For the complete list of CREBs allocations from 10/09, please click link to view PDF.
https://acrobat.com/#d=DErZMY0U9llpPnZ2ofs19g
Tuesday, April 20, 2010
CREBs Fact Sheet 5/09
1. Program Description
The CREBs program provides eligible entities with the opportunity to issue tax-credit bonds to finance renewable energy installations on their facilities. Eligible entities apply for allocations under the CREBs program. The eligible entities then use their allocations to issue the tax-credit bonds.
The CREBs program is complementary to other funding mechanisms for renewable energy installations. Thus, using CREBs allocations to finance a renewable energy installation does not preclude an eligible entity from using certain other funding sources for that installation.
2. Eligible Entities
The CREBs program is available to public power providers, cooperative electric companies, and governmental bodies. The CREBs program defines “governmental bodies” as states, Indian tribal governments, and their political subdivisions. Political subdivisions include state and local public agencies such as counties, cities, regional transportation authorities, water districts, fire districts, school districts, community college districts, and public universities.
3. Eligible Renewable Energy Installations
Eligible renewable energy installations include solar, wind, geothermal, open-loop biomass, closed-loop biomass, small irrigation, hydropower, landfill gas, marine renewables, and trash combustion systems.
4. Features of Tax-Credit Bonds
The CREBs program does not provide direct funding to eligible entities for renewable energy installations. Instead, the eligible entities use allocations under the CREBs program to issue tax-credit bonds to finance those installations. The eligible entities pay back only the principal of the bond, and the bondholder receives federal tax credits in lieu of the traditional bond interest. The tax credit rate is set daily by the U.S. Treasury Department. Under past SD\680853.12
CREBs allocations, the credit could be taken quarterly on a dollar-for-dollar basis to offset the tax liability of the bondholder. Under the new allocation, however, the credit has been reduced
to 70% of what it would have been otherwise.
Tax-credit bonds issued under the CREBs program differ from traditional tax-exempt bonds because the Internal Revenue Service (IRS) treats the tax credits issued through the CREBs program as taxable income for the bondholder. The bondholder may take the tax credit each year that the bondholder has a tax liability, as long as the credit amount does not exceed the limits established by the Energy Tax Incentives Act of 2005.
Theoretically, the eligible entities issue the bonds with a 0% interest rate. In practice, however, the eligible entities typically must issue the bonds at a discount or make supplemental interest payments in order to find a buyer. Also, eligible entities may issue pooled financing bonds, as long as they enter into written loan commitments with each borrower before the issue date of the bonds.
5. Available Allocations
The Energy Improvement and Extension Act of 2008 provided $800 million for the CREBs program, which has not yet been allocated. The American Recovery and Reinvestment Act of 2009 (i.e., the federal stimulus bill) provided another $1.6 billion for the program, which also has not yet been allocated. Thus, the new allocations for the CREBs program total $2.4 billion. The amount available to governmental bodies is one-third of that total, or $800 million. Another third goes to public power providers, and the final third goes to cooperative electric
companies.
6. Key Deadlines
The IRS, which administers the CREBs program, has announced that applications for the new allocations are due August 4, 2009. The allocations are valid for three years from when the IRS grants them and will be forfeited if eligible entities do not use them before then to issue tax-credit bonds. Reporting requirements and deadlines are similar to those for tax-exempt state or local government bonds.
7. Allocation Methodology
The IRS has adopted a smallest-to-largest allocation methodology for governmental bodies. Under this methodology, the IRS will allocate CREBs funds on a project-by-project basis. The first allocation will go to the project requesting the smallest dollar amount, the second allocation will go the project requesting the next smallest dollar amount, and so on until the $800 million available to governmental bodies is used up. This methodology advantages applications requesting small dollar amounts for individual projects. SD\680853.13
For allocation purposes, the IRS treats related projects as a single project. The IRS defines “related projects” as projects that: (1) are owned by the same entity or a related party; (2) are of the same type; (3) are located on the same site; and (4) are integrated, interconnected, or directly or indirectly dependent on each other.
