Bill Mandating Exclusion of Rooftop Solar from Real Property Amended to Limit Impact on Local Revenues

March 1, 2022

A bill mandating that rooftop solar installations be exempt from local taxation was amended to limit its scope and application so as to lessen its impact on local revenue collection. SB 686 (Mason), as introduced, would have mandated that any rooftop or ground-mounted solar installations, serving just the energy needs of the property to which they are located (i.e., behind the meter), shall be a separate class of property and entirely exempt from local real estate taxes.

VACo spoke in opposition to the bill stating that localities should be given the flexibility, as is current law, to exempt these improvements wholly or partially from local real estate tax. It is important to note that any county that does not currently provide a full tax exemption to such improvements to real property will see a reduction in revenue. SB 686 passed unanimously in the Senate.

In order to address the concerns raised by VACo, the patron of the bill agreed to limit its application only to (1) residential and agriculturally zoned property; and (2) to installations with a rated capacity or 25 kilowatts or less. Additionally, and at the request of VACo, the effective date of the legislation is now January 1, 2023. The purpose of this amendment was to avoid counties having to provide rebate assessments for the current calendar tax year.

The bill as amended in committee passed the House and will now go back to the Senate to get their approval of the changes.

VACo Contact: Joe Lerch, AICP

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