Mar 01 - The Santa Fe New Mexican



One of the bills awaiting Gov. Bill Richardson's signature would protect homeowners who install solar energy systems from seeing their property tax bills rise.

House Bill 233, sponsored by Rep. Mimi Stewart, D-Albuquerque, excludes solar energy system installations from the kinds of property improvements that trigger a revaluation of real estate for tax purposes.

"We want people to put solar systems on their houses," Stewart explained. "We want to encourage them to pull themselves off the grid. It doesn't make sense for property taxes go up (when they install solar) because that discourages them from doing so."

Currently when a homeowner makes improvements such as a room addition, county assessors reappraise the property and that usually results in a property tax increase. A solar thermal or solar electric system, which costs thousands of dollars, increases a property's appraised value much like a room addition.

 The resulting property tax increase could offset any energy cost savings for the property owner, according to an analysis by the Legislative Finance Committee and the state Tax and Revenue Department. That makes installing solar systems financially less attractive.

State law caps increases in property tax valuations at 3 percent annually until a home is sold, or unless improvements are added to the property. The state law is being challenged in court by people who say it unfairly treats new owners differently from those who have held their properties for long periods.

The bill now on the governor's desk would expand the pool of properties exempt from market value appraisals until they are sold.

While HB 233 would remove from tax rolls some property value growth, the impact on local government revenue would be minimal because tax rates are adjusted to offset the value change, according to an LFC analysis.

Stewart said the bill supports efforts under way in Santa Fe County to encourage more homeowners to install solar thermal and photovoltaic systems.

The county is the state's first to develop a special renewable-energy tax assessment district allowed under legislation passed last year. Once it's established, homeowners can opt into the special assessment district and then apply for low-interest, long-term loans to install solar, wind or geothermal energy systems. The loans are paid back through property taxes.

HB 233 would apply to any solar energy systems installed, whether or not the homeowner participates in a renewable-energy tax assessment district or takes advantage of federal and state solar tax credits.

The county's economic development director, Duncan Sill, will be hosting public forums beginning sometime in March in different communities to explain how the tax districts work.

Contact Staci Matlock at 986-3055 or smatlock@sfnewmexican.com.

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