Property taxation: active solar energy systems: customer sited: extension.

Plain English Breakdown

The official source material does not specify if there are additional duties imposed on local tax officials beyond those necessary for implementing the bill's provisions.

Extending Property Tax Exemptions for Solar Energy Systems

AB-2389 extends property tax exemptions for customer-sited active solar energy systems in California until January 1, 2031.

What This Bill Does

• Extends the exclusion of newly constructed active solar energy systems from property taxes through January 1, 2031.
• Limits the exemption to systems with a capacity of up to 2 megawatts and those installed on public entity properties.
• Requires tax savings for public entities to be used to maintain or reduce lease costs for future agreements.

Who It Names or Affects

• Homeowners and businesses installing solar energy systems in California.
• Public entities with active solar energy systems installed on their property.

Terms To Know

Active Solar Energy System

A system that uses mechanical or electrical devices to convert sunlight into usable energy, such as heating water or generating electricity.

Customer-Sited

Refers to solar energy systems installed on the property of a customer rather than at a central location.

Limits and Unknowns

• The bill does not provide state reimbursement for local agencies' lost property tax revenues due to these exemptions.
• Local tax officials will have additional duties imposed by this legislation, which may require more resources or training.
• The effectiveness of the tax savings on future lease agreements is uncertain and depends on how public entities choose to use the saved funds.

Official Summary Text

AB 2389, as amended, Irwin.
Property taxation: active solar energy systems: customer sited: extension.
The California Constitution generally limits the maximum rate of ad valorem tax on real property to 1% of the full cash value of the property and defines “full cash value” for these purposes as the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment. Pursuant to constitutional authorization, existing property tax law excludes from the definition of “newly constructed” for these purposes the construction or addition of any active solar energy system, as defined, through the 2025–26 fiscal
year.
year, including the construction of an active solar energy system incorporated by the owner-builder in the initial construction of a new building that
the owner-builder does not intend to occupy or use.
This bill would extend, for lien dates commencing on or after January 1, 2027, and before January 1, 2031, the above-described exclusion for customer-sited, active solar energy systems with a system size of less than or equal to 2 megawatts and for customer-sited, active solar energy systems that are sited on the property of a public entity customer.
The bill would require that, for active solar energy systems sited on the property of a public entity customer, tax savings be utilized to maintain the affordability of, or to reduce the cost of, future lease agreements. The bill would limit the exclusion for active solar energy systems incorporated by the owner-builder to buildings where the initial construction permit for the new building is dated before January 1, 2027.
The bill would
make conforming changes. By imposing additional duties on local tax officials, the bill would impose a state-mandated local program.
Existing law requires bills authorizing a new tax expenditure, as defined, to contain, among other things, specific goals that the tax expenditure will achieve, detailed performance indicators, and data collection requirements.
This bill also would include additional information required for bills authorizing a new tax expenditure.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This
bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.
Existing law requires the state to reimburse local agencies annually for certain property tax revenues lost as a result of any exemption or classification of property for purposes of ad valorem property taxation.
This bill would provide that, notwithstanding those provisions, no appropriation is made and the state shall not reimburse local agencies for property tax revenues lost by them pursuant to the bill.
This bill would take effect immediately as a tax levy.

Current Bill Text

Download Bill PDF