AGENDA ITEM #3.1
September 20, 2011
Introduction
MEMORANDUM
September 16, 2011
TO:
FROM:
SUBJECT:
County Council
Amanda Mihill, Legislative
Attomey~
Introduction:
Expedited Bill 28-11, Property Tax Credit - Renewable Energy ­
Amendments
Expedited Bill 28-11, Property Tax Credit - Renewable Energy - Amendments, sponsored by
Council Vice President Berliner and Councilmembers Leventhal, Floreen, and Riemer, is scheduled
to be introduced on September 20, 2011. A public hearing is tentatively scheduled for October
11 at 1:30 p.m.
Bill 28-11 would suspend the property tax credit program for solar and geothermal energy
devices as of September 20. New applications for the credit could only be granted after
September 20, 2011 if an individual enters into a contract for eligible costs on or before
September 20, 2011 and applies for the credit on or before September 20, 2012. Bill 28-11
would address the backlog of applications for the credit as described in an August 8
memorandum from Joseph Beach, Director of Finance (©4). Bill 28-11 would also clarify that a
property owner must own a solar or geothermal energy device or energy conservation device to
be eligible to receive a certain property
tax
credit (i.e., leased devices would not be eligible for
the credit).
This packet contains:
Expedited Bill 28-11
Legislative Request Report
Memo from Mr. Beach
Circle
#
1
3
4
F:\LAW\BILLS\1128 Property Tax Credit-Renewable Energy\[ntro MemoDoc
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Expedited Bill No.
28-11
Concerning: Property Tax Credit ­
Renewable Energy - Amendments
Draft No. _1_
Revised:
9/17/2011
Introduced:
September 20, 2011
Expires:
March 20, 2013
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ _ __
Effective:
_~:---
_ _ _ _ _ __
Sunset Date: -.:..:.No=:.:on:=-=e'-::---::--_ _ __
Ch. _ _, Laws of Mont. Co. _ _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
By: Council Vice President Berliner and Councilmembers Leventhal, Floreen, and Riemer
AN EXPEDITED ACT
to:
(1 )
suspend the property tax credit for solar or geothermal energy devices;
(2)
clarifY
that a property owner must own a solar or geothermal energy device or
energy conservation device to be eligible to receive a property tax credit; and
(3)
generally amend County law related to the renewable energy property tax credit.
By amending
Montgomery County Code
Chapter 52, Taxation
Section 52-18R
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Double boldface bracketsll
* *
*
Heading or defined term.
Added to existing law
by
original
bill.
Deletedfrom existing law
by
original
bill.
Added
by
amendment.
Deletedfrom existing law or the
bill by
amendment.
Existing law unaffected
by bill.
The County Council for Montgomery County, Maryland approves the following Act:
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EXPEDITED BILL
No,
28-11
1
Sec.
1.
Section
52-18R
is amended as follows:
52-18R.
Property tax credit- renewable energy.
2
3
4
*
(b)
*
*'
Credit.
As authorized by § 9-203 of the Tax-Property Article, an
5
individual who owns and occupies a single-family home that uses a
solar or geothermal energy device or an energy conservation device
may receive a credit against the County property tax.
An
individual
must only receive
~
credit for
~
device that the individual owns.
6
7
8
9
10
11
*
(g)
*
*
Applicability.
The credit authorized by this Section applies to any tax
year beginning after June 30, 2008. However, the Director must not
grant
~
credit for
~
solar or geothermal energy device for any application
received after September 20, 2011, unless an individual:
12
13
14
ill
ill
enters into
~
contract for eligible costs on or before September 20,
2011; and
applies for the credit on or before September 20,2012.
15
16
17
18
19
Sec. 2. Expedited Effective Date.
The Council declares that this Act is necessary for the immediate protection of
the public interest. This Act takes effect on the date when it becomes law.
Approved:
20
21
Valerie Ervin, President, County Council
Date
22
Approved:
23
Isiah Leggett, County Executive
Date
(0
f:\law\bills\1128 property tax credit-renewable energy\bill 1.doc
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LEGISLATIVE REQUEST REPORT
Expedited Bill 28-11
Property Tax Credit
-
Renewable Energy
-
Amendments
DESCRIPTION:
Expedited Bill 28-11 would clarify that a property owner must own a
solar or geothermal energy device or energy conservation device to
be eligible to receive the property tax credit; and suspend the
property tax credit for solar or geothermal energy devices.
There is currently an approximate 6 year backlog of applications for
the property tax credit for solar and geothermal energy devices.
Additionally, current law is ambiguous as to whether a person can
lease, or must own, a device to be eligible for the property tax credit.
