By - Jon Brown

In-Depth Tax Planning for Renewable Energy Projects
July 14-15, 2016 | Portland, OR

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Overview

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, as well as how much a project developer receives and when, depend greatly on how the tax incentives are handled.

Of course, the relevant rules are highly technical.  This often means that investors, users, and developers – as well as less-specialized professionals – 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 attacks.

This course is designed to give investors, users, developers, 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. 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.

Learning Outcomes

The course content will:

  • Review the existing incentives for renewable energy and discuss how the tax incentives for renewables changed in late 2015
  • 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”

Credits

AP_LogoEUCI 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 1.0 CEUs for this course.

Agenda

Thursday, July 14, 2016

7:30 – 8:00 a.m. :: Registration and Continental Breakfast

8:00 a.m. – 5:00 p.m. :: Course Timing

12:00 – 1:00 p.m. :: Group Luncheon

I. 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
  • Detailed review of a typical PTC financial model
  • Detailed review of a typical ITC financial model
II. 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
    • Tax-exempt participants
    • Pre-payment of electricity
    • “Flip” Structures
    • Exit strategies
      • Recapture of tax credits and grants
      • “Flips”
      • 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
  • Developer and financing participant panel
    • Discussing Day 1 Items
    • Future of tax incentives for renewables and the current thinking in Washington

DAY 2 AGENDA

Friday, July 15, 2016

7:30 – 8:00 a.m. :: Continental Breakfast

8:00 a.m. – 4:00 p.m. :: Course Timing

12:00 – 1:00 p.m. :: Group Luncheon

III. Leasing Structures
  • Basic concepts
    • What is a “lease”?
  • More specialized leasing arrangements
    • Sale-leaseback
    • Lease pass-through (“inverted lease”) structure
    • 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”
    • REITs

IV.Detailed Review of a Typical Lease Pass-Through Financial Model

V.Accounting for Renewable Energy Investments (GAAP)

VI. 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

VII.Section 704(b) Tax Allocations

VIII. New Markets Tax Credits
  • Requirements
  • Basic structures
  • Leveraged loan model
  • Use with lease pass-through structure
  • Combining with PTCs, ITCs, and other incentives

IX.Audits and Audit Risks

X. Specialized Tax Issues
  • 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?
XI. Developer and Industry Participant Roundtable Discussion

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.

Instructors

James F. Duffy is a Partner at Nixon Peabody LLP.  His practice concentrates on structuring and closing transactions involving federal income tax credits and other significant federal and state income tax incentives, including production tax credits for wind and other forms of renewable energy, energy investment tax credits for solar and certain other forms of renewable energy, Treasury cash grants in lieu of energy investment tax credits, new markets tax credits, historic rehabilitation tax credits, and low-income housing tax credits.  He has represented numerous developers, investors, syndicators, and lenders in structuring and closing such transactions, representing parties in many high-profile renewable energy transactions.

Richard Cogen is a Partner at Nixon Peabody LLP, and past Chair of the firm’s Energy and Environment Practice Group.  Over his 30-year career, he has worked extensively on the development of major energy, renewable energy, and electric transmission facilities.  His practice currently focuses on the development of wind, solar, biomass and fossil fuel-fired generating facilities, and independent transmission projects.  Mr. Cogen has represented developers, buyers, and sellers of, and investors in, utility and commercial scale solar energy generating facilities.   He earned a J.D. from Cornell Law School, and a B.A. from the University of Rochester.

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. He received a bachelor’s degree from Northeastern University in Boston, Mass., and is licensed in Massachusetts and New Hampshire as a certified public accountant.

Forrest David Milder is a Partner in the Boston office of Nixon Peabody LLP.  He has more than 30 years’ experience in the tax aspects of project finance, particularly renewable energy (including solar, wind, geothermal, and biofuels), housing, historic rehabilitations, and new markets, as well as many other related fields, including partnerships and limited liability companies; tax-exempt organizations and unrelated business income; business formation, operation, and disposition; executive compensation; and tax-exempt bonds and other structured financial products.
Brian Morrissey is the Director of Solar Development at Citizens Energy Corporation. Prior to joining Citizens Energy, he was an Associate at Cambridge Energy Research Associates (CERA), a leading energy consulting and research firm to international energy companies, governments, financial institutions, and technology providers led by Daniel Yergin.  At CERA, he was on the Global Power team and focused on renewable policy and finance.  Prior to his work at CERA, Mr. Morrissey worked in GE Energy’s central marketing and strategy group, and was an officer in the U.S. Army.  He received a BS in Mechanical Engineering from the U.S. Military Academy at West Point and an MBA from the Massachusetts Institute of Technology (MIT).

Joe Ritter is Vice President of Production at Seminole Financial Services, LLC – a full-service national investment management and financial services organization.  Since 2009, Seminole has provided construction and permanent financing for over 200 MW worth of solar and wind projects, totaling over a half-billion dollars of its own managed capital.  Mr. Ritter has been with Seminole since its inception and has personally originated, underwritten and managed more than $200 million in construction and permanent financing for renewable energy projects (and an additional $131 million in commercial real estate).  He holds a Bachelor’s Degree in Finance from the University of Central Florida.

Mark Williams is a Managing Director at PNC Equipment Finance.  He has more than 20 years’ experience in originating, structuring, advising and arranging large ticket asset, facility and project-based financings in the domestic and cross-border markets.   Mr. Williams has been involved in several renewable energy project financings on behalf of developers and tax equity investors with respect to wind and solar electric generation facilities.  His experience in the leasing and asset finance market spans the entire range of the market from small ticket, vendor-driven financings to highly-structured, domestic and cross-border, leveraged financings of equipment, real estate, facilities and infrastructure assets, and renewable energy assets (wind, solar, geothermal and landfill gas facilities). Prior to joining PNC Equipment Finance (formerly known as GSF Advisors), he was a Managing Director at BTMU Capital Corporation and at Dexia Global Structured Finance LLC (formerly PricewaterhouseCoopers – Global Structured Finance).   Mr. Williams started his career as an in-house attorney with AT&T Capital Corporation and in private practice with several prominent Boston law firms.  He received a B.A. from the University of Wisconsin and a J.D. from the University of Texas School of Law. Mr. Williams is a member of the bar of the Commonwealth of Massachusetts and is licensed as a real estate broker in Massachusetts. In addition, Mr. Williams maintains the Series 7 and 63 General Securities Representative FINRA licenses.

Location

Portland Marriott Downtown Waterfront
1401 SW Naito Pkwy
Portland, OR 97201

To reserve your room, please call 1-503-226-7600

Please indicate that you are with the EUCI group to receive the group rate.

or book online at https://resweb.passkey.com/go/EUCImeetingJuly2016

ROOM RATE:

The room rate is $229.00 single or double plus applicable taxes.

ROOM BLOCK DATES:

A room block has been reserved for the nights of July 13 – 14, 2016.

RATE AVAILABLE UNTIL:

Make your reservations prior to June 13, 2016. There are a limited number of rooms available at the conference rate. Please make your reservations early.

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