A group of York residents who own homes with solar panels are upset by a decision of the town to add a $1,000-per-panel assessment to their property’s overall value, calling the move “unjust” and perhaps unconstitutional. And they intend to pursue their action in court, if need be.
But town Assessor Rick Mace defended his decision, saying that based on his research solar panels add to the market value of a property and should be assessed as such.
His decision leaves him in very limited company, however. The only other municipality in the state of Maine that assesses residential panels is Brunswick, at a rate of $500 per panel, and homeowners there are appealing to lower that. Two solar farms in Wayne and South China are also being locally assessed, but not individual homeowners.
Added to this, Maine is alone among New England states in not offering a property tax exemption for renewable energy systems, according to data compiled by North Carolina State University’s Clean Energy Technology Center. And because there is no exemption, Mace argues, “if towns are not assessing for certain things that aren’t exempt then they aren’t doing their jobs.” He said the group’s efforts would be better spent appealing to state representatives to change the law.
The $1,000-per-panel tax is unfair on many levels, said attorney Kristin Collins of the law firm Preti Flaherty, hired by local homeowners to represent them in their appeal. For one, she takes great issue with the $1,000 figure itself.
“That figure is super ballpark,” said Collins. Her clients, she said, paid “between $400 and $900 per panel, installed.” She points to the fact that Brunswick assesses them at $500 per panel, and even that figure is being challenged. Steve Hinchman, in-house counsel for solar energy company ReVision Energy, said York’s figure “is neither fair nor economically justified — it’s so high it’s punitive.”
The panels are being assessed as part of the overall property value. But Collins argues that while a house depreciates over a long period of time, solar panels depreciate much more rapidly, so that their assessed value would drop more quickly. But that is not being taken into consideration by Mace, she said.
She uses as an example a $50,000 kitchen renovation. Depending on the house’s assessed value, the homeowner is not likely to see his or her house increase in value by that full amount. “When the town assesses it, they might choose a higher valuation line, but not a $50,000 increase. If you can acknowledge that $50,000 going in isn’t $50,000 going out on the kitchen, why can’t you acknowledge that a $20,000 solar system going in isn’t a $20,000 solar system going out?
“The constitution and state law requires you to assess property equally according to just value. If you’re using methods that are unequal, then it’s unconstitutional,” she said.
Another key area is market value of a home. Collins reiterated the fact that only two towns in Maine assess residential solar panels. She said, for instance, that she spoke with Kittery’s tax assessor who told her he has seen no evidence that panels increase the value of a residence. At a recent meeting of York solar panel owners, local contractor Dave Chapman said, “Our bank’s appraisal company stated that solar projects are not considered to increase the appraised value of any home in the current real estate and banking model.”
Mace said there are numerous articles and professional publications that speak to a direct correlation between solar panels and increased property values. In fact, he said, he first became aware of this very issue after listening to a program by solar panel professionals — including ReVision Energy — who talked about the increase in market value from solar panels. “So, it seems like they may want to have it both ways.”
Finally, the group is concerned about the chilling effect that this assessment will have on residents considering solar panel installations, said Collins. People pay a substantial upfront cost, with the anticipation that over a period of time — usually a decade to 15 years — they will recoup the cost by paying less for energy.
If a homeowner installs 20 panels, he or she would see $20,000 added to the assessed value of the home. If York’s mil rate is $11, that means additional property tax of $220 a year, Hinchman said. That means the tax on the panels would take away 22 percent of any electricity savings each year, he added. “That’s more than most of our income tax rates and way too high for a property tax.”
Said Collins, “if a person is paying $220 a year but is only saving $200 a year in electricity costs, you’re killing the whole investment by overtaxing it. And if your taxes go up too much, people won’t start investing in these systems.”
But Mace said he is concerned only about the overall assessed value of a property, not about lower energy bills or tax rebates. “We’re talking apples and oranges here. The costs will be recouped when they sell the house,” he said.
However, Rozanna Patane, the chair of the town’s Energy Steering Committee, said the assessment sets the wrong tone in a town that has supported clean energy initiatives. She said 85 percent of voters approved an energy chapter to the Comprehensive Plan. Voters have also approved the use of green standards in new municipal buildings and a LED streetlight replacement program. In addition, she said Town Manager Steve Burns has asked her committee to review York’s ordinances to make sure they don’t discourage solar.
The solar panel assessment, “by discouraging investment in solar, is at odds with the town’s efforts to become a clean-energy community. We should be doing everything we can to help people do the right and smart thing for our future.”
The first step to challenge the solar assessment has already been taken. On Feb. 1, Collins submitted abatement requests for 12 residents with solar panels on their homes. On Feb. 2, Mace denied them all. She now has several months to file an appeal with the town’s Board of Assessment Review. Depending on the outcome of that hearing, the group is prepared to go to court, she said.
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