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The Split-Roll Initiative Would Inadvertently Trigger Massive Property Tax Increases on Solar Energy Property and Jeopardize the Industry

In California, property tax is re-assessed under two circumstances: when property is sold, and when new construction is added to a property. 

In 1980, California voters changed the state’s constitution and authorized the legislature to exclude from the term “newly constructed” the construction or addition of any “active solar energy system”. Revenue and Taxation Code Section 73 was then enacted, which excludes active solar energy systems from “new construction”. The Section 73 exclusion applies to solar systems installed through 2024. 

However, a “split-roll” initiative is expected to be on the ballot in November that will require all commercial and industrial property “that is not otherwise exempt under the Constitution” to be assessed at its full cash value, determined annually. The solar property tax “exclusion” is not an “exemption” from property tax. This change would mean that all solar systems currently in place and excluded from property tax would now be subject to property tax at their full fair market value, despite the fact that voters enacted a property tax incentive decades ago to encourage the deployment of solar energy throughout the state. 

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