BILL ANALYSIS

C.S.H.B. 2500

By: Bohac

Ways & Means

Committee Report (Substituted)

BACKGROUND AND PURPOSE

Interested parties assert that the method for appraising solar facilities for property tax purposes is unclear and that this ambiguity has produced inconsistent results by the state's appraisal districts. It has also been reported that some investors are discouraged from looking at utility-scale projects in Texas due to cost implications of such an ambiguity. The parties are concerned that, in contrast to conventional and other alternative electric generating facilities, the unique nature of solar technology's rapid evolution makes it difficult for appraisal districts to accurately determine the value of a solar facility. C.S.H.B. 2500 seeks to clarify the process for appraising certain solar property to ensure that Texas is competitive with other states in its efforts to promote this growing alternative energy industry.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.

ANALYSIS

C.S.H.B. 2500 amends the Tax Code to require a chief appraiser to use the cost method of appraisal to determine for property tax purposes the market value of solar energy property that is used for a commercial purpose, including commercial storage devices, power conditioning equipment, transfer equipment, and necessary parts for the devices and equipment, and that is constructed or installed on or after January 1, 2014. The bill requires the chief appraiser, in determining the market value of solar energy property using the cost method of appraisal, to use cost data obtained from generally accepted sources; make any appropriate adjustment for physical, functional, or economic obsolescence and any other justifiable factor; and calculate the depreciated value of the property by using a useful life that does not exceed 10 years. The bill prohibits the chief appraiser from determining in any tax year the depreciated value to be less than 20 percent of the value computed after making the appropriate adjustments for obsolescence and other justifiable factors to the value determined by using cost data obtained from generally accepted sources.

EFFECTIVE DATE

January 1, 2014.

COMPARISON OF ORIGINAL AND SUBSTITUTE

While C.S.H.B. 2500 may differ from the original in minor or nonsubstantive ways, the following comparison is organized and highlighted in a manner that indicates the substantial differences between the introduced and committee substitute versions of the bill.