Churches Approached to Lease Land for Solar Batteries

Churches Approached to Lease Land for Solar Batteries

Dawn Hammond, Executive Minister for Policy and Finance, reports that she has received word of a number of SNEUCC churches being approached by a California-based solar energy company seeking to lease outdoor space for battery electricity storage.  
Such an arrangement could have financial benefits for the church and may align with a congregation's values regarding creation care.  Hammond recommends, however, that churches take sufficient time and care in exploring any such offer.

"As with any long-term lease or contract, the details should be thoroughly researched, and vendor references checked, before a commitment is made," she said. "Also, any lease of church property may have property tax implications (see the Church Finance Handbook, p. 160)."
For church leaders considering the possibility of such a lease, National UCC General Counsel Heather Kimmel has this advice:
"Church leaders should contact a tax professional to determine if the rental income will be unrelated business income (UBI), subject to unrelated business income tax, which will cause the church to have to file a 990T with the IRS.  Whether or not it is UBI will depend on whether the property is debt-financed and may involve other considerations as well.
"The lease agreement should be reviewed thoroughly by an attorney for the liabilities the church is assuming with respect to the equipment, and reviewed by the church’s insurer to determine whether the church’s property is being put at unnecessary risk through this activity.
"Also, I’d be concerned over the use of the property for non-exempt purposes as to whether it would affect the property tax exemption. I have heard of some pretty aggressive municipalities in New England denying property tax exemptions to churches for leasing space to others. Tread carefully."

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