Sunnier Days Ahead? Missouriâ•Žs Outlook After Missouri Supreme Court Finds Solar Panel Property Tax Unconstitutional

Missouri Law Review Missouri Law Review

Volume 88 Issue 2 Article 10

Spring 2023

Sunnier Days Ahead? Missouri’s Outlook After Missouri Supreme Sunnier Days Ahead? Missouri’s Outlook After Missouri Supreme

Court Finds Solar Panel Property Tax Unconstitutional Court Finds Solar Panel Property Tax Unconstitutional

Maura Corrigan

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Maura Corrigan,

Sunnier Days Ahead? Missouri’s Outlook After Missouri Supreme Court Finds Solar Panel

Property Tax Unconstitutional

, 88 MO. L. REV. (2023)

Available at: https://scholarship.law.missouri.edu/mlr/vol88/iss2/10

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NOTE

Sunnier Days Ahead? Missouri’s Outlook

After Missouri Supreme Court Finds Solar

Panel Property Tax Unconstitutional

Johnson v. Springfield Solar 1, LLC, 648 S.W.3d 101 (Mo. 2022).

Maura Corrigan

I. INTRODUCTION

Many are aware of the inherent power that a constitution holds.

Whether it be the timeless federal document signed in 1787, or a state

constitution adopted decades later, a “constitution” in the United States

comes with an authoritative voice that instructs the very principles and

values the government has long established. Constitutions, by nature,

stand the test of time; they create guidelines, structure, and, above all, a

sense of justice that lies in the backdrop of every legal argument presented

and every court decision rendered.

As the governing document in Missouri, the Missouri Constitution

has the power to establish rights and ensure freedoms. It is intended to

promote the general welfare of Missourians, instructing that all persons

have a natural right to life, liberty, the pursuit of happiness, and the

enjoyment of the gains of their own industry.

Like the United States

Constitution, the Missouri Constitution creates a separation of powers: the

Missouri General Assembly makes the laws, and the Supreme Court of

Missouri examines the laws’ constitutional soundness.

B.A., Major in Biology, Minor in General Business, Miami University, Oxford, OH,

2018; J.D. Candidate, University of Missouri School of Law, 2024; Editor in Chief,

2023–2024, Associate Member, 2022–2023, Missouri Law Review. I would like to

thank Professor Lauren Shores Pelikan for her kindness, guidance, and support during

the writing of this Note, as well as Noelle Mack, Editor in Chief; Logan Moore, Senior

Note and Comment Editor; and the rest of the Missouri Law Review for their help in

the editing process. Finally, I would like to thank my family for their endless love,

support, and encouragement.

MO. CONST. art. I, § 2.

Supreme Court of Missouri, MISSOURI COURTS, https://www.courts.mo.gov/

page.jsp?id=27 (last visited Mar. 19, 2023).

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532 MISSOURI LAW REVIEW [Vol. 88

Under the Missouri Constitution, Missourians are entitled to personal

property tax exemptions.

Personal property taxes have a large economic

impact on Missouri counties, which rely on these taxes for important

infrastructural needs.

Section 137.100(10) of the Missouri Revised

Statutes granted an exemption for “solar panels not held for resale.”

an exercise of its power of judicial review, the Missouri Supreme Court

recently analyzed the constitutionality of section 137.100(10).

Johnson v. Springfield Solar, the court held that solar systems not held for

resale should not be exempt from personal property taxes and struck down

section 137.100(10).

This Note explores the constitutional, legislative, and economic

impact of Springfield Solar on the world of solar development and beyond.

Part II summarizes the facts and procedural background of Springfield

Solar’s claim that the Missouri General Assembly had the authority to

enact a tax exemption for solar equipment not held for resale. Part III

explains the Missouri Constitution’s organization of personal property tax

exemptions and how personal property taxes impact the economic health

of Missouri counties. Part IV details the Missouri Supreme Court’s

unanimous ruling, which held that section 137.100(10) is unconstitutional.

And finally, Part V discusses the resounding impact of the court’s decision

on the interpretation of future personal property tax exemptions, the

economic structure of Missouri counties, and solar developers and rural

communities at large.

II. FACTS AND HOLDING

Springfield Solar owns a solar energy system (the “Equipment”)

located on property owned by City Utilities of Springfield (“City

Utilities”).

Springfield Solar and City Utilities entered into an agreement,

MO. CONST. art. X, § 6.

Jason Rosenbaum, Curious Louis: Why do Missourians Have to Pay Personal

Property Taxes?, ST. LOUIS PUBLIC RADIO (Dec. 27, 2016, 10:06 AM),

https://news.stlpublicradio.org/government-politics-issues/2016-12-27/curious-louis-

why-do-missourians-have-to-pay-personal-property-taxes [https://perma.cc/S5JU-

D94F].

MO. REV. STAT. § 137.100(10) (2022).

Johnson v. Springfield Solar I, LLC, 648 S.W.3d 101, 102 (Mo. 2022).

Id. at 105.

The Equipment is comprised of photovoltaic solar panels, mounting poles,

inverters, and a concrete slab for the inverters. Respondent’s Brief at *3, Johnson v.

Springfield Solar 1, LLC, 648 S.W.3d 101 (Mo. 2022) (No. SC99441).

See Springfield Solar I, 648 S.W.3d at 102. A solar farm is a facility that

produces electricity from harvesting the sun’s rays and delivering the electricity in a

useable form to a point of use. Solar Farms: What Are They & How Do They Work?,

CHARIOT ENERGY, https://chariotenergy.com/chariot-university/solar-farms/

Missouri Law Review, Vol. 88, Iss. 2 [2023], Art. 10

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2023] SUNNIER DAYS AHEAD? 533

giving City Utilities the option to purchase the Equipment at the end of (1)

the seventh contract year, (2) any subsequent contract year, or (3) the term

of the agreement.

