HOA Guidelines for Going Solar

October 11, 2018 | By: Justin H. Riley

Whether your HOA consists of detached dwellings, condos or townhouses, you can utilize solar to benefit your members, reduce energy costs and preserve the environment.

HOAs and their members that haven’t considered solar in the past are now attracted to the federal tax deduction – 30 percent of installation costs in 2018 and 2019, 26 percent in 2020, and 22 percent in 2021. As the fifth sunniest state, Utah is benefitting from the use of solar. The current installation boom here is expected to continue through 2040, according to the Salt Lake Tribune. In addition, new technologies are becoming available that make solar easier, more affordable and less bulky.

Regardless of your interest in solar, we recommend that your HOA revisit its architectural guidelines related to solar panels and other equipment. Pro-solar Utah legislation enacted in 2017 makes the subject relevant to many HOAs. The legislation, called Solar Access Amendments, prevents Utah HOAs from prohibiting the installation of a solar system on detached dwellings, but HOAs may still enact architectural guidelines that limit where solar panels may be installed, as long as doing so does not impair a solar system’s potential energy production more than 5 percent. The 5 percent clause in the law is subject to interpretation and requires the evaluation of a solar installation specialist.

Most solar system installers will provide a free assessment to determine if solar makes sense for a customer. Going solar requires an upfront investment, and for the system to be economical, it should pay for itself, and then some, over time through reduced electric bills. Factors that influence the return on investment include:

  • Amount of southern exposure to the roof
  • The number of sunny days in your community annually
  • Whether trees or other objects block the sun from hitting the roof for part or all of a day
  • The age of the roof – an older roof may need to be replaced at the time of installation, which would increase costs

Unfortunately, going solar usually involves a lot of red tape for compliance with federal, state, and municipal requirements, although efforts are being made in the federal government to better streamline the process because of its benefits to an entire community. Solar system installers often navigate their customers through some of the paperwork, but an HOA Board can also assist by being aware of existing laws and providing clear architectural guidelines for its members.

Solar easements are an option for members that involve working with one or more neighbors to secure the “skyspace” between their solar panels and the sun. An easement creates an understanding between neighbors that no trees would be planted or buildings built in a specific area that could block the solar energy production over the life of the system. HOAs may choose to require that members who install a solar system obtain a solar easement as a way to encourage communication between neighbors. Consider offering a template of the easement text to simplify the process, and request copies of final easements to have on file.

Another benefit to solar is that it extends HOA member retention. Solar systems, which typically have a lifespan of 25 years, require an upfront investment from the resident. The return on investment occurs over the life of the system, but only if the resident continues to live in the home. Solar is also attractive to prospective HOA members who want to help reduce greenhouse gas emissions. However, your governing documents will want to address member requirements if they move – such as under what circumstances they would be required to remove the panels.

Solar for Common Areas
HOAs may choose to install a solar system to benefit common areas, such as providing energy to a clubhouse or pool, heating a hot tub, or lighting a parking lot and streets within your community. The upfront capital required for the investment could be obtained from savings or by designating a portion of HOA dues towards the project. The savings you receive in reduced electric bills may allow you to appropriate funds to other needs and to perhaps delay increasing HOA fees over time. Attitudes are changing about the aesthetics of solar panels installed on roofs and other surfaces. Panels, as well as solar batteries, continue to reduce in size and expand their efficiency as the technology improves.

The new Utah legislation does not apply to condominium or townhouse communities whose roofs are common areas. They are not required to permit members to install solar systems, but you may choose to do so within certain architectural guidelines for the benefit of your members. For townhouses where the roof is portioned into limited common areas between a handful of members, one member who wishes to invest in solar would need the consent of his common neighbors. Solar paneling provides insulation to a roof, so common members would benefit, regardless of whether they are wired to the alternative energy production. Common members may also choose to invest together in a solar system. Your HOA’s architectural guidelines should address all of those possibilities.

Solar for New Communities
Installing solar systems as part of a new construction project is often the most affordable method because the costs can be appointed right into member’s mortgages. Planned communities can design building architecture for ideal solar panel placement, and can design landscapes to place tall trees is spaces that will not conflict with solar production. In addition, new members would agree to the solar components of your Governing Documents as part of entering the homeowner’s association.

Vial Fotheringham provides legal assistance to homeowner’s associations. If you have legal questions or need assistance in drafting governing documents or architectural guidelines, contact us today.

References
The Solar Foundation, “A Beautiful Day in the Neighborhood, Encouraging Solar Development through Community Association Policies and Processes”