City Council To Consider Solar Panel Tax Exemption

Sam Nickels -- March 5th, 2011

UPDATE: The issue of a solar panel tax exemption in Harrisonburg arose because EMU requested an exemption, and City Council is trying to find a way to manage that request while simultaneously preventing a tax on residential solar additions.

In an email to a local environmental list-serve, Harrisonburg attorney and solar advocate Tom Domonoske drew attention to an environmental issue on the City Council’s agenda for Tuesday night – a proposed solar tax ordinance.

Domonoske is concerned that the City may approve a tax related to the added property value of solar panels. He writes, “if someone puts $25,000 in redoing their bathroom or kitchen, then their real estate taxes do not go up….If someone though puts $25,000.00 into solar equipment, their taxes will go up $145.50 per year, every year.”

Workers install solar panels at EMU, 2010. Photo courtesy Erik Curren.

Domonoske is also concerned about low income residents of the City who have become homeowners through the Habitat for Humanity housing program. “For the past several years all these houses have been equipped with solar hot water heaters, and these homeowners are least able to afford a tax increase simply because they live in a more sustainable, energy efficient house.”

Cathy Stickler, Chair of the Climate Action Alliance of the Valley, said that after talking with a Harrisonburg City Council member, she wants people to know the situation is complicated. She said, “The Harrisonburg City Council says they are working on this ordinance in order to help people feel confident that they can place panels on their property and not be liable for additional taxes.”

Miriam Dickler, Public Information Officer of the City of Harrisonburg, confirmed that the Harrisonburg City Council requested staff look into comparable ordinances from other jurisdictions.

Harrisonburg Mayor Richard Baugh said the ordinance will not tax residential solar panels. “If you look at two houses side by side, one has panels and one does not, currently they are taxed the same.” He stated that the ordinance is necessary to assist Eastern Mennonite University, which came to Council seeking an exemption from liability on a new large solar array they recently installed. The ordinance, said Baugh, “allows a path for local government to reduce or eliminate a tax.” In this case, a current tax related to EMU.

But concerned residential owners want to know how much of an exemption the Harrisonburg City Council will pass for this ordinance. City staff returned to Council with a proposed ordinance that would tax such property additions as solar panels, but provide a 20% discount. Baugh and other council members are considering a 100% exemption. “I will certainly do what I can to provide an incentive for solar energy,” said Baugh.

Councilman Kai Degner, in an email on the same topic, assured City residents that no one is out to dis-incentivize solar. He encouraged people to come speak at the council meeting, particularly on “the unintended impact on personal property owners that would occur if an ordinance aimed at exempting some of a business’ solar tax is adopted at a rate of less than 100% of the tax for the lifetime of the equipment,” as well as “the importance of incentivizing solar.”

Domonoske is looking to citizens to turn out in support of the full exemption.

The Harrisonburg City Council will consider the “ordinance to permit Solar Tax Exemption as permitted under Virginia State Code § 58.1-3661: Certified solar energy equipment, facilities or devices and certified recycling equipment, facilities or devices” as item #12 on the March 8 agenda.

UPDATE: Here is more of Degner’s response to Domonoske’s email:

. . . The reason the ordinance is in front of us at all is to consider how much the city wants to incentivize solar projects like the one underway at EMU. In exploring a tax exemption for the EMU / Secure Futures solar project, our only tax exemption option NECESSARILY includes a tax exemption for solar installations on residential property. Currently, residential installations aren’t taxed because the Commissioner of Revenue doesn’t factor them into the property assessment (just like she wouldn’t consider what kind of water heater you have). We are PROHIBITIED from creating an ordinance with a different exemption for business or residential solar equipment. So, that means by drafting an ordinance which would RELIEVE a business from a portion of the cost of their normally required machinery and tools tax applied to solar equipment, we are forced to create a scenario where by in an effort to SUPPORT solar installations by businesses we introduce a NEW tax (even if reduced) to the personal property owner. This effect is being weighed carefully by council members, who don’t want to “punish” home owners by relieving a well-intentioned solar power manufacturing for-profit business of some of their required machinery and tools tax.

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