Kalamazoo-area solar farm, township continue fight over property taxes |... http://www.mlive.com/news/kalamazoo/index.ssf/2013/06/kalamazoo_so...

Michigan

Kalamazoo-area solar farm, township continue

fight over property taxes

12

Gallery: Kalamazoo Solar farm run by father and son team

By Erin Gignac | egignac@mlive.com

Email the author | Follow on Twitter
on June 29, 2013 at 6:45 AM

KALAMAZOO, MI -- It's been more than two years since Sam Field, one of the owners of a Kalamazoo-area solar farm, was
handed a $27,689 tax bill for the property on which the business operates.

The amount exceeded the value of the electricity the solar farm produced, Field said, and while some of the issue has been
resolved with refunds for large tax bills in 2010, 2011 and 2012, Kalamazoo Solar and Charleston Township are still fighting over
how the array of 756 solar panels should be taxed going forward.

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Kalamazoo-area solar farm, township continue fight over property taxes |... http://www.mlive.com/news/kalamazoo/index.ssf/2013/06/kalamazoo_so...

In February, the company paid $1,466 on a winter tax bill but was originally charged $20,395 before the Michigan Tax
Tribunal reduced the amount, he said.

The solar array, located near Galesburg, will make a profit this year but only marginally, Field said.

"If you ask us to pay more in taxes than what it's worth, how can renewable energy ever work?" Field said. "The property taxes are
a big obstacle to people buying solar power. If you want to incentivize renewable energy, abate the property tax."

The main issue has to do with the way Charleston Township classifies the property for tax purposes. Originally, the property was
assessed as real property based on State Tax Commission guidelines, said Fran Bell, Charleston Township supervisor. The
guidelines indicate that once structures are attached to the real property, they become real property, Bell said.

Field fought the assessment, arguing that the solar panels should have been classified as personal property, as other business
equipment is, and in recent rulings, the Michigan Tax Tribunal and the Michigan State Tax Commission agreed. A classification of
personal property means Kalamazoo Solar's taxes would decrease over the years as the value of his solar panels decreased.

Kalamazoo Solar lost money in 2010, the first year after the panels were installed, because of the high taxes, Field said. Each
year, the business pays $60,000 to pay off the solar equipment, which was an initial investment of $735,000 when the company
installed the 756 panels in 2009. The project started operating on Feb. 17, 2010.

The business earns 45 cents per kilowatt hour, or $99,000 a year, from Consumers Energy for the array that produces 220,000
kilowatt hours of electricity. With that revenue, taxes, rent, maintenance and other costs need to be paid.

"The tax rate was a business killer," Field said. "We invested $735,000 to this project and we were losing money because of the
taxes every year."

Kalamazoo Solar appealed the first $27,689 property tax bill in 2011 and won his case with the Michigan Tax Tribunal. Kalamazoo
County and Charleston Township refunded $55,000, covering overpayment of property taxes paid in 2010, 2011 and 2012, he
said.

"The one issue I have with the Michigan Tax Tribunal is that there is no consistency in their decisions," Bell said. "There is no way
of anticipating and understanding how they would rule."

Before this year, Bell said he had not received a consistent answer from the Michigan State Tax Commission on whether the
panels should be real property or personal property.

The Michigan State Tax Commission ordered on June 13 that the solar panels were personal property and a Michigan Tax Tribunal
judge also ordered on Dec. 21, 2012 that the solar array be taxed as personal property.

"We're following the dictates of the commission," Bell said. "The initial process we didn't agree with, so we opposed."

This year, Charleston Township has reclassified the solar array as a "Building on Leased Land," which still falls under the category
of real property but is different than the original classification, said Brenda Schug, Charleston Township treasurer. Kalamazoo
Solar's 2013 property assessment notice in February valued his solar array at $331,800, he said.

In response, Field has filed two separate appeals. First, he appealed the real property classification to the Michigan State Tax
Commission, which supervises administration of property tax laws. Second, he appealed the 2013 assessed value of his land to
the Michigan Tax Tribunal, the administrative court that hears appeals relating to individual, property, and business tax matters
involving taxes enforced by the Michigan Department of Treasury.

Field said he doesn't know what his taxes will be on the 2013 assessed value, but he appealed based on past experience with
Charleston Township.

In the past, Charleston Township assessed the value of the solar array at a yearly average of $333,025. On June 13, the Michigan

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State Tax Commission lowered the assessed value for 2011 and 2012 to $295,148 and $251,566 respectively, which was a
decrease of $43,582 each year.

Though the amount has been reduced in the past by the state, Field will still pay some property tax for the past three years. On
May 28, Charleston Township voted 3-2 not to exempt alternative energy property from paying property taxes for 2011 and 2012.
The board also denied a Michigan Next Energy Authority Certificate, which was a property tax exemption for alternative energy
systems.

Charleston Township officials said they aren't opposed to alternative energy. They're opposed to losing the little money they
have, he said.

"We need those funds," Bell said. "Support from the state has been cut regularly."

Bell added, "If they want to make that tax exempt, make that tax come out of state government."

Field said he is not looking for a large tax break.

"I'm not someone who doesn't like paying taxes," Field said. "I just don't want to pay what I don't owe."

Email Erin at egignac@mlive.com and follow her on Twitter at @roseering.

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