GENERAL FAQ

What is Foss & Company?

Foss & Company is a nationally recognized, institutional investment fund sponsor, striving to provide corporate investors the greatest access to federal and state tax credit-driven investments available within the tax credit marketplace. Our sole focus is to assist our investor and developer partners in selecting and structuring the most appropriate and efficient tax credit programs to meet their strategic tax planning and funding needs.

When was Foss & Company established?

Foss & Company was founded in 1983.

Where is Foss & Company located?

Foss & Company headquarters are located 832 Sansome Street, San Francisco, CA 94111. Foss & Company has representatives across the US, assisting both national and local partners as they navigate the world of tax credit investments.

Which markets does Foss & Company serve?

Foss & Company is active across the US, serving all 50 states.

What are tax credits?

Tax credits allow taxpayers to subtract from the total tax payment they owe the government. Unlike deductions and exemptions, which reduce taxable income, tax credits reduce the actual amount of tax owed on a dollar for dollar basis. These congressionally approved incentives are intended to enhance social, economic, and environmental impact while providing alternatives to traditional tax expenditures.

Is this a tax “loophole?

No. Congress approved these programs to encourage capital to flow towards programs and projects the government sees as beneficial. The U.S. government wants taxpayers to make these investments.

How do tax credit investments help my company meet our ESG goals?

ESG investors and professionals have identified tax credit investments as a key component of strategic ESG integration. Strategic utilization of tax liabilities reduces effective tax rates and improve earnings, all while enabling the fulfilment of sustainability and ESG goals. Foss & Company provides services that allow corporate taxpayers to direct their dollars to worthy projects that match their corporate sustainability goals.

What is a Foss Fund?

Foss & Company forms proprietary funds for the purpose of investing in projects that qualify for specified state and federal tax credits. These Funds afford corporations an efficient way to reduce their state and federal tax liabilities by acquiring interests in projects that generate tax credits.

Where are state tax credits available?

Foss & Company operates state tax credit funds in nearly every state in the U.S. Contact our team for additional information on state tax credit availability.

How does Foss manage risk?

Foss & Company has an inhouse, dedicated underwriting and asset management team to serve clients and investment mitigate risks. Foss & Company also utilizes the services of leading third-party advisers and legal counsel to ensure each transaction is optimally structured and risk mitigated.

Who should I contact if I have questions about Developer options?

For questions regarding real estate developer service options, please contact Eric Brubaker. For questions regarding renewable energy and sustainable technology developer service options, please contact Bryen Alperin.

Who should I contact if I have questions about Investor options?

For questions regarding available investor options, please contact George Barry

FOR INVESTORS

I’d like to find tax credits. How can Foss & Company help me?
Foss & Company has a dedicated team that closes and manages numerous projects that generate tax credits each year. Foss Funds are utilized to invest in these projects, and the tax benefits are ultimately allocated to our investor clients.
As an investor, what benefits does a tax credit investment provide me?

Tax credit investments provide an economic return on dollars that would otherwise be used to pay taxes, while generating positive environmental and social benefits.

How do tax credits impact my financial statement?

Please see our whitepaper on the GAAP implications of tax credit investments. For additional information, please contact our team.

Who is eligible for investment tax credit investments?

Eligible participants are Institutional Investors with a tax liability sufficient to utilize tax credits. Governmental and other tax-exempt entities typically cannot benefit from tax credits. There are special qualifying requirements for individuals, S Corporations, and closely held C Corporations. To learn more about options, please contact our team.

Will I receive project status updates?

The project is monitored continuously monitored by our professional asset management team, and investors receive periodic reports on project performance.

What is a recapture event and how does it occur?

In a recapture event a portion or all the tax credits may be lost or recaptured. The compliance period for federal renewable energy and historic real estate tax credits is 5 years and represents the total period over which noncompliance could result in disallowance or recapture of tax credits.

What is the likelihood of a recapture event occurring?

The likelihood is very low if the project is properly planned and the investor works with a reputable developer, syndicator and asset manager.

What if the project can’t service the underlying debt?

Foss & Company requires a forbearance agreement on any project-level debt in place during the investment period. This ensures that a default on a loan payment will not lead to a foreclosure during the first five years of the investment, thus protecting the tax equity investor from a tax credit recapture event that could be triggered by the foreclosure.

How do I receive my tax credits and depreciation?

Tax Credits and losses from depreciation are reported by the fund on a federal partnership Schedule K-1 which is provided to the investor annually. Information on the Schedule K-1 is then used by the investor’s tax preparer to report the tax credits and losses on the investor’s tax return.