8. Required Application Information
The IRS issued Notice 2009-33 to provide guidance on applying for the new CREBs allocations. The notice includes an application template. As the notice and application template state, applications for allocations must include the following information:
· The amount of funds requested.
· A detailed description of the project, including reasonably expected costs of components, such as land, site preparation, equipment, installation, transmission facilities, and capacity.
· Anticipated dates for beginning construction, installation, and operation of the project.
· Certification by a licensed engineer that the project meets the technical requirements under the CREBs program for renewable energy installations.
· A list of regulatory approvals needed for the project and the applicant’s plan and timeline for obtaining the approvals.
· A detailed financing plan, including all reasonably expected sources and uses of financing and other funds, the status of financing, the anticipated date of bond issuance, the sources of security and repayment for the bonds, the aggregate face amount of bonds expected to be issued for the project, and the issuer’s expected schedule for spending proceeds of the allocation.
The CREBs program provides eligible entities with the opportunity to issue tax-credit bonds to finance renewable energy installations on their facilities. Eligible entities apply for allocations under the CREBs program. The eligible entities then use their allocations to issue the tax-credit bonds.
The CREBs program is complementary to other funding mechanisms for renewable energy installations. Thus, using CREBs allocations to finance a renewable energy installation does not preclude an eligible entity from using certain other funding sources for that installation.
2. Eligible Entities
The CREBs program is available to public power providers, cooperative electric companies, and governmental bodies. The CREBs program defines “governmental bodies” as states, Indian tribal governments, and their political subdivisions. Political subdivisions include state and local public agencies such as counties, cities, regional transportation authorities, water districts, fire districts, school districts, community college districts, and public universities.
3. Eligible Renewable Energy Installations
Eligible renewable energy installations include solar, wind, geothermal, open-loop biomass, closed-loop biomass, small irrigation, hydropower, landfill gas, marine renewables, and trash combustion systems.
4. Features of Tax-Credit Bonds
The CREBs program does not provide direct funding to eligible entities for renewable energy installations. Instead, the eligible entities use allocations under the CREBs program to issue tax-credit bonds to finance those installations. The eligible entities pay back only the principal of the bond, and the bondholder receives federal tax credits in lieu of the traditional bond interest. The tax credit rate is set daily by the U.S. Treasury Department. Under past SD\680853.12
CREBs allocations, the credit could be taken quarterly on a dollar-for-dollar basis to offset the tax liability of the bondholder. Under the new allocation, however, the credit has been reduced
to 70% of what it would have been otherwise.
Tax-credit bonds issued under the CREBs program differ from traditional tax-exempt bonds because the Internal Revenue Service (IRS) treats the tax credits issued through the CREBs program as taxable income for the bondholder. The bondholder may take the tax credit each year that the bondholder has a tax liability, as long as the credit amount does not exceed the limits established by the Energy Tax Incentives Act of 2005.
Theoretically, the eligible entities issue the bonds with a 0% interest rate. In practice, however, the eligible entities typically must issue the bonds at a discount or make supplemental interest payments in order to find a buyer. Also, eligible entities may issue pooled financing bonds, as long as they enter into written loan commitments with each borrower before the issue date of the bonds.
5. Available Allocations
The Energy Improvement and Extension Act of 2008 provided $800 million for the CREBs program, which has not yet been allocated. The American Recovery and Reinvestment Act of 2009 (i.e., the federal stimulus bill) provided another $1.6 billion for the program, which also has not yet been allocated. Thus, the new allocations for the CREBs program total $2.4 billion. The amount available to governmental bodies is one-third of that total, or $800 million. Another third goes to public power providers, and the final third goes to cooperative electric
companies.
6. Key Deadlines
The IRS, which administers the CREBs program, has announced that applications for the new allocations are due August 4, 2009. The allocations are valid for three years from when the IRS grants them and will be forfeited if eligible entities do not use them before then to issue tax-credit bonds. Reporting requirements and deadlines are similar to those for tax-exempt state or local government bonds.
