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Missoula County launches new property tax allowance aimed at solar panels

Solar Panel
Posted at 2:04 PM, Feb 14, 2022
and last updated 2022-02-14 16:10:35-05

MISSOULA — Business owners in Missoula County have a new option to help manage the cost of installing renewable energy systems.

Commissioners last week voted unanimously in favor of establishing a program that gives commercial property owners the option to repay the cost of renewable energy upgrades through their property taxes.

The Commercial Property-Assessed Capital Enhancements Act, or CPACE, was authorized in Montana during the 2021 legislative session. Counties can opt-in, and Missoula County is the first to do so in Montana, according to Diana Maneta, Missoula County sustainability program manager.

CPACE is available to commercial, agricultural, industrial, nonprofit, or multifamily properties with four or more homes, for projects costing at least $50,000. Property owners who opt-in pay off the installation cost using a loan tied to their property taxes.

There is no tax increase to commercial properties that do not participate.

“It’s not a tax, it’s just a repayment mechanism,” Maneta said.

Types of renewable energy projects covered include solar panels, water conservation upgrades, more efficient lighting, heating and cooling, improved insulation, and electric vehicle charging stations.

The line item on the property taxes is tied to the property, not the owner. So if a person decides to sell, they will not be burdened with paying off the remainder before selling.

Just like other property improvements—Maneta mentioned sidewalk maintenance as an example—the next owner assumes those financial responsibilities.

To be approved, money saved on utility bills must be equal to or greater than the total upfront cost.

“I am excited for there to be more options for business owners to save energy and to install renewable energy systems,” Maneta said. “I think the more options available, the easier we make it for folks, the more energy conservation projects we’ll see move forward.”

Andrew Valainis, executive director of the Montana Renewable Energy Association, said CPACE helps diminish the upfront cost of installing renewable systems. With CPACE, property owners interested in transitioning to solar panels, for example, don’t have to have the money in hand for the installation to move forward.

Commercial property owners work with banks who provide loans covering the installation costs for terms up to 20 years. Missoula County acts as the collector and pays the bank back using the property owners’ property tax.

This system opens the possibility of low-interest rates from banks since loans are being paid back by the county, not the property owner.

The property taxes can’t be separated from the loan, Commissioner Josh Slotnick said. They get rolled together.

“What I really hope is that we get a whole lot more green energy and energy-efficient projects out there on the commercial landscape because this makes them affordable,” Slotnick said. Missoula County Commissioners will vote on a final resolution, officially creating the CPACE program, on Feb. 24.