Solar leases will likely prevent any other use of the property.
All of us in Texas have likely driven by a piece of property and seen a tractor farming around oil pump jacks or cattle grazing beneath wind turbines. Because of how oil, gas, and wind production occurs, it is quite possible for the surface owner to make agricultural uses of the property even during the time while the oil, gas or wind lease exists. The same is often not true for solar leases. Often, a solar farm requires numerous continuously placed panels that would prevent other uses to be made of the surface of the land. Based on this, landowners evaluating solar leases should usually assume the lease payment will be the only income for the property and negotiate accordingly.
A solar project could impact special tax use valuation eligibility.
In Texas, many rural landowners take advantage of the special tax valuation available for agriculture or open space land. If a landowner meets the criteria, the special use valuation allows the property taxes to be calculated based on a percentage of its productive capacity versus the fair market value of the land, which is usually much greater. A solar project could impact the ability for property to qualify for this special use valuation. If that is the case, a host of issues arise, including a rollback period where the landowner may owe the difference between the normal tax value and the modified value paid. Importantly, even after the solar project has left the land, it could be years before the property can quality for ag or open space valuation again. Landowners should visit with their local appraisal district to determine how solar projects are treated with regard to special use valuation. It is important that landowners include a term in the solar lease agreement whereby the solar company covers any additional real property taxes owed as a result of the solar project and that the solar company pays for any personal property taxes on the solar equipment.