7. Allocation Methodology
The IRS has adopted a smallest-to-largest allocation methodology for governmental bodies. Under this methodology, the IRS will allocate CREBs funds on a project-by-project basis. The first allocation will go to the project requesting the smallest dollar amount, the second allocation will go the project requesting the next smallest dollar amount, and so on until the $800 million available to governmental bodies is used up. This methodology advantages applications requesting small dollar amounts for individual projects. SD\680853.13
For allocation purposes, the IRS treats related projects as a single project. The IRS defines “related projects” as projects that: (1) are owned by the same entity or a related party; (2) are of the same type; (3) are located on the same site; and (4) are integrated, interconnected, or directly or indirectly dependent on each other.
8. Required Application Information
The IRS issued Notice 2009-33 to provide guidance on applying for the new CREBs allocations. The notice includes an application template. As the notice and application template state, applications for allocations must include the following information:
· The amount of funds requested.
· A detailed description of the project, including reasonably expected costs of components, such as land, site preparation, equipment, installation, transmission facilities, and capacity.
· Anticipated dates for beginning construction, installation, and operation of the project.
· Certification by a licensed engineer that the project meets the technical requirements under the CREBs program for renewable energy installations.
· A list of regulatory approvals needed for the project and the applicant’s plan and timeline for obtaining the approvals.
· A detailed financing plan, including all reasonably expected sources and uses of financing and other funds, the status of financing, the anticipated date of bond issuance, the sources of security and repayment for the bonds, the aggregate face amount of bonds expected to be issued for the project, and the issuer’s expected schedule for spending proceeds of the allocation.
Thursday, April 15, 2010
Solar and Renewable Tax Exemption?
SB 71 (Alquist and Padilla and Strickland)
Economic development: sales and use tax exclusions: environmental technology project.
LEGISLATIVE COUNSEL'S DIGEST
SB 71, as amended, Committee on Budget and Fiscal Review
Padilla . Budget Act of 2009.
Economic development: sales and use tax exclusions: environmental technology project.
The California Alternative Energy and Advanced Transportation Financing Authority Act established the California Alternative Energy and Advanced Transportation Financing Authority. The authority is authorized to do all things necessary and convenient to carry out the purposes of the act. The authority is also required to establish a
renewable energy program to provide financial assistance, as defined,to certain entities for projects to generate new and renewable energy sources, develop clean and efficient distributed generation, and demonstrate the economic feasibility of new technologies.
Existing law provides that the transfer of title of tangible personal property constituting a project under the act to the authority by a participating party, or the lease or transfer of tangible personal property constituting a project under the act by the authority to a participating party pursuant to the act is not a "sale" or "purchase" for the purposes of the Sales and Use Tax Law.
This bill would, for purposes of the act until January 1, 2021, expand the definition of "alternative sources" and "projects," as specified. The bill would, until January 1, 2021, authorize the authority to evaluate project applications, and to approve projects, as defined, for financial assistance under the existing exclusion
from a "sale" or "purchase" subject to sales or use tax, as provided. This bill would require the Legislative Analyst's Office to submit a report to the Joint Legislative Budget Committee, as provided.
The Bradley-Burns Uniform Local Sales and Use Tax Law authorizes counties and cities to impose local sales and use taxes in conformity with the Sales and Use Tax Law, and districts, as specified, may impose transactions and use taxes in accordance with the Transactions and Use Tax Law, which conforms to the Sales and Use Tax Law.
Amendments to the Sales and Use Tax Law are automatically incorporated into these laws. Section 2230 of the Revenue and Taxation Code provides that the state will reimburse counties and cities for revenue losses caused by the enactment of sales and use tax exemptions. This bill would provide that, notwithstanding Section 2230 of the
Revenue and Taxation Code, no appropriation is made and the state shall not reimburse local agencies for sales and use tax revenues lost by them pursuant to this bill.
This bill would declare that it is to take effect immediately as an urgency statute.
This bill would express the intent of the Legislature to enact statutory changes relating to the Budget Act of 2009.
Economic development: sales and use tax exclusions: environmental technology project.
LEGISLATIVE COUNSEL'S DIGEST
SB 71, as amended, Committee on Budget and Fiscal Review
Padilla . Budget Act of 2009.
Economic development: sales and use tax exclusions: environmental technology project.