The agreement also required that City Utilities

purchase all energy the Equipment generated during the term of the

contract.

In 2017, the Greene County Assessor began assessing the Equipment

for personal property taxes.

The Assessor denied Springfield Solar’s

requested exemption under section 137.100(10), because he believed that

the Equipment fell outside the scope of section 137.100(10) and, even if

the statute did cover the Equipment, the statute’s language itself did not

clearly and unambiguously apply to a valuation Springfield Solar's

Equipment.

Springfield Solar appealed the Equipment’s assessment to

the Missouri State Tax Commission (the “Commission”), challenging the

Equipment’s classification and valuation.

Both the Assessor and Springfield Solar filed cross-motions for

summary judgment on the issue of whether the Equipment was tax-exempt

under the statute.

Springfield Solar argued that the Equipment was

exempt from taxation as a “solar energy system not held for resale,”

pursuant to section 137.100(10), whereas the Assessor contended the

section 137.100(10) was unconstitutional and void pursuant to article X,

section 6 of the Missouri Constitution.

The senior hearing officer

granted Springfield Solar’s motion for summary judgment and denied the

Assessor’s motion for summary judgment.

While the senior hearing

officer ruled that the Equipment was exempt from taxation pursuant to

section 137.100(10), she also noted that she lacked the authority to decide

the constitutional question, as the scope of that question lies entirely within

the purview of the Missouri courts.

The Assessor appealed the senior hearing officer’s Decision and

Order to the Commission.

The Commission affirmed the senior hearing

[https://perma.cc/6597-SXQM] (last visited Mar. 21, 2023). A solar facility can also

be utilized as a utility solar farm. Id. A utility solar farm is a solar facility that produces

electricity sell to utility customers through a power purchase agreement or public

utility rates for revenue. Id. In order for a solar farm to operate, it needs to be situated

on land that has a great exposure to sunlight. Id.

Springfield Solar I, 648 S.W.3d at 102.

Id.

Brief of Appellants at *17–18, Johnson v. Springfield Solar 1, LLC, 648

S.W.3d 101 (Mo. 2022) (No. SC99441).

Springfield Solar I, 648 S.W.3d at 102.

Id.

Id. at 103.

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534 MISSOURI LAW REVIEW [Vol. 88

officer’s decision.

The Assessor filed his petition for judicial review of

the Commission’s decision with the Greene County Circuit Court.

Both

Springfield Solar and the Assessor filed motions for summary judgment.

Finding no genuine issue of material fact, the trial court determined that

summary judgment was appropriate and granted Springfield Solar’s

motion.

The court denied the Assessor’s motion for summary judgment

and held that section 137.100(10) was not unconstitutional and, even if it

was, the Assessor lacked the authority to ignore the exemption unless and

until a court declared the statute unconstitutional.

The Assessor appealed the trial court’s judgment directly to the

Missouri Supreme Court, as the Missouri Supreme Court has exclusive

jurisdiction over the issue, being a matter of Missouri statute and

constitutional provision.

The issue before the court was whether section

137.100(10) was constitutionally valid.

The court ultimately held that

the tax exemption was unconstitutional because the Missouri Constitution

does not grant the General Assembly the power to exempt from taxation

“solar energy systems not held for resale.”

As a result, the court vacated

the circuit court’s judgment and declined to address the Assessor’s other

claims.

III. LEGAL BACKGROUND

Personal property tax is a levy based on the value of taxable personal

property.

Personal property consists of all property that is not real

property, or not real estate.

On the first day of January, every individual

who holds taxable personal property in Missouri becomes liable for

property taxes during the same calendar year.

On January 1, a tax

assessor determines the market value of the personal property and then

calculates a percentage of that value to arrive at the assessed value.

The

percentage is based on the classification of the property, which is

Id. at 102.

Id. at 102–03.

Id.

Id. at 105.

Id. at 105 n.7.

Frequently Asked Questions, STATE OF MISSOURI TAX COMMISSION,

https://stc.mo.gov/frequently-asked-questions/ [https://perma.cc/7VGP-KYHX] (last

visited Mar. 20, 2023).

See id.

MO. REV. STAT. § 137.075 (2022).

See id.; STATE OF MISSOURI TAX COMMISSION, supra note 29.

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determined by the type of property or how it is used.

Classifications of

personal property include manufactured homes, farm machinery, historic

cars or planes, crops, vehicles, and more.

Business personal property

receives the same tax treatment as individual personal property.

After

the assessed value is calculated, the tax rate is applied to determine the

total amount of personal property tax liability.

Missouri counties utilize most of the tax revenue collected from

personal property taxes to fund various avenues of public service

throughout the state.

The tax revenue goes toward the maintenance and

improvement of schools, fire districts, dispatch, libraries, and critical

infrastructure.

Personal property tax rates vary from county to county in

Missouri.

For policy reasons, such as easing the burden on certain

nonprofit, religious, and government properties, the Missouri Constitution

and the Missouri General Assembly created property tax exemptions to

assist individuals or organizations with lowering or eliminating property

taxes.

It is through these personal property tax exemptions that

individuals and organizations can install, build, and maintain personal

property in a more economically feasible way.

Id.

STATE TAX COMMISSION OF MISSOURI MANUAL 5 (2016),

https://www.lincolninst.edu/sites/default/files/gwipp/upload/sources/Missouri/2016/

MO_Assessor%20Manual_State%20Tax%20Commission_November%202016.pdf

[https://perma.cc/75CY-G2FX].

What Every Business Needs to Know About Personal Property, REAL

PROPERTY TAX ADVISORS, https://www.realpropertytaxadvisors.com/blog/what-

every-business-needs-to-know-about-personal-property [https://perma.cc/9ZAN-

6XP8] (last visited Mar. 20, 2023).

STATE OF MISSOURI TAX COMMISSION, supra note 29.

