SB 841
Department of Legislative Services
Maryland General Assembly
2021 Session
FISCAL AND POLICY NOTE
Third Reader - Revised
Senate Bill 841 (Senator Hershey, et al.)
Budget and Taxation Ways and Means
Property Tax - Community Solar Energy Generating Systems
This bill alters the assessment and taxation of specified community solar energy generating
systems. The bill takes effect June 1, 2021, and applies to taxable years beginning after
June 30, 2021.
Fiscal Summary
State Effect: None.
Local Effect: Local personal property tax revenues may decrease by a significant amount
beginning in FY 2022, to the extent exemptions are granted. Based on the existing accepted
capacity of community solar energy generating systems, local revenues may decrease by
approximately $569,400 in FY 2022 and by $3.5 million in future years once projects that
are currently approved become operational. The potential revenue decrease in future years
does not include the impact of any community solar energy generating system that may be
approved in the future. Local expenditures are not significantly affected.
Small Business Effect: Minimal.
Analysis
Bill Summary: The bill authorizes county and municipal governments to exempt personal
property that is a community solar energy generating system from the county or municipal
personal property tax if the system is installed (1) on the rooftop of a structure or (2) over
a parking garage, surface parking lot, or roadway. The bill also establishes community solar
energy generating system as a new subclass of personal property and enables county
governments to impose a different personal property tax rate on community solar energy
generating system property. In addition, the bill prohibits the State Department of
Assessments and Taxation (SDAT) from considering the value of income, including
income related to rights to use the underlying real property attributable to the installation
of a community solar energy generating system when determining a real property
assessment.
Current Law: Local governments have the authority to impose personal property taxes
on solar photovoltaic property. SDAT indicates that local governments collected
approximately $3.1 million in personal property tax revenues from solar energy property
in fiscal 2018.
Personal property is divided into the following subclasses: (1) stock in business;
(2) distilled spirits; (3) operating personal property of a railroad; (4) operating personal
property of a public utility that is machinery or equipment used to generate electricity or
steam for sale; (5) all other operating personal property of a public utility; (6) machinery
and equipment, other than operating personal property of a public utility, that is used to
generate electricity or steam for sale or hot or chilled water for sale that is used to heat or
cool a building; and (7) all other personal property that is to be assessed.
The county tax rate applicable to personal property and the operating real property of a
public utility may not exceed 2.5 times the rate for real property.
Community Solar Energy Generating System Pilot Program
Chapters 346 and 347 of 2015 required the Public Service Commission (PSC) to establish
a three-year Community Solar Energy Generating System Pilot Program, subject to
specified conditions. Such a system, in addition to other requirements, must have at least
two subscribers, but a subscriber limit is not specified in statute. Under PSC regulations, a
system may have up to 350 accounts, unless the electric company has developed an
automated billing function, in which case there is no limit. PSC regulations also increase
authorized capacity additions each year. According to PSC, the program, if fully
subscribed, would add about 200 megawatts under the existing 1,500-megawatt net
metering cap. Chapters 461 and 462 of 2019 extended the Community Solar Energy
Generating Systems Pilot Program through December 31, 2024.
Local Fiscal Effect: Local personal property tax revenues may decrease by a significant
amount beginning in fiscal 2022 to the extent that local governments exempt personal
property of community solar energy generating systems from taxation or whether they
approve a tax differential for the affected personal property. The actual revenue decrease
depends on the number of community solar energy generating systems located in each
jurisdiction, the value of personal property, and local personal property tax rates.
SB 841/ Page 2
Personal Property Tax Exemption
PSC indicates that 139.92 megawatts of community solar energy generating system
capacity has been approved in jurisdictions across Maryland. Of this amount,
22.57 megawatts was operational as of September 2020.
Data from the National Renewable Energy Laboratory (NREL) indicates that the average
cost to install a commercial solar energy generating system in Maryland totals $1.77 per
watt. NREL data also indicates that equipment and hardware make up approximately
45% of the total installation costs. Based on this information, the personal property base
for each one megawatt community solar energy generating system would total
approximately $800,000.
Based on the approved megawatt capacity of community solar energy generating systems
and cost data detailed above, it is estimated that construction costs for these projects when
completed will total approximately $247.7 million. Of this amount, equipment and
hardware (personal property) will total $111.4 million.
Assuming a weighted average local personal property tax rate of $3.1675 per $100 of
assessment, local government revenues may decrease by approximately $569,400 for
community solar energy generating systems currently in operation and $3.5 million in
future years once the projects that are currently approved become operational. This
potential revenue decrease does not include the impact of any community solar energy
generating system that may be added in the future. As solar energy generating systems
become more viable and utilized as a renewable energy source, the potential decrease in
local property tax revenues from the personal property exemption will be substantially
higher than currently estimated. Any potential local revenue decrease will be dependent on
whether the local government approves the tax exemption.
Personal Property Tax Rate Differential
Under the bill, county governments are authorized to impose a personal property tax rate
on community solar energy generating systems that is different than the rate imposed on
other personal property. However, the tax rate cannot exceed 2.5 times the rate for real
property. This provision may result in a decrease in local personal property tax revenues
assuming that counties impose a lower personal property tax rate on community solar
energy generating systems.
SB 841/ Page 3
 Additional Information
Prior Introductions: None.
Designated Cross File: HB 954 (Delegate Washington) - Ways and Means.
Information Source(s): Baltimore and Frederick counties; State Department of
Assessments and Taxation; Public Service Commission; National Renewable Energy
Laboratory; Department of Legislative Services
Fiscal Note History: First Reader - February 17, 2021
rh/hlb Third Reader - March 29, 2021
Revised - Amendment(s) - March 29, 2021
Analysis by: Michael Sanelli Direct Inquiries to:
(410) 946-5510
(301) 970-5510
SB 841/ Page 4


Statutes affected:
Text - First - Property Tax – Solar Energy Systems: 7-306.2 Tax Property, 6-302 Tax Property, 8-109 Tax Property, 7-402 Tax Property, 8-101 Tax Property, 8-105 Tax Property
Text - Third - Property Tax - Community Solar Energy Generating Systems: 7-306.2 Public Utilities, 6-302 Public Utilities, 8-109 Public Utilities, 7-402 Public Utilities, 8-101 Public Utilities, 8-105 Public Utilities