What is a preferred return?

A preferred return is an annual cash return you receive as the tax equity investor based upon a percentage of your original capital contribution (typically 2.0% - 3.0%). It is paid before any other distribution to other investors or owners.

How do I receive my preferred return?

Your preferred return is paid quarterly or annually.

Can the credits be carried back or forward?

Yes, the credit is first carried back one year, and then carried forward 20 years.

Once I have invested and claimed the credits, how and when does the partnership end?

You must remain in the partnership for a period of 5 years to avoid recapture. Once this time period is complete, there is typically a right on the part of the investor to have their interest purchased at fair market value and a right on the part of the project sponsor to buy the investor’s interest for fair market value.

What is the difference between an Investor and a Syndicator?

Investors provide capital and bear economic risk while Syndicators are intermediaries that assist investors in sourcing, underwriting, closing and ongoing asset management of the investment(s) for a fee. The Syndicator takes the place of a multi-member staff generally required to thoroughly evaluate the financials and developer of each potential new project, as well as managing all of the compliant legal documentation, investment reporting and ongoing review.

Syndicators are not the recipients of the tax benefits, nor do they hold economic interest in the project(s), though their fees are typically aligned with the positive performance of the project. The primary function of the syndicator, once each deal and developer has been fully vetted, is to manage the delivery of all cost certifications for federal tax credits as agreed.

FOR DEVELOPERS

How can I submit a project for funding consideration?

If you are a developer looking for capital, Foss & Company has set up an easy, straight forward process for submitting projects for potential funding. Contact us today for more information.

Will I need to work with my bank or find a bank for funding?

Foss & Company has had unparalleled success in the last five years in delivering competitive tax equity pricing and terms on every project. Our efficient, full-service team is your one stop partner from beginning to end, identifying funding options and helping you drive social, environmental or economic benefits in your community.

How long does the process typically take?

Having deployed billions of dollars in project capital over the years, Foss & Company has identified the tools and talent vital to accelerating the process. From legal and accounting to project management and documentation, we have the people and processes in place to get your project funded efficiently.

I’m a property developer. How can Foss & Company help me?

Foss & Company has the proven expertise and institutional investor base to get high-quality tax credit-advantaged projects financed, making room for developers to focus on advancing and cultivating their projects. We leverage our relationships on your behalf - whether it is sourcing capital from Fortune 1000 companies, navigating the complexities of tax guidance, or decoding government bureaucracy.

HISTORIC PRESERVATION

Can a taxpayer claim the preservation tax credit without receiving final approval by the National Park Service?

Yes. Treasury Regulation 1.48-12(d)(7)(ii) states that if the final certification of completed work has not been issued by the Secretary of Interior at the time the tax return is filed for a year in which the credit is claimed, a copy of the first page of Part 2 of the Historic Preservation Certification Application must be attached to Form 3468 filed with the tax return. The taxpayer must reasonably expect that they will receive final approval and that their project will be certified by the National Park Service.

Final certification by the Department of Interior is required. If the taxpayer fails to receive final certification within 30 months after the date the taxpayer filed a tax return on which the credit was claimed, the taxpayer must agree to extend the period of assessment for any tax relating to the time for which the credit was claimed. If the final certification is denied by the Department of Interior, the credit will be disallowed for any taxable year in which it was claimed.

How is the preservation tax credit claimed on a tax return?

The credit is claimed on Form 3468. Attached to the Form 3468 (or by way of a marginal notation), specific information must be provided. See Treasury Regulation 1.48-12(b)(2)(viii) for details.

How do the recapture rules apply?

The rehabilitation credits are subject to recapture if the building is sold or ceases to be business use property. The HTC compliance period is 5 years after which recapture risk of the credits no longer exists. The amount of such recapture is reduced by 20% for each full year that elapses after the property is placed in service. Thus there is a 100% recapture if the property is disposed of less than one year after the property is first placed in service; an 80% recapture after one year, a 60% recapture after two years; a 40% recapture after three years; and a 20% recapture after four years. See Internal Revenue Code Section 50(a) for additional information.

What relationship exists between the substantially rehabilitated requirement and the placed in service requirement?

If the substantial rehabilitation test has not been met at the time a building, or some portion of the building is actually placed in service, the building does not meet the definition of a qualified rehabilitated building. As such, placed in service is deemed to be at the point in time when the substantial rehabilitation test is actually met. See Internal Revenue Code Section 47(b)(1) and 47(c)(1)(C) and Treasury Regulation 1.48-12(f)(2) and 1.48-12(c)(6) for additional information.