The California Alternative Energy and Advanced Transportation Financing Authority Act established the California Alternative Energy and Advanced Transportation Financing Authority. The authority is authorized to do all things necessary and convenient to carry out the purposes of the act. The authority is also required to establish a
renewable energy program to provide financial assistance, as defined,to certain entities for projects to generate new and renewable energy sources, develop clean and efficient distributed generation, and demonstrate the economic feasibility of new technologies.
Existing law provides that the transfer of title of tangible personal property constituting a project under the act to the authority by a participating party, or the lease or transfer of tangible personal property constituting a project under the act by the authority to a participating party pursuant to the act is not a "sale" or "purchase" for the purposes of the Sales and Use Tax Law.
This bill would, for purposes of the act until January 1, 2021, expand the definition of "alternative sources" and "projects," as specified. The bill would, until January 1, 2021, authorize the authority to evaluate project applications, and to approve projects, as defined, for financial assistance under the existing exclusion
from a "sale" or "purchase" subject to sales or use tax, as provided. This bill would require the Legislative Analyst's Office to submit a report to the Joint Legislative Budget Committee, as provided.
The Bradley-Burns Uniform Local Sales and Use Tax Law authorizes counties and cities to impose local sales and use taxes in conformity with the Sales and Use Tax Law, and districts, as specified, may impose transactions and use taxes in accordance with the Transactions and Use Tax Law, which conforms to the Sales and Use Tax Law.
Amendments to the Sales and Use Tax Law are automatically incorporated into these laws. Section 2230 of the Revenue and Taxation Code provides that the state will reimburse counties and cities for revenue losses caused by the enactment of sales and use tax exemptions. This bill would provide that, notwithstanding Section 2230 of the
Revenue and Taxation Code, no appropriation is made and the state shall not reimburse local agencies for sales and use tax revenues lost by them pursuant to this bill.
This bill would declare that it is to take effect immediately as an urgency statute.
This bill would express the intent of the Legislature to enact statutory changes relating to the Budget Act of 2009.
Monday, April 5, 2010
CREBs Coalition Update - 4/5/10
CREBs activity is picking up. I am pleased to share some items of mutual interest.
FIRST NEW CREBS DEALS PRICED
Neal Skiver reports that Bank of America has priced its first combination CREBs ($2MM) and QCEBs ($2MM) for a solar project in Yolo County. The project also used a low interest (3%) loan from the CEC. The deal is set to close within the week. More information can be made available soon on interest rate and term. We think these are the first ever new CREBS and QECB.
Our partners at Stone & Youngberg are working with Bank of America on a CREBs ($6MM), Tax-Exempt /Build America Bond ($15MM) renewable energy financing for the City of Brea that is likely to close on the heels of the Yolo County project.
SENATE AND HOUSE JOBS BILLS ADDRESS TAX CREDIT BONDS INCLUDING CREBs
The United States Senate is hoping to give final approval to the first in a series of job-creating measures, including language to expand some aspects of the Build America Bonds program. No legislation has been approved yet but it is possible that the Jobs bill will allow New CREBs to be sold as taxable debt with a direct interest subsidy to the issuer, instead of a tax credit. This would create a more liquid market for New CREBs. The direct subsidy provided under the new legislation will be the lesser of: (i) 70% of the qualified tax credit bond rate or (ii) the actual interest rate on the bonds. Action is expected any day. The House also has a bill in play. Below are two links to the action in this area. If meaningful action occurs, Stone & Youngberg has offered to host a webinar to walk us through the potential implications for projects. More to follow.
http://thehill.com/homenews/senate/86015-senate-passes-extension-of-some-unemployment-benefits
http://mcguirewoods.com/news-resources/item.asp?item=4597
IRS PROVIDES GUIDANCE ON EQUIPMENT LEASES
Neal Skiver informs us that the IRS recently gave guidance that equipment lessors under true lease agreements with municipalities/non-profits can now receive the benefit of the 30% Treasury grant. Attached is some information on the guidance and a few slides that Bank of America prepared. It is ground-breaking information that might change the whole PPA dynamic (See attachments).