Missouri Property Tax, H&R BLOCK, https://www.hrblock.com/tax-

center/filing/states/missouri-property-tax/ [https://perma.cc/WKL9-XYB6] (last

visited Mar. 20, 2023).

Jason Rosenbaum, Curious Louis: Why do Missourians Have to Pay Personal

Property Taxes?, ST. LOUIS PUBLIC RADIO (Dec. 27, 2016, 10:26 AM)

https://news.stlpublicradio.org/government-politics-issues/2016-12-27/curious-louis-

why-do-missourians-have-to-pay-personal-property-taxes [https://perma.cc/H8JL-

3GBL].

STATE OF MISSOURI TAX COMMISSION, supra note 29.

Victoria Araj, Property Tax Exemptions: Seniors, Veterans And Others Who

Qualify, ROCKET MORTGAGE (Mar. 20, 2023) https://www.rocketmortgage.com/learn/

property-tax-exemptions [https://perma.cc/9WU6-88MV].

25 States Offer Sales Tax Exemptions For Solar Energy, SOLAR ENERGY

INDUSTRIES ASS’N, https://www.seia.org/initiatives/solar-tax-exemptions

[https://perma.cc/2H35-RPTP] (last visited Mar. 20, 2023).

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A. Personal Property Taxes in the Missouri Constitution

The Missouri Constitution sets forth the universe of personal property

that the Missouri General Assembly may exempt from taxation.

expresses the people’s intent that only certain personal property may

receive an exemption.

Section 137.100, which tracks with article X,

section 6 of the Missouri Constitution, controls such personal property tax

exemptions within the state.

Article X, section 6 of the Missouri Constitution specifically exempts

the following property from taxation:

All property, real and personal, of the state, counties and other political

subdivisions, and nonprofit cemeteries, and all real property used as a

homestead as defined by law of any citizen of this state. . . shall be

exempt from taxation; all personal property held as industrial

inventories, including raw materials, work in progress and finished

work on hand, by manufacturers and refiners, and all personal property

held as goods, wares, merchandise, stock in trade or inventory for

resale by distributors, wholesalers, or retail merchants or

establishments shall be exempt from taxation. . . .

In addition to this exempted property, article X, section 6 permits the

Missouri General Assembly to exempt certain other property.

Specifically, it includes a catchall for the Missouri legislature by providing

that “. . . [personal property] may be exempted from taxation by general

law.”

Through the legislature’s use of this provision, the list of personal

property exempted from taxation expanded in 1972, 1982, and 2010.

Article X incudes additional provisions that, after interpretation,

allow the legislature to establish tax exemptions beyond those listed in

section 6.

For example, section 4(c) allows the Missouri General

Assembly to substitute “another form of tax, probably an excise tax,” for

the property tax on bank shares and “constitutes an exemption from

personal property taxation in addition to those enumerated in

[section] 6.”

Furthermore, section 7 permits the Missouri General

MO. CONST. art. X; St. Charles Cnty. v. Curators of Univ. of Mo., 25 S.W.3d

159, 162 (Mo. 2000) (en banc).

Arsenal Credit Union v. Giles, 715 S.W.2d 918, 919–20 (Mo. 1986) (en banc).

See MO. REV. STAT. § 137.100.

MO. CONST. art. X, § 6.

Id.

Arsenal Credit Union, 715 S.W.2d at 921–22.

MO. CONST. art. X, § 6.

Mercantile Bank Nat’l Ass’n v. Berra, 796 S.W.2d 22, 26 (Mo. 1990) (en

banc).

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Assembly to provide “partial relief from taxation” for lands devoted to the

purpose of “encouraging forestry . . . and the reconstruction,

redevelopment, and rehabilitation of obsolete, decadent, or blighted

areas[.]”

Sections 4(a) and 4(b) also contain language that seems to give

the legislature the ability to grant a tax exemption.

When faced with a question of whether personal property may qualify

for an exemption, courts have held that taxation is the rule and exemptions

are the exception.

In other words, the law places a substantial burden on

those claiming exemptions to establish that their property falls squarely

within an exempted class.

However, even where a taxpayer

demonstrates that his personal property is clearly covered by a statutory

exemption, there is still a risk that the statute may be found to violate the

Missouri Constitution’s limitations on personal property tax exemptions.

B. Violating the Missouri Constitution

A statute that “clearly and undoubtedly violates the constitution” is

deemed to be unconstitutional by nature.

In Missouri, if a statute

conflicts with a provision of the Missouri Constitution, the courts must

invalidate the statute and render it void. The party challenging the statute’s

constitutional validity bears the burden of proving the violation by

demonstrating that the constitution did not allow for the specific exercise

of that power.

A common violation occurs when the Missouri General

Assembly passes a statute that is contradictory to, or not upheld by, the

scope of power outlined in the Missouri Constitution.

In Arsenal Credit Union v. Giles, the Missouri Supreme Court

examined whether section 148.620.3 violated article X, sections 4(a) and

6 of the Missouri Constitution.

Section 148.620.3 imposed a net income-

based corporate franchise tax on credit unions and savings and loan

associations.

Ten credit unions brought suit against the tax assessor and

MO. CONST. art. X, § 7; Land Clearance for Redev. Auth. of City of St. Louis

v. City of St. Louis, 270 S.W.2d 58, 64–65 (Mo. 1954) (en banc).

See MO. CONST. art. X, § 4. Section 4(a) relates to the classification of taxable

property—taxes on franchises, incomes, excises, and licenses, while section 4(b)

includes basis of assessment of tangible property tax—real property—taxation of

intangibles—limitations. Id.

Mo. Church of Scientology v. State Tax Comm’n, 560 S.W.2d 837, 844 (Mo.

1977) (en banc).

Id.

See generally MO. CONST. art. X, § 3.

Williams v. Mercy Clinic Springfield Cmtys., 568 S.W.3d 396, 406 (Mo.

2019) (en banc).

