Assigned to FIN                                                                                                                      FOR COMMITTEE

ARIZONA STATE SENATE

Fifty-Fourth Legislature, First Regular Session

FACT SHEET FOR H.B. 2493

appraisal methods; solar energy devices

Purpose

            Considers a solar energy device characterized as personal property to have no value and to add no value. Prescribes, if the current statute is adjudicated invalid, a formula to assess a solar energy device's full cash value (FCV).

Background

            Current statute considers solar energy devices, grid-tied photovoltaic systems and any other device or system designed to produce solar energy primarily for on-site consumption (device or system) to have no value and to add no value to the property on which such a device or system is installed (A.R.S. § 42-11054). A solar energy device is a system or series of mechanisms that is designed primarily to provide heating, provide cooling, produce electrical power, produce mechanical power, provide solar daylighting or provide any combination of these uses by collecting and transferring solar-generated energy by either active or passive means (A.R.S.
§ 44-1761).

            In 2014, the Arizona Department of Revenue (ADOR) issued notices of value to businesses that own solar panels and lease them to residential and commercial property owners, stating that the solar panels had been assigned FCVs and that taxes would be assessed for tax year 2015. In SolarCity Corp. v. ADOR (2018), the Arizona Supreme Court affirmed that ADOR lacks the statutory authority to value leased solar panels and remanded for the tax court to determine whether county assessors are authorized to value solar panels and, if so, whether a zero valuation is appropriate.

            A Joint Legislative Budget Committee fiscal note has been requested.

Provisions

1. Specifies that a device or system, whether leased or owned, is considered to have no value when characterized as personal property and to add no value to the real property on which it is installed.

2. Prescribes, if any portion of the statute stating that a device or system has no value is adjudicated invalid, an FCV of $500 for a device or system up to 500 kilowatts and $1 per kilowatt for each additional kilowatt.

3. Makes technical and conforming changes.

4. Becomes effective on the general effective date, retroactive to tax years beginning January 1, 2015.

House Action

WM                 2/13/19      DP       8-2-0-0

3^rd Read          2/26/19                  48-11-1

Prepared by Senate Research

March 11, 2019

CS/LC/kja