Generally speaking, the 24-month measuring period ends sometime during the year in which the property is placed in service.

What is the definition of "placed in service"?

"Placed in service" generally means that the appropriate work has been completed which would allow for occupancy of either the entire building, or some identifiable portion of the building. See Treasury Regulation 1.46-3(d) for additional information.

When can a taxpayer claim the preservation tax credit?

The property must be substantially rehabilitated. During a 24-month period selected by the taxpayer, rehabilitation expenditures must exceed the greater of the adjusted basis of the building and its structural components or $5,000. The basis of the land is not taken into consideration. It is important to note that any expenditure incurred by the taxpayer before the start of the 24-month period will increase the original adjusted basis. See Treasury Regulation 1.48-12(b)(2) for additional information.

Why invest in the HTC?

Foss & Company connects investors with the strategic opportunities in this underserved portion of the market - where the supply of credits is outpacing demand - leading to higher tax equity yields and a diversified pool of historic real estate assets.

What is the Historic Tax Credit?

Established in 1978, the Historic Tax Credit (HTC) program has facilitated the rehabilitation of over 42,000 certified historic buildings, attracted more than $90 billion in new private capital to the historic cores of cities and towns across the nation, and created more than two million jobs.

RENEWABLE ENERGY & SUSTAINABLE TECHNOLOGIES

Why does Carbon Capture - and sequestration - matter?

Carbon capture and sequestration play an important role in reducing greenhouse emissions and preventing the release of large quantities of CO2 into the atmosphere, thereby serving as a critical tool in the fight against climate change.

What is Carbon Capture and Sequestration?

Carbon capture and sequestration is the process of capturing waste carbon dioxide (CO2) - typically from the burning of fossil fuels or other industrial processes - then transporting it to a storage site and depositing it where it will not enter the atmosphere – typically in an underground geological formation. The aim of this process is to prevent the release of large quantities of CO2 into the atmosphere.

What is the 45Q Carbon Capture Tax Credit?

Section 45Q of the US tax code provides a tax credit for CO2 that is sequestered. The 45Q tax credit is a production-based tax credit, whereby the federal government offers a tax credit for the capture and storage per ton of CO2 that would otherwise be emitted by an industrial facility or power plant.

Does the ITC expire?

No. The Consolidated Appropriates Act of 2016 extended the ITC through 2019 as a 30 percent credit for qualified expenditures. It dropped to 26 percent for facilities that began construction in 2020 and will drop to 22 percent for those beginning construction in 20221, before it becomes permanently 10 percent in 2022.

What is the Investment Tax Credit (ITC)?

The investment tax credit (ITC), also known as the federal renewable energy tax credit, is a dollar-for-dollar credit for expenses invested in renewable energy properties, most often solar developments. For more information, please contact Bryen Alperin.

What is the avoided costs doctrine?
Some utilities are required by law to purchase 100% of the electricity produced by a renewable energy project at a set rate called an "avoided cost" rate. This rate is defined as the incremental cost to an electric utility to generate one more unit of power itself or purchase from another source. It establishes a minimum contract price that is predictable and legally enforceable.
Does the PPA rate stay constant?

Some PPAs have a constant rate throughout the term of the agreement, and some include an annual escalator.

What is a PPA rate?

A PPA rate is the value applied per unit of solar power produced (e.g. cents per kilowatt hour).

What is a PPA?

A PPA is a Power Purchase Agreement between the project and the utility. It establishes the terms under which power will be sold to the utility.

Are utilities required to buy solar power?

Some utilities are required by law to obtain a certain portion of their power from renewable sources. It varies on a national basis, and widely from state to state.

What percentage of my income tax can be offset with solar tax credits?

Renewable energy tax credits can offset up to 75% of your federal income tax liability.

Why invest in Renewable Energy?

Renewable energy investment tax credits are the last remaining federal tax credit that can be fully claimed in the first year. There is rich ground for investors seeking to achieve high risk-adjusted returns while generating positive environmental impact. Investors have the opportunity to earn a return with mitigated risk and become more tax efficient, all while making progress towards their sustainability and ESG goals.

What does sustainability investment mean for developers?
Foss & Company has deployed nearly $7 billion in cash equity from institutional investors - including national insurance companies and large corporations – over $1 billion of which was invested in energy infrastructure projects. Our team has designed underwriting and diligence processes with the unique needs of the renewable energy developer community in mind. Our goal is to meet our investors’ objectives while allowing our development partners the flexibility they need to run their business.