Renewable Energy Projects Tax Structuring and Strategies
Updated to Reflect Changes Effected by Recent Legislation and IRS Rulings
June 17-18, 2020 | Online :: Central Time
This is an Online Course. In lieu of recent developments with COVID-19, for the health and safety of our speakers and attendees, we have decided to move many of our events to Online Courses.
Maximizing the benefits of tax incentives is vital in any renewable energy transaction, and whether a project “pencils out” generally turns on the efficient use of these incentives. How soon investors can get their desired return and exit the project, how much a project developer receives, and when, depends greatly on how the tax incentives are handled.
Indeed, the relevant rules are highly technical. This often means that parties involved in the acquisition and disposition of renewable energy assets typically depend on the structuring advice of experts who often assume the “typical” business deal and then provide general guidance about deal structures, using jargon and arcane tax references. Worse, some investors, users, developers, and their advisers may “go it alone” and fail to attend to important aspects, leaving money on the table or putting their ventures at the risk of IRS challenges.
This course, therefore, is designed to give investors, developers, lenders, asset owners, utilities and their advisers an in-depth understanding of the tax issues involved in the development and structure of renewable energy projects. The discussion will first focus on the various incentives available for renewables, then move to an in-depth discussion of the basic and more advanced tax and accounting rules for partnerships and leasing structures. It will incorporate case studies of actual deal structures, using economic models designed specifically for renewable energy projects. Finally, there will be a discussion as to how the tax incentives for renewables investments have been influenced by the Trump administration and updated to reflect changes effected by both the budget act and tax act of 2018. Throughout, the content will embed definitions, references to the terms employed, and transaction-specific examples. The program will culminate with a roundtable discussion of experienced renewable developers, lenders and investors.
The course content will:
- Review the existing incentives for renewable energy and discuss how the tax incentives for renewables investment has been influenced by the Trump administration and current Congress
- Discuss in depth the various rules for partnerships and leasing structures
- Explain how to optimize the financial accounting aspects of renewables
- Describe the use of new markets tax credits
- Review case studies using economic modeling analysis
- Discuss with experienced developers, lenders and investors the issues they confront in their projects
- Examine how to present financial documents to achieve the greatest “bankability”
EUCI has been accredited as an Authorized Provider by the International Association for Continuing Education and Training (IACET). In obtaining this accreditation, EUCI has demonstrated that it complies with the ANSI/IACET Standard which is recognized internationally as a standard of good practice. As a result of their Authorized Provider status, EUCI is authorized to offer IACET CEUs for its programs that qualify under the ANSI/IACET Standard.
EUCI is authorized by IACET to offer 1.4 CEUs for this event.
Upon successful completion of this event, program participants interested in receiving CPE credits will receive a certificate of completion.
Course CPE Credits: 14.0
There is no prerequisite for this Course.
Program Level: Beginner/Intermediate
Delivery Methood: Group-Live
Advanced Preperation: None
EUCI is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit.
PowerPoint presentations and case studies will be used in program.
Requirements For Successful Completion Of Program
You must be logged in for the entire presentation and send in the evaluation after the online course is completed.
Wednesday, June 17, 2020 – Central Time Zone
8:30 – 9:00 a.m. :: Log In
9:00 – 9:15 am ::Overview and Introductions
9:15 – 10:15 a.m. :: Overview of Tax Incentives for Renewable Energy
- Refresher on the basics – credits, grants, and depreciation
- The Production Tax Credit (PTC) – Section 45 / sales of electricity to third parties
- The Investment Tax Credit (ITC) – Section 48 / based on cost of the facility
- Recent extension of PTC and ITC, with relevant changes
- MACRS and bonus depreciation
10:15 – 10:25 a.m. :: Morning Break #1
10:25 – 10:45 a.m. :: Overview of Tax Incentives for Renewable Energy (con’t)
10:45 – 11:30 a.m. :: Solar “Flip” Financial Model Review
11:30 – 11:40 a.m. :: Morning Break #2
11:40 a.m. – 1:00 p.m. :: Solar “Flip” Financial Model Review (con’t)
1:00 – 1:45 p.m. :: Break for Lunch
1:45 – 3:00 p.m. :: Tax Elements and Characteristics
Partnerships and LLCs
- Why are partnerships and LLCs used for renewable projects?