Id.

Arsenal Credit Union, 715 S.W.2d at 919.

Id. at 918–19.

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538 MISSOURI LAW REVIEW [Vol. 88

collector of revenue for the City of St. Louis to contest personal property

taxes the city collected.

Specifically, the taxpayers argued that section

148.620.3 created a tax exemption for the intangible property of credit

unions.

For support, the credit unions pointed to article X, section 6,

which expressly exempts from taxation the property of some entities and

permits exemption by the legislature for a limited number of other

entities.

The court determined that section 148.620.3 effectively created

an arrangement in which personal property could be exempt but, because

article X, section 6, did not authorize such an exemption for intangible

personal property, held that the exemption was unconstitutional.

The

Missouri Supreme Court held that section 148.620.3 was void, because the

statute “clearly and undoubtedly violate[d] the constitution” by going

outside the framework of article X, section 6.

C. Dealmaking With Solar Developers

While the origin of personal property tax exemptions is rooted in the

Missouri Constitution, the tax exemptions themselves have a resounding

impact on the counties, municipalities, and communities that bear the

benefits and burdens of such exemptions. One such area of impact is the

rural and agricultural lands of Missouri. Therefore, although the Missouri

Constitution and the Missouri General Assembly hold the power to create

tax exemptions, individuals and companies involved with the affected

industries feel the economic ramifications.

Personal property tax exemptions can leave Missouri counties little

incentive to contract with businesses that enjoy such exemptions.

Prior

to 2013, Missouri had no statewide policy addressing the assessment and

taxation of solar panel systems.

After the Missouri General Assembly

adopted section 137.100(10), however, “solar energy systems not held for

resale [were] exempt from taxation for state, county or local purposes.”

Because solar project developers were not required to pay property taxes

as a result of this statute, Missouri counties had no incentive to contract

Id. at 919.

Id. at 919–20.

Id. at 924.

Id.

Id. at 923–25.

Telephone Interview with James Owen, Executive Director, Renew Mo. (Oct.

7, 2022).

Justin Barnes et al., Property Taxes and Solar PV Systems: Policies, Practices,

and Issues, NORTH CAROLINA SOLAR CENTER 1, 76 (Jul. 2013) https://ncsolarcen-

prod.s3.amazonaws.com/wp-content/uploads/2015/06/Property-Taxes-and-Solar-

PV-Systems-Policies-Practices-and-Issues.pdf [https://perma.cc/EUR3-TKKC].

MO. REV. STAT. § 137.100(10).

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2023] SUNNIER DAYS AHEAD? 539

with them.

This is because Missouri counties would not receive any

property tax revenue from the equipment, and the solar developers could

use Missouri land without much cost. To entice Missouri counties to allow

development on their land, solar developers started bargaining for a

negotiated payment in lieu of taxes.

These deals—typically resulting

from negotiations between Missouri government officials and individual

solar developers—consisted of tax-exempt solar developers making

voluntary payments as a substitute for property taxes.

Many deals

resulted in long-term contracts, including routine annual payments, or

sometimes irregular one-time payments.

But, the payments lacked

uniformity and were often conducted on a case-by-case or county-by-

county basis.

Historically, Missouri counties are not the only group affected by

solar equipment tax exemptions. Agricultural landowners are also

impacted by this type of tax legislation. Oftentimes, solar farms lease land

from an owner of real property.

The agreement between a real estate

owner and the solar farm represents a solar land lease agreement which

contains defining terms and conditions for operating said facility on the

property.

Solar developers typically require landowners to sign multiple

documents during the land lease process, including a letter of intent, option

to lease, and the actual lease or purchase agreement.

The letter of intent

reserves the land for a particular energy developer,

which may limit the

landowner’s right to negotiate with other developers.

In comparison, the

option to lease is a legally binding agreement in which the landowner

grants the developer the right to lease the land during a time period

Telephone Interview with James Owen, supra note 65.

Kurt Erickson, Opponents of Planned Solar Energy Project Cheer Missouri

Supreme Court Decision, ST. LOUIS POST-DISPATCH (Aug. 31, 2022),

https://www.stltoday.com/news/local/govt-and-politics/opponents-of-planned-solar-

energy-project-cheer-missouri-supreme-court-decision/article_a0d633fc-2141-5986-

95ef-2a28b5659cb1.html?utm_medium=social&utm_source=email&utm_

campaign=user-share [https://perma.cc/2FS3-T4P6].

Telephone Interview with James Owen, supra note 65.

Daphne A. Kenyon & Adam H. Langley, Payments in Lieu of Taxes By

Nonprofits: Case Studies, LINCOLN INSTITUTE OF LAND POLICY 171, 171 (Jul. 18,

2011) https://www.lincolninst.edu/sites/default/files/Case_Studies_on_Nonprofit_

PILOTs.pdf [https://perma.cc/AA2U-ZMBK].

Telephone Interview with James Owen, supra note 65.

Ryan Milhollin et al., Leasing Land for Solar Energy Development,

EXTENSION UNIV. OF MISSOURI (Jun. 2022) https://extension.missouri.edu/

publications/g431 [https://perma.cc/CV4N-JLZ6].

Real Property Value and Solar Energy, NORTH CAROLINA DEP’T OF REV. 1, 5

(2018) https://www.ncdor.gov/media/10020/open [https://perma.cc/554M-XTW8].

Milhollin et al., supra note 73.

Real Property Value and Solar Energy, supra note 74.

Milhollin et al., supra note 73.

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specified within the option.

Finally, the lease is a longer-term agreement

between the landowner and the solar developer.

The lease oftentimes

includes negotiated payment terms, liability and tax responsibilities, and

renewal terms.

Missouri landowners are now increasingly interested in solar

development because of the potential profit associated with leasing their

land.

Solar farm developers and utility-scale solar energy farms propose

leases to Missouri farmland owners to develop and utilize their land for

solar purposes.