To suspend the property tax program for renewable energy devices
and clarify existing law.
Department of Finance.
To be requested.
To be requested.
To be requested.
To be researched.
Amanda Mihill, Legislative Attorney, 240-777-7815
To be researched.
PROBLEM:
GOALS AND
OBJECTIVES:
COORDINATION:
FISCAL IMPACT:
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
APPLICATION
WITHIN
MUNICIP ALITIES:
PENALTIES:
N/A
F:\LAW\BILLS\1128 Property Tax Credit-Renewable Energy\Legislative Request Report.Doc
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't(.L
c....C-­
SfJ
I-\.­
C,"I·S
DEPARTMENT OF FINANCE
Isi(lh l.eg,g.:11
('tlU/lly
r;xI.'('ulin'
Joseph F, Beach
IJirrn:lor
MEMORANDUM
August 8, 2011
"
..
';
TO:
Valerie Ervin
Council Preside
t
064342
FROM:
SUBJECT:
Renewable Energy Credit backlog
As a result of strong demand by County residents for the Renewable Energy
Credit, which has an annual funding cap of $400,000, there is a current and significantly growing
backlog of applications for the credit. The purpose ofthis memorandum is to make the County
Council aware of this trend.
The Renewable Energy Credit program was introduced effective levy year 2008
(Fiscal Year 2009) with an initial annual funding cap of $250,000. This property tax credit is
provided for eligible geothermal and solar energy devices and is the lesser of $5,000 or 50% of
the cost of the system that provides heating or cooling, or generates electricity. The credit is the
lesser of$1,500 or 50% of the cost of the system for a solar or geothermal hot water heater. In
2009, the County Council increased the annual funding to $400,000 (Bill 39-09), effective levy
year 2009. Although the increase in annual funding allowed more taxpayers to receive the credit
on their property tax bill, the demand for the credit quickly exceeded the annual funding cap.
Even though the program has been in existence for only three years, due to the
excess demand for the credit, the backlog in issuing credits by reducing the property tax bill for
applicants
has
doubled each year to 501 at the close oflevy year 2010 (Fiscal Year 2011). To
illustrate the trend, the backlog after the first year (levy year 2008) was only 100, but grew to 245
(levy year 2009), and to 501 (levy year 2010). Since the majority of applications qualify for the
$5,000 credit, that suggests a $2.5 million backlog. Assuming a $400,000 annual cap indicates
that some taxpayers that have been approved for the credit but are in the queue may have to wait
six years before they see the credit reflected on their property tax bill. Meanwhile, new
applications will be received making the backlog even longer over the coming years.
Office
onroe Street,
15t~
[)f
the Directnr
Floor, Rockville,
Maryland 20850· (240) 777-8860 • FAX (240)
wVI'w.montgomerycountymd.gov
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Valerie Ervin, Council President
August 8, 2011
Page 2
Renewable Energy Tax Credit
Data
New
Applicallons
Processed
LY 2008
LY
2009
LY
2010
Prior Year
Applications
Processed
0
44
57
Total
Applications
Processed
55
103
118
$
$
$
Amount
Processed
250,000
400,000
400,000
Applications
Receiled
155
204
317
Annual
Backlog
100
145
256
Cumulatiw
Backlog
100
245
501
55
59
61
Note:
Amounls based on maximum
$5,000
credil \8Iue muKiplied
by
applications
Total Applications is sum
of
new and prior
year
applications processed
LY2008
is
ftrst year 01
cred~
The table above illustrates the trend of increasing applications, from 155 (2008) to
317 (2010), and shows that even though the number of taxpayers receiving the credit more than
doubled from 2008 to 2010 (from 55 to 118) - the amount of funding available was insufficient
to prevent the backlog from rising to 501 by the end of June 2011.
Since we recognize that some taxpayers have made the investment in this
technology expecting the credit within a reasonable timeframe, and that this unintended delay in
receiving the credit may create financial hardship for some County residents, the Department of
Finance has placed a notice on our website to inform applicants of the delay in receiving the
credit. Finance will also work with the Department of Environmental Protection (DEP) to obtain
a list of contractors that install the renewable energy devices and inform them of the time delay,
I also want to take this opportunity to inform the County, Council that Finance is
administering the credit in compliance with the County law, which requires issuing the credit on
a first-come-first-serve basis and with a maximum allowable credit amount of $400,000 for this
program in each fiscal year. In this case, however, the success of the credit program exceeds the
allowable funding creating an immediate customer service challenge and a long-term funding
liability in excess of what was anticipated at the onset.
JFB:cmc