- Basic partnership/LLC tax issues
- Comparing allocations with distributions
- Can you “sell” tax benefits?
- Development fees and other items that go into basis
- What you need to know about capital accounts
- Cash investors
- Lease vs. loan vs. service contract
- Determining ownership for tax purposes
- Section 7701
- Equipment leasing safe harbors – the IRS
- More complex partnership issues
- Treasury’s rules about “substantial economic effect”
- Historic Boardwalk Hall and Rev. Proc. 2014-12
- Economic substance and profit motive
- Economic substance
- Partner in a partnership
- Cash profits
- Sacs case
- Rev Prov 2014-12 / HBH
- Overview of capital accounts
- Inside vs. outside basis
- Basis vs. 704b capital accounts
- Debt allocations
- Minimum gain
- 731/734 issues that can arise when partners receive distributions in excess of basis
3:00 – 3:10 p.m. :: Afternoon Break #1
3:10 – 4:10 p.m. :: Tax Elements(cont’d)
4:10 – 4:20 p.m. :: Afternoon Break #2
4:20 – 5:15 p.m. :: Project Financing SME Panel/Open Forum
- Discussing Day 1 Items
- Recently enacted and pending legislative measures relating to renewables
- Current “thinking” in Washington
5:15 p.m. :: Program Adjourns for Day
Thursday, June 18, 2020
8:45 – 9:00 a.m. :: Log In
9:00 – 9:30 a.m. :: Interparty Agreements: Lender – Investor Engagement
9:30 – 10:15 a.m. :: Wind Financial Model Review
10:15 – 10:25 a.m. :: Morning Break #1
10:25 – 11:40 a.m. :: Complex Tax Issues
- Tax-exempt participants
- Pre-payment of electricity
- “Flip” Structures
- Exit strategies
- Recapture of tax credits and grants
- Purchase options
- Puts and calls
- Limits on an investor’s ability to deduct losses
- Computing basis
- The role of non-recourse debt and minimum gain (Section 752)
- General debt vs. equity considerations
- Allocations of depreciation and net losses
- Economic substance and profit motive
- Specialized tax issues for renewables
- Allocations of tax credits and non-taxable Section 1603 grant proceeds
- Modeling issues
- Pre-payment for energy
- IRS safe harbor for “flip” structure transactions
- Commencement of construction for PTC purposes
- Section 50(d) income/loss allowance
- Differences between credits and grants when using leases
- Accounting issues
- Leasing to tax-exempt and governmental entities
- “Tax-exempt use”
- “Disqualified leases”
- Individual Investors
- At-risk rules
- Depreciation rules
- Tax credit rules
- Lease pass-through rules
- Passive loss rules
- Securities disclosure of tax items for individual investors
- Section 704(b) Tax Allocations
11:40 – 11:50 a.m. :: Morning Break #2
11:50 a.m. – 1:00 p.m. :: Detailed Review of Typical Lease Pass-Through Financial Model
1:00 – 1:45 p.m. :: Break for Lunch
1:45 – 2:30 p.m. :: GAAP, HLBV, Consolidation & Accounting for Tax Credits
- Accounting for Renewable Energy Investments (GAAP)
2:30 – 3:00 p.m. :: New Markets Tax Credits
- Basic structures
- Leveraged loan model
- Use with lease pass-through structure
- Combining with PTCs, ITCs, and other incentives
3:00 – 3:15 p.m. :: Afternoon Break
3:15 – 4:15 p.m. :: Advanced Tax Structuring Considerations
- Commencement of construction
- Tax ramifications of power purchase agreements (PPAs)
- IRC Section 467
- Options to buy
- Sharing of REC and SREC Revenues
- Sharing benefits with a project host
- 80% of useful life Issues and appraisals
- Selling permitted development rights or early stage projects
- What about Yieldcos and other alternative mechanisms?
