Stites & Harbison, PLLC

A unique opportunity may be available for businesses to finance projects that make major reductions in energy costs. In that regard, a financing structure to consider is the “marrying” of the New Markets Tax Credit  “NMTC” with other tax credits and incentives related to renewable energy.

The NMTC can provide up to a thirty-nine percent tax credit for qualifying non-residential commercial projects that are located in low-income communities.  The NMTC can often help to fill the gap in structuring the financing of renewable energy projects.  Other tax credits and incentives that may be available for renewable energy projects include:

• Thirty Percent Federal Grant.  Look into this option while there is still time.  A 30 percent grant for solar photovoltaic and solar thermal projects, available now, is scheduled to expire at the end of this year.
• One Hundred Percent Bonus Depreciation.  Depreciable property such as biomass equipment or solar panels purchased for the renewable energy project can be depreciated at 100 percent.  This benefit will be reduced to 50 percent next year and return to prior depreciation rules the following year.  (need to explain what the prior depreciation rules are)
• Other Governmental Grants.  Due largely to the economic incentive provided by and jobs created by renewable energy projects, other federal, state, city and county grants may be available to help finance renewable energy projects.

For example, a “sponsoring” company may be able to structure financing of a renewable energy project, such as a solar, biomass or hydroelectric project, located in a "low-income community" with NMTCs “married to” other tax credits/grants/bonus depreciation/other incentives.  The following materials will give you more details about the ability to "marry" NMTCs with renewable energy grants/credits/incentives:

1. Material Provided at an USGBC Panel Discussion held on February 24, 2011

2. White Paper co-authored with the Reznick Group and presented to a Workshop, March 15, 2011, sponsored by the University of Louisville

3. Material Provided at a Forum presented April 27, 2011, held by the Georgia Sustainability Business Coalition

Should you have any questions or like more information about the financing structure of “marrying” the NMTC with other tax credits and incentives available for renewable energy projects, please contact one of our attorneys, including the following who practice in the tax and/or renewable energy areas:

Jim Seiffert, Louisville office – jseiffert@stites.com; 502-681-0519
Bill Groton, Lexington office – wgorton@stites.com; 859-226-2241
Jeff King, Nashville office – jeff.king@stites.com, 615-782-2293
Jamie Cox, Louisville office – jcox@stites.com; 502-681-0576
Allen Bradley,  Atlanta office – abradley@stites.com; 404-739-8978