Both utilities, which directly offer solar energy leases,

and lesser-known renewable energy development companies, which

generally plan to sell power under contract to a utility, are common

players.

Missouri farmers are particularly interested in solar

development because returns per acre from a utility-scale solar energy

lease have the potential to far exceed farm enterprise returns or farmland

cash rents.

Historically, rental rates of land for solar farmers were

reported within a range of $750 to $1,400 per acre per year.

These rents

generate “ordinary” income, likewise reported on federal and state income

tax returns.

Farmers find that these rents are generally greater than cash

rent values for agricultural production of crops such as cotton, tobacco,

and other commodity crops.

Missouri landowners and solar companies remain invested in tax

exemption developments, and they are particularly cognizant of the

evolvement of section 137.100(10). Johnson v. Springfield Solar

illustrated the intersection of the constitutional implications and practical

ramifications of tax exemptions for solar equipment. A decision in favor

of Springfield Solar would continue to completely reshape the markets for

purchasing and leasing solar equipment in Missouri. A decision in favor

of the Assessor would serve as a rare exercise of judicial review, with the

body of unelected judges dismissing the laws passed by elected legislators.

As a result, the consequence of the court’s decision would impact not only

the narrow legality of a statute, but it could also leave a ripple effect on

broad economic and capital market landscapes.

Id.

Justin Moore, Solar and Wind Energy Development Opportunities: Tax

Implications, NORTH CAROLINA STATE UNIV. EXTENSION (last updated 2016),

https://www.ces.ncsu.edu/solar-and-wind-energy-development-opportunities-tax-

implications/ [https://perma.cc/ED77-E46Q].

Id.

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IV. INSTANT DECISION

The Springfield Solar court faced one ultimate issue: whether section

137.100(10) was constitutionally valid.

Springfield Solar acknowledged

that “solar energy systems not held for resale” did not fall within the

enumerated exemptions created by article X, section 6, but it contended

that the General Assembly had the implied authority to create such an

exemption through article X, sections 4(a) and 4(b).

The court disagreed

and explained that such a reading of sections 4(a) and 4(b) would ignore

the explicit language in article X, section 6—which indicates that all

property tax exemptions not expressly listed in article X shall be void.

Additionally, the court noted that such an interpretation would completely

undermine the purpose of section 6 by effectively creating a backdoor for

tax exemptions not enumerated in the constitution.

Therefore, the court held that section 137.100(10)’s exemption for

“solar energy systems not held for resale” was unconstitutional and void.

From the date of its enactment, an unconstitutional statute is not law and

confers no rights.

Because the statute was deemed void, the court held

that it never had the authority to create any legal rights or responsibilities

whatsoever.

V. COMMENT

The Missouri Supreme Court correctly analyzed the structure of

section 137.100(10) and distinguished its exemption from those permitted

under the Missouri Constitution. In doing so, the court successfully upheld

the state’s goals and initiatives of personal property tax exemptions.

Through its determination that section 137.100(10) was unconstitutional,

the Missouri Supreme Court has limited the slippery slope for business

entities or individuals to argue that tax exemptions can and should apply

to their personal properties.

The Springfield Solar decision has sparked

development and discussion in the Missouri General Assembly regarding

a reasonable personal property tax that could apply to the solar energy

systems not held for resale.

These changes will leave a resounding

Johnson v. Springfield Solar 1, LLC, 648 S.W.3d 101, 103 (Mo. 2022).

Id. at 104.

Id.

Id. at 105.

Id.

Trout v. State, 231 S.W.3d 140, 148 (Mo. 2007) (en banc).

Mo. Bankers Ass’n, Inc. v. St. Louis Cnty., 448 S.W.3d 267, 274 (Mo. 2014)

(en banc).

Springfield Solar I, 648 S.W.3d at 105.

S.B. 745, 101st Gen. Assemb., Reg. Sess. (Mo. 2022).

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542 MISSOURI LAW REVIEW [Vol. 88

positive economic impact on Missouri counties and solar developers, with

the potential to spur environmental growth efforts in Missouri.

A. Confronting the Constitutional Dilemma

Personal property tax exemptions in Missouri may arise in one of two

ways: (1) the exemption is specifically enumerated in article X, section 6,

of the Missouri Constitution or (2) the exemption falls within the Missouri

Constitution’s permissive grant of limited authority to the Missouri

General Assembly.

The structure of the Missouri Constitution prevents

abuse of personal property tax exemptions and protects the interests of

Missouri’s economy, communities, and business organizations.

Its

construction places certain limitations and restrictions on the Missouri

General Assembly’s authority to create personal property tax

exemptions.

Its strict statutory language makes the Missouri

Constitution a self-regulating document. Therefore, statutes created by the

Missouri General Assembly but not found to be covered by the Missouri

Constitution are held unconstitutional.

As discussed in Arsenal Credit Union v. Giles, article X, section 6,

lists a few entities whose property is specifically exempt from taxation but

provides that only a limited number of other entities may be exempted

from taxation by general law.

100

In other words, the citizens of Missouri,

through the Missouri Constitution, did not intend for the Missouri General

Assembly to create a limitless amount of personal property tax

exemptions. Both Giles and Springfield Solar recognized this notion.

101

In both cases, the Missouri Supreme Court limited backdoor tax

exemptions to sustain the drafters’ intent and prevent an “open season” on

property taxes.

102

These safeguards ensure that any lobbyist who wants an

exemption must do more than merely gauge the political winds of the time

and request one.

103

If the Missouri Supreme Court regularly recognized backdoor

exemptions for personal property tax breaks, as Springfield Solar hoped it

would do, the court would swing the door wide open for other individuals,

companies, and industries to creatively circumvent Missouri tax law. This

would create a slippery slope for Missouri courts. Stocked with more

MO. CONST. art. X, § 6.

Id.