- 731 gains
- Step ups
- Year 6 tax issues
4:15 – 5:00 p.m. :: Project Financing SME Panel/Open Forum
The roundtable-format panel will focus on the practical problems confronted by developers and other industry participants in maximizing the efficiency of monetizing tax incentives in structuring and financing renewable energy projects. It will also discuss aspects of how to assemble a team of deal experts.
5:00 p.m. :: Program Adjourns
Shariff Barakat, Project Finance Attorney, Nixon Peabody LLP
Shariff Barakat is a project finance attorney at Nixon Peabody focused on domestic infrastructure and renewable energy projects. He represents developers, sponsors, tax-equity investors, lenders and other stakeholders in the acquisition, development and financing of power generation projects. Mr. Barakat’s focus is representing clients involved in the acquisition, development and financing of renewable energy power generation projects, with a particular focus on tax equity financing. He handles due diligence review, drafting and negotiating primary transaction documents and providing tax advice and opinions, as well as overall project management. Prior to joining Nixon Peabody, he worked at a Big Four consulting firm where he provided tax advice and opinions, financial modeling services and valuation services in connection with renewable energy projects. Mr. Barakat also provided tax advice and opinions on a number of large M&A and tax-advantaged leasing transactions.
Tom Boman, Partner, Novogradac & Company LLP
Tom Boman is a partner in the St. Louis office of Novogradac & Company LLP. He joined the St. Louis office in 2013 as a tax partner. Before joining the firm, he served as a senior vice president of tax for a private equity firm in St. Louis. Mr. Boman has more than 30 years of experience as a tax consultant to a variety of companies with a focus on pass-through entities. He has significant experience with the new markets tax credit (NMTC) at both the federal and state levels. He also worked for 17 years in public accounting, primarily with the Big Four firms. Mr. Boman participates in the Partnership and LLC Committee of the American Bar Association and is a member of the American Bar Association, the American Institute of Certified Public Accountants and the Missouri Society of Certified Public Accountants. He has Juris Doctor and Master of Business Taxation degrees from the University of Minnesota. Mr. Boman served as an adjunct instructor at the law school at Washington University in St. Louis, where he taught federal partnership taxation for 16 years.
James F. Duffy, Partner, Nixon Peabody LLP
James F. Duffy is a partner in the Boston office of the national law firm, Nixon Peabody LLP. He serves as the Co-Chair of the firm’s Renewable Energy Tax Credit Team and concentrates his practice on structuring and closing transactions involving federal income tax credits and other significant federal and state income tax incentives, including Production Tax Credits and Investment Tax Credits for renewable energy. His practice also covers New Markets Tax Credits. Mr. Duffy has represented numerous developers, investors, syndicators and lenders in structuring and closing renewable energy and other transactions. He serves on the Board of Directors and is the Secretary of the Distributed Wind Energy Association (DWEA), as well as the Board of Directors of Windustry. He is a graduate of the University of Rhode Island, B.A. and The Harvard Law School.
Tony Grappone, Partner, Novogradac & Company LLP
Tony Grappone is a partner in the Boston, Mass., office of Novogradac & Company LLP, where he specializes in providing accounting, tax, and consulting services to developers, syndicators, and investors of projects that qualify for the low-income housing tax credit, historic tax credit, new markets tax credit, and renewable energy tax credit. He serves as a technical editor of the firm’s Renewable Energy Tax Credit Handbook. Prior to joining Novogradac & Company LLP, Mr. Grappone worked at Ernst & Young LLP, specializing in partnership taxation within the affordable housing industry, servicing many of the nation’s largest tax credit syndicators and investors. In addition, he served several leading venture capital firms as well as commercial real estate developers and investors. Mr. Grappone serves as a member on the Northeastern University Undergraduate Accounting Group Advisory Board.
