Tax Credits

HOW INFLATION REDUCTION ACT SOLAR ITC ADDERS SUPPORT SUSTAINABLE DEVELOPMENT GOALS

Incentives for renewable energy have been a hot topic in the U.S. lately, especially with new provisions geared towards implementing recently developed technologies that aim to fight climate change. The Inflation Reduction Act (IRA), signed into law in August of this year, contained significant adjustments to several climate and sustainability solution incentives. Widely regarded as landmark legislation, it was one of the most extensive environmental policies in decades. It laid the groundwork for incremental change through increases in tax credit incentives for projects like Carbon Capture, Utilization and Sequestration (CCUS), battery storage, and solar Investment Tax Credits (ITCs). Under the IRA, institutional investors may now see higher tax credit returns on their investment and new opportunities through ITC adders. The U.N.’s Sustainable Development Goals (SDGs) offer a blueprint to achieve a better and more sustainable future for all. They address the global challenges we face, including poverty, inequality, climate, environmental degradation, prosperity, and peace and justice. No one action can address all 17 goals at once but using the SDGs as guidelines can help inform corporations of processes that can help tackle some of the most pressing issues of our time. The adjustments made to policies under the IRA align in many ways with the SDGs including those made to solar ITCs. ITCs are calculated as a percentage of the cost that solar developers spend on solar power production equipment while constructing a project. Before the IRA, ITCs were set to reach 10% by 2024, but under the IRA, they now have a base rate of 30% locked in for the next ten years. The law also includes certain adders that can increase the total amount to 60%. The increased incentives can help move solar projects forward despite the recent high interest and inflation rates. These adders include, but are not limited to: 10% for projects located…

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Spotlight Series: Tony Pucci, Director, Real Estate Investments & Portfolio Management

Foss & Company is comprised of a group of experienced professionals, representing the best in class within their respective fields. In this blog series, we highlight different Foss & Company team members to shine a light on the diverse and dedicated people that help make us who we are.   Tony was born and raised in the San Francisco Bay Area, earning his bachelor’s degree from UC Berkeley and his law and business degrees from Santa Clara University. After spending years as an attorney, he joined Foss & Company in 2017. As Director of Real Estate Investments & Portfolio Management, Tony oversees the underwriting and asset management of Foss Historic Tax Credit (HTC) investments, working closely with real estate developers, institutional investors, and industry partners.   Get to know Tony in the latest Spotlight Series blog:   What originally interested you about the historic rehabilitation industry?   I have always been interested in real estate development, especially projects that have a meaningful impact on the community. I also like old buildings and historic architecture. I would much rather see a building repurposed than demolished. The rehabilitation of a building is an interesting process, and more challenging than new construction. In the end, a valuable resource is being conserved and enhanced, and that’s a great benefit for all.    When did you join Foss & Company and what interested you about the company?  I joined Foss in January 2017. I was looking for new opportunities and when I learned about Foss, I did a lot of research on the company and the tax credit industry. The more I learned, the more excited I was about joining the company. I wanted to be a part of financing historic rehabs by monetizing tax credits. It’s a great business, and it’s rewarding to be a part of the rehabilitation…

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Investment Tax Credits: An Underrated Tool Delivering Financial & ESG Benefits