100

Arsenal Credit Union v. Giles, 715 S.W.2d 918, 924 (Mo. 1986).

101

Johnson v. Springfield Solar 1, LLC, 648 S.W.3d 101, 104 (Mo. 2022);

Arsenal Credit Union v. Giles, 715 S.W.2d 918 (Mo. 1986).

102

Reply Brief of Appellants at 22, Johnson v. Springfield Solar 1, LLC, 648

S.W.3d 101(Mo. 2022) (No. SC 99441).

103

Id.

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2023] SUNNIER DAYS AHEAD? 543

leverage, Missouri companies may negotiate contracts or manage

operations differently under the assumption that they too qualified for a

personal property tax exemption. As a result, if the Missouri Supreme

Court gave credence to Springfield Solar’s argument, organizations

looking to manufacture similar personal property tax exemptions would

attempt parallel arguments to that of Springfield Solar’s claims.

104

B. Economic and Environmental Effects

Upon first glance, halting a solar energy tax break that was

mistakenly on the books for nearly a decade could appear to be a step

backwards for the Missouri economy and environmental solar

development.

105

Some have argued that the ruling will have a chilling

effect on solar energy in Missouri, and therefore relay a contradictory

approach to the nation’s push to combat climate change.

106

The decision

specifically makes Missouri an outlier in the global initiative intended to

combat climate change, as the federal government has expanded tax breaks

for the production of clean energy and installation of solar panels in recent

years.

107

Before the ruling in Springfield Solar, Missouri was one of thirty-

eight states to offer some sort of property tax break for solar energy

systems.

108

Critics of the decision argue that Missouri now risks losing

solar development to other states that offer better tax incentives and

benefits.

109

As renewable energy grows in popularity and solar farms look to

strategically expand, states across the country are competing to lead the

charge in the dawn of a new energy era.

110

Flat, undeveloped parcels that

enjoy plenty of sun are in growing demand, and individual states are eager

to reap the benefits.

111

Missouri currently ranks 34th on the list of the best

104

Id.

105

David A. Lieb, Missouri Halts Solar Tax Break as Federal Incentives

Expand, ASSOCIATED PRESS (Aug. 16, 2022), https://apnews.com/article/biden-

technology-solar-power-climate-and-environment-government-politics-

2926087466d35771b7183973651f027f [https://perma.cc/4XMK-ZYWR].

106

Id.

107

Id.

108

Id.

109

David Lieb, Missouri Halts Solar Tax Break as Federal Incentives Expand,

KSDK (Aug. 16, 2022), https://www.ksdk.com/article/news/local/missouri-halts-

solar-tax-break-federal-incentives-expand/63-c1a263c2-a2ef-4c16-8859-

77520c4ee54d [https://perma.cc/H3K5-WWHT].

110

Lisa Iscrupe, Best and Worst States Ranked For Solar Industry Growth,

CHOOSE ENERGY https://www.chooseenergy.com/solar-energy/best-and-worst-

ranked-states-for-solar-industry-growth/ [https://perma.cc/63GV-Z9NC] (last visited

Mar. 20, 2023).

111

Carey L. Biron, When Harrow Met Solar: U.S. Land-Use Competition Heats

Up, REUTERS (Jan. 28, 2019), https://www.reuters.com/article/us-usa-energy-

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544 MISSOURI LAW REVIEW [Vol. 88

states in which to own solar panels, with a total solar investment of $774

million.

112

These rankings are assessed based on six factors:

(1) megawatts of solar installed per state, (2) how many solar jobs are

available, (3) number of homes powered by solar, (4) percentage of energy

run by solar, (5) how many clear days each state averages per year, and (6)

the average cost of installation after the federal solar tax incentive.

113

Given that other states offer competitive property tax exemptions and

credits, some Missourians worry that the state is now in danger of falling

behind the race for solar expansion.

114

While all of these concerns are reasonable, the Springfield Solar

decision will ultimately have a positive economic and environmental

effect in Missouri. In response to the decision, the legislature established

the Task Force on Fair, Nondiscriminatory Local Taxation Concerning

Solar Energy Systems, which began its work in August 2022.

115

After the

court concluded that solar equipment not held for resale is not subject to

tax exemptions, the Missouri General Assembly saw the need to address

the lack of personal property tax placed on solar equipment.

116

Thus, the

task force’s purpose is to examine a fair and standardized assessment and

taxation of solar energy systems and their connected equipment.

117

The task force delivered a report of its findings, including potential

legislation to provide a uniform assessment and taxation methodology for

solar energy systems and their connected equipment, to the Missouri

General Assembly in December 2022.

118

Executive Director of the

Missouri Solar Energy Industries Association, Jon Dolan, was hopeful that

the task force could mirror other states and build a reasonable taxation

formula based on input from Missouri tax assessors.

119

A committee of

state legislators, regional tax assessors, and renewable energy corporations

agriculture-feature/when-harrow-met-solar-u-s-land-use-competition-heats-up-

idUSKCN1PM185 [https://perma.cc/M74E-UEGC].

112

Iscrupe, supra note 110.

113

Emily Glover, The Best And Worst States For Solar Energy 2023, FORBES,

https://www.forbes.com/home-improvement/solar/best-worst-states-solar/

[https://perma.cc/H2A3-BLQV] (last visited May 6, 2023).

114

Lieb, supra note 109.

115

MISSOURI STATE TAX COMMISSION, https://stc.mo.gov/wp-content/uploads/

sites/5/2022/08/Information-for-Website-Assessment-of-Solar-Property-Post-

Supreme-Court-Decision.pdf [https://perma.cc/LGB7-NJ6M] (last visited Mar. 20,

2023).

116

Id.

117

Id.

118

Id.

119

Emily Manley, Tax Force Discusses How to Resolve Tax Issues on Missouri

Solar Farms, FOX 2 NOW (Oct. 19, 2022), https://fox2now.com/news/missouri/task-

force-discusses-how-to-resolve-tax-issues-on-missouri-solar-farms/

[https://perma.cc/X6UQ-GH2H].

