Advocacy News – December 3, 2020
Earlier today the Michigan Senate passed SB 1105 and SB 1106, bills that exempt certain equipment that is a part of a solar energy facility from personal property tax and impose payment in lieu of taxes (PILT) program in its place.
Solar development has the potential to bring over $11 billion in private sector investment to Michigan, create thousands of good-paying jobs and contribute hundreds of millions of dollars to the local tax base. Michigan utilities already have plans for over 7 GW of solar generation in the next decade.
Unfortunately, there is one major obstacle to large-scale solar development in Michigan – a personal property tax regime that is out of step with that in other Great Lakes states and other states that have seen significant solar development. As many other states have recognized, traditional ad valorem taxation of solar equipment is simply too burdensome to allow many solar projects to be developed.
To address these problems SB 1105 and SB 1106 allow local solar developers to apply for an exemption from personal property taxes and instead make a fixed annual PILT based on the size of their facility. The maximum amount of the PILT (on a per megawatt basis), would be fixed in the statute, but the taxpayer and local assessing authority would be able to negotiate a mutually agreeable lower rate if applicable. The alternative taxation arrangement would apply as long as the solar facility is in operation unless the taxpayer and the local assessing authority negotiate a shorter duration. This approach would create a fixed and substantial source of revenue for local units of government, reduce the legal cost and burden on local assessors and encourage the necessary investment to create a robust solar industry across Michigan.
For more information on this issue, please contact Dan Papineau at dpapineau@michamber.com