BY ALEJANDRO SANTA CRUZ, CFA, VICE PRESIDENT OF INVESTMENTS It is rare to find a multi-functional, multi-faceted “Tool” that creates a “win-win-win” outcome in the world of corporate finance. Fortunately, there is a Tool that creates value across multiple corporate areas simultaneously, but it is little known, often overlooked, and certainly underused. This Tool is the Investment Tax Credit (ITC). Approved by the U.S. Congress, enshrined in the Internal Revenue Code, and encouraged by the federal government, ITCs allow those with a US tax liability to redirect their federal income tax obligation towards specific economic sectors or qualified projects. In other words, with the blessing of Uncle Sam, a company can repurpose its tax liability and invest in ESG (Environmental, Social and Governance) initiatives and reap a financial reward. Unfortunately, ITCs continue to be underutilized despite the benefits afforded to corporations seeking to deploy impactful strategies to manage tax rates and create shareholder value. Let’s be honest, the tax strategy of a corporation may often be disregarded and undervalued. Tax departments tend to be isolated from the executive floors and often excluded from strategic decisions. Perhaps it is time for the C-Suite to pay more attention to their tax teams. Similarly, it’s also time for the market (i.e., equity research analysts and portfolio managers) to pay closer attention to what companies are doing below the standard EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) line with regards to tax strategies and give them credit when these strategies lead to secondary, yet impactful, noble causes.  Admittedly, it is not an easy (or exhilarating) task. For one, understanding the Tax Code is daunting. In addition, companies tend not to disclose much about their tax strategies. Other than the effective tax rate or “ETR” (actual income tax paid/EBT), and the occasional disclosure of…

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Understanding Scope 1, 2, & 3 Emissions: How you can Reduce Your Emissions With Tax Credits

BY BRYEN ALPERIN, DIRECTOR OF RENEWABLE ENERGY AND SUSTAINABLE TECHNOLOGIES A March 21 meeting of the Securities and Exchange Commission (SEC) proposed a reporting framework for publicly traded companies to provide information about the carbon intensity of their businesses. Voluntary disclosure of climate risk factors has already become widespread in recent years, with the SEC estimating that about one third of regulatory filings submitted by public companies in 2019 and 2020 included some degree of environmental impact assessment. Standardizing these disclosures will make them more functional for investors as “consistent, comparable, and reliable information” on climate-related risk exposure, says the SEC’s recent guidance. Carbon accounting, the process by which emissions are calculated and attributed, has evolved in recent years thanks to work by the World Resources Institute and the World Business Council for Sustainable Development. Their joint Greenhouse Gas Protocol lays out three principal areas of emissions: Scope 1: Direct Emissions Scope 1 emissions result directly from business activities, such as fuel used in vehicles owned by the company and exhaust from running manufacturing equipment. This is the simplest scope of emissions to calculate and would be required of all publicly traded companies under the proposed rule change. One option for reducing your Scope 1 emissions are carbon offsets. Example carbon offsets you can purchase include forest preservation, energy efficiency projects, or carbon capture. There are a variety of brokers which sell carbon offsets, but since the market is largely unregulated, it’s important you work with an expert advisor to perform due diligence on your purchase. Tax Credit Use Case: The recently improved 45Q Sequestration Tax Credit is a tax credit for carbon capture and sequestration. Projects which generate 45Q tax credits may also produce carbon offsets, and tax credit investors may be able to gain access to carbon offsets…

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$20 Million In Solar Tax Credit Investments

Foss & Co. Managed Over $20 Million In Solar Tax Credit Investments In 2017​

Growth continues in 2018 January 24, 2018, San Francisco CA – Foss and Company is pleased to announce that they closed out the 2017 calendar year having managed over $20 million in solar tax credit investments. The investments were made into seven unique projects that were all Massachusetts-based and approached 20 megawatts in scale. Foss Renewables Managing Director Alex Tiller said, “We were pleased with our 2017 results and are looking forward to investing over 10 times that amount in 2018 via our new renewable energy focused fund.” Tiller went on to say, “renewable energy investments are nothing new to this firm. Over our last 35 years we’ve managed over $500 million in renewable and alternative energy tax credit investments including some of the first large scale solar thermal SEGs projects in the Mojave Desert way back in the 1980’s. We’ve participated in landfill gas, refined coal and anaerobic digesters transactions as well. Foss and Company is a nationally recognized institutional investment management firm dedicated to providing corporate investors the greatest access to federal and state tax credit driven investments in the tax credit marketplace. Their services for solar developers include market pricing and transaction structuring, direct tax credit equity investments and private placement services. Additional information about the company is available at: fossandco.com

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