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Sunday, April 5, 2009

Federal Solar Stimulus Package Summary

1.       Renewable Energy Grants
Creates a new program through the Department of Treasury that provides grants equal to 30 percent of the cost of solar property placed in service during 2009 and 2010, in lieu of the section 48 investment tax credit. This grant program is important because it will allow companies with no tax liability to obtain the financial benefit of the tax credit without needing a tax liability.

  1. Repeals Penalty for Subsidized Renewable Energy Financing
    Allows businesses and individuals to qualify for the full amount of the solar tax credit, even if projects receive subsidized energy financing (e.g. below market loans, tax preferred bonds, state grants etc.). This amendment shall apply to periods after Dec. 31, 2008. (Div. B, Sec. 1103, p.36) This will allow customers who purchase solar through a Berkeley type program with solar financed by bonds and repaid through property taxes to also qualify for the federal investment tax credit.
  2. Renewable Energy Loan Guarantee Program
    Establishes a temporary DOE loan guarantee program for renewable energy projects, renewable energy manufacturing facilities and electric power transmission projects. Appropriates $6 billion to pay the credit subsidy costs, which should support $60 billion worth of loan guarantees. Davis
     Bacon wage requirements (prevailing federal wage) apply to any project receiving a loan guarantee. (Div. A, p. 63 & p. 77)
  3. Solar on Federal Property
    • Appropriates $5.5. billion to be deposited into the Federal Buildings Fund for expenditures to construct, repair and make alterations on federal buildings to increase energy efficiency, including installing solar energy equipment. $4.5 billion shall be available for measures necessary to convert GSA facilities to high
     performance green buildings. (Div. A, Title V, General Services Administration, p. 88)
    • Appropriates $1 billion for non
    -recurring maintenance on Veterans Affairs facilities, including energy projects. (Div. A, p. 213)
    • GSA estimates that 75% of the anticipated projects will include a solar component.
  4. Extend Bonus Depreciation
    Last year, Congress temporarily increased the amount (50% of the cost of capital investment) that small businesses could write
    -off for capital expenditures incurred in 2008 to $250,000 and increased the phase-out threshold for 2008 to $800,000. The bill would extend these temporary increases for capital expenditures incurred in 2009. Accordingly, until the end of 2010, small business taxpayers are allowed to write-off up to $125,000 (indexed for inflation) of capital expenditures subject to a phase-out once capital expenditures exceed $500,000 (indexed for inflation). (Div. B, Sec 1202, p. 74)
  5. Remedy for AMT and R&D Credits in Lieu of Bonus Depreciation
    Where a taxpayer is in a loss position, deductions in excess of income are unable to enjoy the benefit of bonus depreciation. This provision extends the allowance in the Foreclosure Prevention Act of 2008 that permits AMT and loss taxpayers to receive 20% of the value of their old AMT or R&D credits to the extent such taxpayers invest in assets that qualify for bonus depreciation. The amount is capped at the lesser of 6% of outstanding and unused AMT and R&D credits or $30 million. The extension of the additional first
    -year depreciation deduction is generally effective for property placed in service after December 31, 2008. The extension of the election to accelerate AMT and research credits in lieu of bonus depreciation is effective for taxable years ending after December 31, 2008. (Div. B, Sec 1201(b), p. 71)
  6. 5 Year Carryback of Net Operating Losses
    For tax years 2008 and 2009, extends the maximum carryback period for net operating losses from two years to five years. Eligible small business may elect to increase the carryback period for an applicable 2008 NOL from two years to any whole number of years elected by the taxpayer that is more than two and less than six. An eligible small business is a taxpayer meeting a $15,000,000 gross receipts test. (see Sec. 448(c)) An applicable NOL is the taxpayer's NOL for any taxable year ending in 2008, or if elected by the taxpayer, the NOL for any taxable year beginning in 2008. However, any election under this provision may be made only with respect to one taxable year. (Div., B. Sec. 1211, p. 74)
  7. New Clean Renewable Energy Bonds (“New CREBs”)
    Provides an additional $1.6 billion for new clean renewable energy bonds to finance facilities that generate electricity from renewable energy sources including solar facilities. (Div. B, Sec. 1111, p. 39)
  8. Solar for Schools
    Appropriates $53.6 billion to a state fiscal stabilization fund. Specifies that states shall use 18.2% of this money for public safety and other government services, including the renovation of facilities and schools to meet green building standards. Solar energy projects qualify. (Div. A, Sec. 14001
    -14002, pp. 425-429)
  9. Green Collar Jobs
    Appropriates $500 million to fund job training programs in energy efficiency and renewable energy. (Div. A, Title VIII, p. 148) Also appropriates $250 million for rehabilitation and construction projects on Job Corps Centers, including energy efficiency and renewable energy projects. (Div. A, Title VIII, p. 150)
  10. Solar Water Treatment Plants
    • Provides $6 billion for the State and Tribal Assistance Grants account ($4 billion for the Clean Water State Revolving Funds and $2 billion for the Drinking Water State Revolving Funds). To ensure that the funds are used immediately to create jobs, the money must be committed to projects under contract or construction within 12 months of the date of enactment.
    • The bill requires that not less than 20 percent of each Revolving Fund be available for projects to address green infrastructure, water and/or energy efficiency, or other environmentally innovative technologies. The bill allows States to use less than 20 percent for these types of projects only if the States lack sufficient applications. (Div A, Title VII, p. 137)
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