Mike Mahmoudi, owner of the 32-room New Sun Gate Motel on
South Federal Highway in Lake Worth, is pleased that he invested $115,000 in a
40.2 kilowatt rooftop solar system that generates power whenever the sun is
shining.
“My electric bill was expensive. It’s saving me some money,
and I helped create jobs. I feel good. My property value will go up, and I get
a federal income tax break,” Mahmoudi said.
Since Fort Lauderdale-based Advance Solar & Spa
installed the 120 commercial LG 72-cell solar panels, at 335 watts each in
April, Mahmoudi estimates he is saving $800 to $1,000 a month in electricity
costs. Plus, guests at the New Sun Gate have also made favorable comments about
Mahmoudi’s decision to use solar power.
“A lot of people like it because it’s green,” Mahmoudi said.
But a successful constitutional amendment intended to make
it easier — and more profitable — for people like Mahmoudi to benefit from
renewable energy seems more cloudy than clear by rules being implemented in
Tallahassee.
Solar energy has received a lot of attention in Florida in
the past year. Last November, voters faced two proposed constitutional
amendments. They rejected the utility-backed proposed Amendment 1 that would
have likely restricted rooftop solar but approved passage of Amendment 4,
designed to spur the growth of solar photovoltaic systems.
In June, Gov. Rick Scott signed Senate Bill 90, putting the
changes proposed in Amendment 4 into law. The law is most associated with solar
energy but it also covers other types of renewable energy devices, such as
windmills.
Patrick Altier, president of the Florida Solar Energy
Industries Association, and owner of SolarTrek Inc, Ocala, said while the new
law appears to offer more consumer protection, it has created a lot of
uncertainty and confusion in the industry. While commercial installations will
reap a definite benefit, what seems like a benefit for residential solar is, in
real life, a step back.
“Amendment 4 was a commercial property tax exemption. There
will be no change that will make residential solar more accessible for
Floridians. For that reason, I do not anticipate a large increase in
residential sales strictly due to the new bill. With the language added by the
House, it may actually have the opposite effect on residential installations
and slow installations. Only time will tell. We do anticipate an uptick in
commercial installations due to SB 90,” Altier said.
Susan Glickman, Florida director, Southern Alliance for
Clean Energy, agrees. “Some of the big growth is likely to come in the form of
commercial properties, such as beer distributors,” she said. “They are more
likely to have the funding.”
Since 2014, homeowners who installed rooftop solar or other
renewable energy devices on or after Jan. 1, 2013 have been protected from
their property assessments being raised due to the systems.
Here’s what you might not know about the new law:
• It gives no new tax breaks to homeowners who own solar,
but extends the exemptions through 2037. However, some say that because the new
law requires 31 disclosures in writing to consumers, such as a calculation of
energy savings, financing and roof warranties, it could impair residential
solar growth.
• The new tax breaks apply only to rooftop solar on
commercial buildings and utility-scale solar and only to those systems
installed after Jan. 1, 2018. The law is not retroactive, meaning that existing
commercial rooftop or utility-scale solar projects cannot receive any of the
tax breaks. The exemptions expire on Dec. 31, 2037.
• New utility-scale solar projects will be among the biggest
beneficiaries of the tax breaks. But if they are built in one of 30 Florida
counties considered “fiscally-constrained,” the developers will have to pay the
full taxes.
Tim Hughes, an attorney with Shumaker, Loop & Kendrick,
LLP in Tampa, whose clients include utility-scale solar developers, said that
for commercial solar and utility-scale solar farms, the new law exempts 80
percent of the taxable value of solar energy equipment, such as solar panels,
from county ad valorem taxation until December 31, 2037.
Ownership of the solar equipment determines whether it
is characterized as either real property or tangible personal property for tax
purposes. If a landowner owns the solar equipment, 80 percent of the value of
the solar installation will be excluded from real property taxes. If a tenant
on the property owns the solar equipment, 80 percent of the value of the solar
equipment will be exempted from tangible personal property tax instead, Hughes
said.
“Our clients are definitely seeing value in the exemptions
and finding that this helps improve the financial feasibility of projects,”
Hughes said.
FPL spokeswoman Alys Daly said that FPL will save millions
in taxes over the next 20 years due to the new exemptions, and customers will
benefit from the cost savings.
The tax exemption, however, is not without a few exceptions,
Hughes explained.
Projects under development in any of 30 Florida counties
considered fiscally constrained and that file applications for comprehensive
plan amendments or planned unit development zoning in those counties on or
before Dec. 31, 2017, will not be eligible for the tax breaks.
While utility-scale solar is moving ahead rapidly, Altier
said he has concerns that the new law’s requirement of lengthy disclosures to
consumers could be a a turn-off.
“We want to have the highest level of ethics and the best
solar installers in the country doing work for Florida residents. The house
companion bill, HB1351 had 19 pages of required disclosures,” Altier said.
“Although some of the most onerous language was removed, it will add
significant confusion to the process of a residential solar installation
possibly turning people away.
“It was adopted from Arizona and although we have not had
any appreciable number of complaints against solar installers, and it was not
part of the voter approved Amendment 4, we will have enough disclosures for a
solar system to rival buying a new home. This will not increase the adoption of
residential solar,” Altier said.
Maggie Clark, state affairs manager, Southeast, Solar Energy
Industries Association, Washington, D.C., said Florida’s new law “includes
strong protections and increased transparency for consumers, helping ensure
they fully understand solar transactions.”
She said the law also has other benefits.
“The new law reduces tax penalties for businesses who go
solar, which had previously made solar less economically attractive,” she said.
“Commercial property owners who add new solar systems will pay 80 percent less
in property tax penalties than they would have paid before the new law. This is
true regardless of whether they purchase or lease their system,” Clark said.
While it has been stated that residential property owners
will be exempt from tangible taxes on solar equipment, that has always been the
case. Tangible taxes apply only to equipment owned by businesses, such as
computers, machinery and solar equipment.
The reason the solar industry pushed for the residential
exemption is that, previously, a solar company leasing panels to a homeowner or
business would have had to pay the tangible tax. Now the change opens the door
for companies to lease panels because they won’t have to pay the tangible tax.
Justin Hoysradt, CEO of Vinyasun in West Palm Beach, said
his company plans “to offer leases in 2018 as soon as the implementation
language surrounding consumer protection” is in place.
“While ownership of solar is gaining steam, there are many
people in Florida, who will benefit from lease options,” he said. “These are
primarily, middle-income families and folks on fixed incomes who do not pay
enough or any federal income taxes, making it impossible for them to monetize
the tax credit,” Hoysradt said.
Florida law prohibits power purchase agreements, but not
leasing, and the two are commonly confused, Hoysradt said.
Both are forms of “third party financing” models. Florida is
one of only four states that explicitly ban the third-party sale of retail
electricity, via a PPA, Hoysradt said.
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