Missouri Law Review, Vol. 88, Iss. 2 [2023], Art. 10

https://scholarship.law.missouri.edu/mlr/vol88/iss2/10

2023] SUNNIER DAYS AHEAD? 545

convened to review the findings from the joint report.

120

In the report, the

task force strongly suggested that Missouri adopt one uniform approach to

evaluating solar property across the state rather than allowing each of its

114 counties and St. Louis City to independently negotiate contracts with

solar businesses.

121

The report argued that, by developing a reasonable

personal property tax for this equipment, the solar taxation process would

be greatly simplified while also ensuring there is a consistent evaluation

system for all stakeholders involved.

122

In its conclusion, the report stated

that it was reasonable for solar companies to contribute their fair share of

taxes to counties, school districts, and other governing bodies.

123

While

the task force’s chairman is not optimistic that results will come soon,

many members remain hopeful that the upcoming legislative sessions will

ultimately settle the controversial debate of how Missouri should impose

taxes on massive solar energy farms.

124

With section 137.100(10) in place, Missouri counties would continue

to feel a resounding frustration and strain on their communities, and solar

corporations would continue to have a difficult time negotiating with

counties to utilize their land.

125

Because solar corporations were not

required to pay personal property taxes, Missouri counties were reluctant

to allow solar farms onto their land.

126

Many individuals view solar farms

as a nuisance and, as such, they actively participate in protests to prevent

solar companies from building solar developments.

127

These protests can

reach the magnitude of politicized social-media campaigns, effectively

preventing solar developers from constructing new sites in rural

Missouri.

128

Protestors cite a variety of anti-solar reasons, ranging from

aesthetics that would harm property values to fears about health, safety,

loss of land, and destruction of wildlife.

129

Facebook pages collect such

concerns, and they oftentimes spout misinformation about climate change

120

Jonas Muthoni, Missouri Legislators Are Unlikely to Address the Solar

Energy Tax Issue During the Upcoming Year, MICROGRID MEDIA (Dec. 27, 2022),

http://microgridmedia.com/missouri-legislators-are-unlikely-to-address-the-solar-

energy-tax-issue-during-the-upcoming-year/ [https://perma.cc/54ZM-ZPVR].

121

Id.

122

Id.

123

Id.

124

Id.

125

Telephone Interview with James Owen, supra note 65.

126

Id.

127

Sarah Maslin Nir, He Set Up a Big Solar Farm. His Neighbors Hated It.,

N.Y. TIMES (Mar. 18, 2020), https://www.nytimes.com/2020/03/18/nyregion/solar-

energy-farms-ny.html [https://perma.cc/FF2Z-RP73].

128

John Fitzgerald Weaver, Missouri Town Declares Solar Farm a Nuisance,

PV MAGAZINE (Apr. 27, 2022), https://pv-magazine-usa.com/2022/04/27/missouri-

town-declares-solar-farm-a-nuisance/ [https://perma.cc/73KD-MEDL].

129

Nir, supra note 127.

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546 MISSOURI LAW REVIEW [Vol. 88

and alleged health hazards from solar electricity.

130

Protests often occur

in politically conservative regions—i.e., where most of the farmland ripe

for solar development is located—because citizens are generally less

concerned about climate change and more supportive of agricultural

jobs.

131

These community concerns make it hard for solar developers to

scale solar projects. Additionally, it is difficult to sell to rural communities

because the governing bodies see little economic benefit as compared to

the aesthetic downsides of the large installations.

132

Through the creation

of a reasonable personal property tax on solar equipment, counties may be

more encouraged to contract with solar companies to focus on fostering

economic stimulation rather than highlighting the aesthetic concerns of

solar energy production.

133

As a result of enjoying personal property tax exemptions, solar farms

have historically not contributed to the schools, fire departments, and

surrounding infrastructure of the land that they inhabit. For this reason,

they have negotiated payments in lieu of taxes to help their presence look

more attractive to surrounding counties.

134

These negotiated payments

lead to inconsistent bargaining from county to county.

135

Rather than

having a flat personal property tax rate, solar companies were forced to

engage in costly and time-consuming negotiations with a multitude of

counties. These individualized negotiations led to frustration for both

solar companies looking for consistency and Missouri counties looking for

high payments.

136

For example, in gathering plans to construct a solar

development in Callaway County in July of 2022, two solar companies,

Ranger Power and NextEra Energy, faced resistance from the citizens of

the surrounding county.

137

The citizens were concerned with the lack of

tax revenue that would go to the schools, libraries, and public spaces in

130

Nichola Groom Reuters, U.S. Solar Expansion Stalled By Rural Land-Use

Protests, STL TODAY (Apr. 7, 2022), https://www.stltoday.com/business/local/u-s-

solar-expansion-stalled-by-rural-land-use-protests/article_7790c853-ec05-535c-

8c50-195dee0429e1.html [https://perma.cc/G7QZ-2XXN].

131

Id.

132

Id.

133

Kurt Erickson, Opponents of Planned Solar Energy Project Cheer Missouri

Supreme Court Decision, STL TODAY (Aug. 31, 2022), https://www.stltoday.com/

news/local/govt-and-politics/opponents-of-planned-solar-energy-project-cheer-

missouri-supreme-court-decision/article_a0d633fc-2141-5986-95ef-

2a28b5659cb1.html?utm_medium=social&utm_source=email&utm_campaign=user

-share [https://perma.cc/9Y8N-BF77].

134

Id.

135

Telephone Interview with James Owen, supra note 65.

136

Erickson, supra note 133.

