Archive for the 'Taxes' Category
Solar Power for Connecticut
Last evening I attended a seminar on residential solar systems presented by Alteris Renewables, a firm that specializes in integration and installation of renewable energy systems. This particular talk was focused on photovoltaic solar systems and the associated Connecticut state assistance program.
The earth receives huge amounts of energy every year in the form of sunlight. Photovoltaic solar systems are able to capture some of that energy and convert it directly into electricity. Homeowners can deploy systems that connect to the power grid, so that during sunny times they deliver power to the utility companies, and during non-sunny times they draw power from the grid. Photovoltaic technology has advanced to the point where a homeowner is able to generate enough power (on an average basis over the year) to offset all of their electricity usage.
One of the negatives of alternative energy is the substantial up-front investment. If an individual were to install a photovoltaic system sufficient to generate 100% of their electricity needs, then the base price for the equipment and installation would be well into five figures. One large system that was used as an example in the presentation cost over $70,000. Which is more than most of us have laying around these days.
To encourage investment in systems like these, Connecticut has put a program in place to help homeowners overcome the initial cost. CT Solar Lease is a program that combines rebates from the Connecticut Clean Energy Fund and leases from CT Solar Leasing, LLC to install systems with no down payments for the homeowner. Instead homeowners commit to a 15 year lease with fixed payments. In theory the payments will initially be comparable to their monthly power bill and will stay constant as the price of electricity increases over time. After the 15 years the homeowner has the option to extend the lease for 5 years at a considerably lower rate, buy the system at its current market value, or pay the un-installation expenses.
When buying through the CT Solar Lease program, the homeowner that installed the $70,000+ system mentioned above did not pay anything for installation and set-up. The rebate from the state covered over half of the cost and the lease made up the difference. He has monthly payments of about $160 for 15 years and then projected monthly payments of about $35 per month if he chooses to extend the lease through year 20. He has effectively locked in his power costs for the life of the lease. Beyond that, he will have the opportunity to buy a power-generating asset for an undetermined one-time cost and then receive the electricity for free for the remainder of the system’s useful life (estimated to be 35 years). If electricity prices continue to increase on an annual basis, then he will save himself a considerable amount of money over time.
With the financial burden of solar substantially reduced, the next major challenge is identifying an appropriate site. Photovoltaic cells are ideally positioned facing south and never in the shade. However the reality is that there are very few perfect sites, so this is where the professionals from Alteris enter the picture. They have experience siting and installing photovoltaic systems and are willing to do initial site and financial analysis for free.
Some other interesting tidbits about solar:
1. Connecticut’s environment is not dramatically worse than Arizona’s for generating solar power – we have more cloudy days, but the systems are more efficient in our cooler climate.
2. CT state law prohibits solar improvements from increasing a property’s assessed value, and therefore taxes.
3. A 2007 report in the Appraisal Journal of the National Appraiser’s Association found that home values increase by $20 for every $1 in energy savings, which suggests that investments in solar systems would have a 95% payback based on current technologies and costs.
4. If you generate more power than you use in a year, then CL+P will cut you a check.
5. Photovoltaic systems connected to the grid must turn off (for safety reasons) if the grid goes down – they are not a backup power source for power outages.
If you are serious about investigating solar, send me an email and I would be happy to pass on the local expert’s contact information (didn’t have a chance to ask for his permission to post it).
Leaving West Hartford?
Yesterday the weather was perfect for a winter open house. Pretty much a spring day in February. My sellers in the West End of Hartford had some good traffic come through their homes, with lots of people seriously looking.
I had some good conversations with the various buyers and I noticed an interesting trend emerging. Of the 23 groups of people that visited my open house, 8 were from West Hartford. Every one of them indicated that they are upset with the high taxes in West Hartford and are looking to relocate to the West End of Hartford because they can get more house for the money and enjoy lower taxes. The buyers were families with children in the West Hartford public schools and Hartford magnet schools, families with children in private schools, familes with children not yet old enough to be in school, young couples, and a retiree.
A few of the families mentioned that they’re rapidly outgrowing their current West Hartford homes but both the housing prices and subsequent taxes associated with a “move up” home made the monthly housing payments financially unaffordable to them. So they’re starting to explore Hartford because they realize they can get a lot more for their money. The average price per square foot in West Hartford last year was $175/square foot, versus $127/square foot in the West End of Hartford. Taxes can also be significantly different. For example, the $5,500 annual taxes on my 3,200 square foot West End home would run me anywhere from approximately $8,000 to $10,000 on a comparable home in West Hartford.
There always seems to be a lot of debate about budgets in West Hartford, perhaps this is some early evidence of people voting with their feet. Thoughts?
Regionalism in CT
This Sunday’s Courant contained an excellent editorial about regionalism as a possible strategy for addressing the financial challenges our numerous local governments face. It is a very helpful piece because it not only introduces & defines the idea, but also looks at pros & cons. Finally, the article cites other US metropolitan regions that are already making strides with this strategy and articulates first steps for Greater Hartford.
Town finances impact all of us (even renters) through property taxes. They are a hot button issue for the traditional pro-school and anti-tax groups that emerge every time a budget comes up for debate. There is always lots of rhetoric, and there is sometimes cooperation and compromise, but there are rarely constructive suggestions or discussions that address the underlying issues. Which is not surprising because the established rules of the game are that everything is local.
The Greater Hartford Real Estate Blog has written about the financial stresses that local governments face on a couple of occasions. One post focused on West Hartford’s ongoing budget situation, while the other was more general and looked at the difficult economics of running a town. We see financial trouble on the horizon at all levels of government. And like many others have not been sure how best to work within the rules.
Rather than continuing to beat each other up at a local level, another way to address the challenges is to team up at a state and/or regional level and try to work together. The Courant has stepped to the front by making an initial proposal that includes the following:
1. Launch a study at the state level to identify whether or not core services can be more efficiently delivered on a regional basis (with the focus on federal metropolitan areas rather than counties).
2. Begin dialogs about regionalism at the town level immediately, and launch a major education campaign if the state study shows meaningful savings are possible.
3. Create incentives at the state level to encourage towns to participate.
4. Consider enhancing the existing entities that already think on a regional level so they can play more of a leadership role.
Regionalism is a new arrow in our quiver as we all go through the local budget balancing process. It joins tax hikes, reduced services, begging for more state money, and increased efficiency as the primary tools for making sure that town revenue matches town expenses. And of the five, it seems most likely to make a meaningful long-term impact.
So give the editorial a quick read. Talk about it with your friends, neighbors and coworkers. And if it seems as promising to you as it does to us, tell your elected officials to reach out to their counterparts in other towns.