposes of this section and §§ 44-5-20, 44-5-22, 44-5-38, and § 9 of chapter 245, public laws of Rhode Island, 1966, “manufacturing” includes the handling and storage of manufacturer’s inventories as defined in § 44-3-3(a)(20)(ii).

(2) “Manufacturer’s machinery and equipment” or “manufacturing machinery and equipment” is defined as:

(i) Machinery and equipment which is used exclusively in the actual manufacture or conversion of materials or goods in the process of manufacture by a manufacturer as defined in § 44-3-3(a)(20) and machinery, fixtures, and equipment used exclusively by a manufacturer for research and development or for quality assurance of its manufactured products; and

(ii) Machinery and equipment which is partially used in the actual manufacture or conversion of raw materials or goods in the process of manufacture by a manufacturer as defined in § 44-3-3(a)(20) and machinery, fixtures, and equipment used by a manufacturer for research and development or for quality assurance of its manufactured products, to the extent to which the machinery and equipment is used for the manufacturing processes, research and development, or quality assurance. In the instances where machinery and equipment is used in both manufacturing activities, the assessment on machinery and equipment is prorated by applying the percentage of usage of the equipment for manufacturing, research and development, and quality assurance activity to the value of the machinery and equipment for purposes of taxation, and the portion of the value used for manufacturing, research and development, and quality assurance is exempt from taxation. The burden of demonstrating this percentage usage of machinery and equipment for manufacturing and for research and development and/or quality assurance of its manufactured products rests with the manufacturer.

(3) This definition of “manufacturing” or “manufacturer’s machinery and equipment” does not include:

(i) Motor vehicles required by law to be registered with the division of motor vehicles;

(ii) Store fixtures and other equipment situated in or upon a retail store or other similar selling place operated by a manufacturer, whether or not the retail establishment store or other similar selling place is located in the same building in which the manufacturer operates his or her manufacturing plant; and

(iii) Fixtures or other equipment situated in or upon premises used to conduct a business which is unrelated to the manufacture of finished products for trade and their sale by the manufacturer of the products, whether or not the premises where the unrelated business is conducted is in the same building in which the manufacturer has his or her manufacturing plant. The levy on tangible personal property of manufacturers consisting of manufacturer’s manufacturing machinery and equipment of a manufacturer is at the rate provided in § 44-5-38.

(c) Notwithstanding any exemption provided by this section, and except for the exemptions created by §§ 44-3-3(a)(22), 44-3-3(a)(48) and 44-3-3(a)(49), which exemptions shall remain intact, cities and towns may, by ordinance or resolution, tax any renewable energy resources, as defined in § 39-26-5, and associated equipment only pursuant to rules and regulations that will be established by the office of energy resources in consultation with the division of taxation after the rules are adopted, no later than November 30, 2016. The rules will provide consistent and foreseeable tax treatment of renewable energy to facilitate and promote installation of grid-connected generation of renewable energy and shall consider the following criteria in adopting appropriate and reasonable, tangible property tax rates for commercial renewable energy systems:

(1) State policy objectives to promote renewable energy development;

(2) Tax agreements between municipalities and renewable energy developers executed and effective after 2011, including net metering or lease agreements that address tax treatment;

(3) The valuation of local property tax in the ceiling prices set for the distributed-generation standard contract or renewable energy growth programs by the distributed-generation board;

(4) Assessment practices used by Rhode Island municipal property tax assessors;

(5) Five dollars ($5.00) per kilowatt of nameplate capacity and the average kilowatt value of the tax agreements and associated payments executed between municipalities and renewable energy developers between 2011 and 2016 shall be the benchmarks for consideration of reasonable revenue generated by a city or town from renewable energy facilities provided that evidence to the contrary may be incorporated in final rules and regulations; and

(6) Cities and towns may only assess a tax on the real property upon which a renewable energy resource is located pursuant to § 44-5-12(a)(5) and § 44-27-10.1(b), as applicable.

(d) The dollar amount adopted through the rules and regulations that municipalities will be required to use for commercial renewable energy systems shall be based on the alternating current (AC) nameplate capacity of the renewable energy resource.

(e) Any renewable energy resource projects that have executed interconnection service agreements with the electric distribution company as of December 31, 2016, shall not be subject to the rules developed under subsection (c) and shall maintain the tax status applicable before the rules are adopted, unless otherwise agreed pursuant to § 44-3-9(a).