Courtney Mooney, Associate, Nixon Peabody LLP
Courtney Mooney is an associate in the Boston office of Nixon Peabody LLP. As a member of the Tax Credit Finance & Syndication Group, she handles transactions utilizing renewable energy tax credits. She assists developers and equity investors in financing the construction and development of solar and wind facilities across the country. Prior to joining Nixon Peabody, Ms. Mooney worked at Ernst & Young LLP in its National Tax practice. Her practice concentrated on advising tax equity investors and project developers on the business and tax implications arising from tax credit transactions. She assisted clients in structuring renewable energy deals that involved the investment tax credit and production tax credit. In her role at Ernst & Young LLP, Ms. Mooney reviewed and built financial models, provided tax advisory services, and performed financial and transactional due diligence.
Lan Adair Sasa, Vice President – Renewable Energy Investments, U.S. Bancorp Community Development Corp
Lan Adair Sasa is Vice President of Renewable Energy Investments, U.S. Bancorp Community Development Corp. She leads a transaction underwriting and closing team at U.S. Bank that specializes in renewable energy tax equity investments. In her current role she has overseen the development of deployment of over $4.6B and 5.6GW of solar, wind and storage assets to date. Lan is a graduate of the St. Louis University and Oberlin College.
Lloyd Ritter, Founder and Managing Partner, Green Capitol, LLC
Lloyd Ritter is the founder and managing partner of Green Capitol, LLC. Since 2006 Green Capitol has specialized in agriculture, clean energy and environment advocacy, strategic planning and public policy development. The company has advised a wide-array of businesses, trade groups and non-profit organizations. Prior to forming Green Capitol, Mr. Ritter was a Senior Counsel to the Senate Agriculture, Nutrition and Forestry Committee where he advised Chairman Tom Harkin (D-IA) and Committee Democrats on key policy issues. In 2002, he designed for then Chairman Harkin the first-ever energy title to appear in a Farm Bill, deemed “landmark legislation” at the time. He was also one of a handful of leading staffers orchestrating the passage of the first Renewable Fuels Standard, biomass and bioproduct and wind power amendments to the 2005 energy bill. He holds a Bachelor’s Degree in Political Science and Juris Doctor with Certificates in Environmental and International Law.
Peter Lawrence, Director – Public Policy & Government Relations, Novogradac & Company LLP
Peter Lawrence is Director of Public Policy & Government Relations for Novogradac & Company LLP. In this role, he coordinates the firm’s public policy and government relations work on low-income housing tax credit (LIHTC), the new markets tax credit (NMTC), the historic rehabilitation tax credit (HTC), renewable energy tax credits, and U.S. Housing & Urban Development programs. Prior to joining Novogradac & Company, Mr. Lawrence was the senior director of public policy and government affairs for Enterprise Community Partners where he led the execution of Enterprise’s policy and advocacy agenda. He also was a housing policy analyst for the Center on Budget Policies and Priorities, where he worked on the Section 8 Housing Choice Voucher Program, a congressional fellow for Sen. Jack Reed of Rhode Island in his capacity as the Ranking Member of the Senate Housing and Transportation Subcommittee, and a presidential management fellow for the Office of Policy Development & Research at the U.S. Department of Housing & Urban Development.
Our courses are designed to be the best possible use of your valuable time – get the information you need to improve your position in the market in an interactive, dynamic format.
We will be using Microsoft Teams to facilitate your participation in the upcoming event. You do not need to have an existing Teams account in order to participate in the broadcast – the course will play in your browser and you will have the option of using a microphone to speak with the room and ask questions, or type any questions in via the chat window and our on-site representative will relay your question to the instructor.
- You will receive a meeting invitation will include a link to join the meeting.
- Separate meeting invitations will be sent for the morning and afternoon sessions of the course.
- You will need to join the appropriate meeting at the appropriate time.
- If you are using a microphone, please ensure that it is muted until such time as you need to ask a question.
- The remote meeting connection will be open approximately 30 minutes before the start of the course. We encourage you to connect as early as possible in case you experience any unforeseen problems.