CPUC APPROVES FUNDING FOR UCSD SOLAR FORECASTING WORK
Just last week, the CPUC approved funding for an expansion of Professor Jan Kleissl’s solar forecasting work seed funded by DOE ARRA’s High PV Penetration grant. The Am Solar Energy Society posted this story for their members. http://ases.org/index.php?option=com_myblog&show=California-PUC-funds-UCSD-forecasting-project.html&Itemid=27http://ases.org/index.php?option=com_myblog&show=California-PUC-funds-UCSD-forecasting-project.html&Itemid=27>
NEW LEADERSHIP COUNCIL HONORS CREBs PARTICIPANTS: APRIL 15
April 15 New Leadership Council Honors CREBs Coalition. On April 15, the San Diego chapter of the New Leadership Council will present its 2010 Community Collaboration Awards at a mixer from 6:00 – 8:00 pm at the W Hotel at 421 B Street in Downtown San Diego. We would be delighted if the entire coalition--muni partners and service providers--could be on hand for this special recognition. More information will be forthcoming. In the mean time, please mark your calendars.
FIRST NEW CREBS DEALS PRICED
Neal Skiver reports that Bank of America has priced its first combination CREBs ($2MM) and QCEBs ($2MM) for a solar project in Yolo County. The project also used a low interest (3%) loan from the CEC. The deal is set to close within the week. More information can be made available soon on interest rate and term. We think these are the first ever new CREBS and QECB.
Our partners at Stone & Youngberg are working with Bank of America on a CREBs ($6MM), Tax-Exempt /Build America Bond ($15MM) renewable energy financing for the City of Brea that is likely to close on the heels of the Yolo County project.
SENATE AND HOUSE JOBS BILLS ADDRESS TAX CREDIT BONDS INCLUDING CREBs
The United States Senate is hoping to give final approval to the first in a series of job-creating measures, including language to expand some aspects of the Build America Bonds program. No legislation has been approved yet but it is possible that the Jobs bill will allow New CREBs to be sold as taxable debt with a direct interest subsidy to the issuer, instead of a tax credit. This would create a more liquid market for New CREBs. The direct subsidy provided under the new legislation will be the lesser of: (i) 70% of the qualified tax credit bond rate or (ii) the actual interest rate on the bonds. Action is expected any day. The House also has a bill in play. Below are two links to the action in this area. If meaningful action occurs, Stone & Youngberg has offered to host a webinar to walk us through the potential implications for projects. More to follow.
http://thehill.com/homenews/senate/86015-senate-passes-extension-of-some-unemployment-benefits
http://mcguirewoods.com/news-resources/item.asp?item=4597
IRS PROVIDES GUIDANCE ON EQUIPMENT LEASES
Neal Skiver informs us that the IRS recently gave guidance that equipment lessors under true lease agreements with municipalities/non-profits can now receive the benefit of the 30% Treasury grant. Attached is some information on the guidance and a few slides that Bank of America prepared. It is ground-breaking information that might change the whole PPA dynamic (See attachments).
CPUC APPROVES FUNDING FOR UCSD SOLAR FORECASTING WORK
Just last week, the CPUC approved funding for an expansion of Professor Jan Kleissl’s solar forecasting work seed funded by DOE ARRA’s High PV Penetration grant. The Am Solar Energy Society posted this story for their members. http://ases.org/index.php?option=com_myblog&show=California-PUC-funds-UCSD-forecasting-project.html&Itemid=27http://ases.org/index.php?option=com_myblog&show=California-PUC-funds-UCSD-forecasting-project.html&Itemid=27>
NEW LEADERSHIP COUNCIL HONORS CREBs PARTICIPANTS: APRIL 15
April 15 New Leadership Council Honors CREBs Coalition. On April 15, the San Diego chapter of the New Leadership Council will present its 2010 Community Collaboration Awards at a mixer from 6:00 – 8:00 pm at the W Hotel at 421 B Street in Downtown San Diego. We would be delighted if the entire coalition--muni partners and service providers--could be on hand for this special recognition. More information will be forthcoming. In the mean time, please mark your calendars.
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