137

Nate Brenner, Callaway County Residents Reckon With Proposed Solar

Expansion, KOMU (Jul. 12, 2022), https://www.komu.com/news/midmissourinews/

callaway-county-residents-reckon-with-proposed-solar-expansion/article_b859a71a-

013c-11ed-b3da-53e2e50057b2.html [https://perma.cc/T9Z9-48L9].

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2023] SUNNIER DAYS AHEAD? 547

Callaway County.

138

Thus, the solar companies negotiated payments with

Callaway County to offer a greater financial incentive to contract.

139

After the court struck down section 137.100(10), the need for

individualized, negotiated payments was eliminated. As a result, both

Missouri counties and solar companies will benefit from simpler and

efficient dealmaking. Both tax assessors and solar developers will be able

to develop a uniform approach, consisting of a standardized formula that

is able to specify numbers and rates upfront, rather than in hindsight.

Accordingly, the risk of potential back-taxes from tax exemptions will be

reduced, and solar developers will approach landowners and counties with

a more reliable framework.

If the Missouri legislature is able to derive a reasonable personal

property tax approach based on the task force’s recommendation, solar

developers will benefit from less resistance when expanding into

farmland. Rural communities are resistant to allow solar farms to overtake

farmland in Missouri.

140

Farmland has always been sacred; the idea of the

family farm is central to America’s identity and the American spirit.

Those in agricultural communities are wary of allowing technology to

disturb this national identity which has withstood the test of time. In

addition, individuals in rural communities who take pride in their

agricultural terrain have viewed solar panels as an eye sore.

141

But despite

the opinions of rural communities at large, farmers themselves are

surprisingly interested in the possibility of leasing their land to solar

companies.

142

By encouraging solar companies’ presence in Missouri

through a standard personal property tax approach, farmers have the

potential for an additional source of income without the risk that comes

with farming.

143

Farmers’ net income may be significantly higher from

solar farm revenue than any crop yield.

144

In addition, this transition of

farmland to commercial property increases tax revenue for Missouri

counties.

145

With the presence of solar farms, farmland income and tax

138

Id.

139

Id.

140

Reuters, supra note 130.

141

Nir, supra note 127.

142

How Do Farmers Lease Land for Solar Farm Income?, UNBOUND SOLAR

(Oct. 27, 2021), https://unboundsolar.com/blog/how-do-farmers-lease-land-for-solar-

farm-income [https://perma.cc/PJ3P-522D].

143

Id.

144

Mike Carroll, Considerations for Transferring Agricultural Land to Solar

Panel Energy Production, NC COOPERATIVE EXTENSION, https://craven.ces.ncsu.edu/

considerations-for-transferring-agricultural-land-to-solar-panel-energy-production/

[https://perma.cc/K4YQ-PEHX] (last updated Feb. 2023).

145

Id.

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548 MISSOURI LAW REVIEW [Vol. 88

revenue generated could thus add value to the landowner himself and the

surrounding Missouri county.

146

By making it easier for solar companies to reach deals with Missouri

counties, and by encouraging the development of solar energy on

farmland, solar energy will ideally continue to grow and expand in

Missouri. Solar energy is a renewable, sustainable, and clean energy

source for the state and it creates an environment where fewer natural

resources are consumed.

147

Solar energy can also improve air quality and

reduce water use for energy production.

148

Through the increase of solar

energy’s presence on Missouri land, Missouri may become a leading state

in renewable energy and energy efficiency efforts.

149

The Missouri

Supreme Court’s decision in Springfield Solar will help achieve these

state-wide initiatives by providing economic incentives, consistency, and

stability to properly encourage the growth of solar development in

Missouri.

VI. CONCLUSION

The Missouri Constitution sets forth the universe of personal property

that the Missouri General Assembly may exempt from taxation, and the

Missouri Supreme Court acts as the gatekeeper to ensure the constitutional

validity of those laws. In doing so, the Missouri Supreme Court ensures

that Missouri citizens abide by constitutionally valid personal property tax

exemptions while safeguarding against under-the-table tax breaks.

Through the court’s robust analysis of section 137.100(10) in Springfield

Solar, the court limited the slippery slope of organizational tax

exemptions. In doing so, the court upheld the true goals and initiative of

the Missouri Constitution.

Springfield Solar not only illustrates the importance of the Missouri

Constitution’s tax exemption framework, but it also highlights the

potential solar industry growth between Missouri solar developers,

counties, landowners, and environmentalists alike. With the pending

legislation before the Missouri General Assembly, Missouri can provide a

uniform personal property tax and resolve the economic, environmental,

146

Id.

147

5 Advantages of Solar Power in Missouri, SUN SOLAR, https://ussun

solar.com/2020/05/19/5-advantages-solar-in-missouri/ [https://perma.cc/PDT4-

6A8S] (last visited Mar. 20, 2023).

148

Solar Energy, Wildlife, and the Environment, OFFICE OF ENERGY EFFICIENCY

& RENEWABLE ENERGY, https://www.energy.gov/eere/solar/solar-energy-wildlife-

and-environment#:~:text=As%20a%20renewable%20source%20of,water%

20use%20from%20energy%20production [https://perma.cc/CDW7-VU8C] (last

visited Mar. 20, 2023).

149

Our Advocacy, RENEW MISSOURI, https://renewmo.org/our-advocacy/

[https://perma.cc/K4RN-85NP] (last visited Mar. 20, 2023).

Missouri Law Review, Vol. 88, Iss. 2 [2023], Art. 10

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2023] SUNNIER DAYS AHEAD? 549

and agricultural disputes now associated with solar development. After

this case and the findings of the task force, solar developers and Missouri

counties alike will be armed with greater predictability and a greater

incentive to build. With increased solar development on Missouri's

horizon, and greater relationships among landowners, cities, and

businesses, one can only conclude that sunnier days might in fact be ahead.

Corrigan: Sunnier Days Ahead? Missouri’s Outlook After Missouri Supreme Cou

Published by University of Missouri School of Law Scholarship Repository, 2023