Support Tax Reform for Small-Scale Solar

To: Members of the Michigan Senate

Re: Support Tax Reform for Small-Scale Solar - House Bills 5143 and 5680

Dear Senators,

We are writing to urge your support for House Bills 5143 and 5680, legislation that would eliminate the confusing patchwork of property tax assessments for small-scale solar across the state and remove harmful tax barriers for businesses and homeowners to generate their own energy.

As the cost of solar technology continues to fall, home and business owners in Michigan are increasingly turning to small-scale solar as a means of reducing high energy bills. In fact, a new report from the Michigan Public Service Commission (MPSC) shows that in the last year alone small-scale solar installations increased by 28 percent in Michigan.

However, Michigan’s current taxation system for small-scale solar is hindering access to this cost-saving technology in some parts of our state. Michigan currently has a patchwork property taxation system when it comes to small-scale solar. In some communities like Ann Arbor, residents face increases in their property taxes when they install rooftop solar, while in other Michigan communities, assessors do not take rooftop solar into account. For businesses, there is uncertainty around which small-scale energy systems qualify for existing tax exemptions. Together, these bills would eliminate uncertainty by clarifying exemptions and ensuring Michigan applies the same system of taxation across the state.

HB 5143 would ensure that an existing industrial personal property tax exemption applies to commercial and industrial alternative energy system installations (including solar and battery storage) if those systems are 150 kilowatts or smaller. HB 5860 would add the installation of alternative energy systems to the list of normal home maintenance and repair activities. This would make it so assessors are prohibited from valuing small-scaled solar projects as part of the true cash value assessment of the home until the property is sold or transferred. In short, the bill would ensure that a homeowner who installs solar would not see a property tax increase, but that the increase in value of the home due to the installation could be captured when the property changes hands and is re-appraised.

To create a better energy future for all of Michigan and to empower local economies with investments in renewable energy, we need a legislative agenda that eliminates barriers to solar energy and promotes the rapid adoption of next-generation solar systems. Unfortunately, our current tax system unfairly penalizes some homeowners and businesses that install small-scale solar. HB 5143 and HB 5680 make it easier for Michigan residents to access the benefits of small-scale solar, which includes saving money on their energy bills, boosting local solar jobs, and contributing to cleaner air. We, the below signers, ask that you vote yes on HB 5143 and HB 5680 when it comes up for a Senate floor vote this year.