Tax Equity
Foss & Company 2022 project, Radical Hotel Many companies have long overlooked tax equity investing as part of their tax strategy for different reasons. But this past year has presented new, unique opportunities in the tax equity market for both developers and investors. The Inflation Reduction Act (IRA) has provided more incentives than ever in US history for tax credit investments and facing the current challenge of inflation and increasing interest rates, tax equity may be essential to push projects forward. 2022 proved to be a big year for Foss & Company as well. In June, Foss announced that in addition to the over $8 billion in tax equity the company has deployed since its inception, we have over $1 billion in tax credits currently under management. Among other milestones, the Foss & Company team has continued to grow. We welcomed 14 new team members who have helped grow our capital markets, renewable energy, marketing and real estate teams. We are also pleased to share that in August of 2022, Foss & Company featured North Carolina project, Capitola Mill, won the Gertrude S. Carraway Award for demonstrating a commitment to extraordinary leadership, research, philanthropy, promotion, and/ or significance in preservation. We could not be more thrilled with our successes in 2022, and we could not have done it without our dedicated team, developer partners and investor clients. Vision 2045: A Look Towards the Future In 2022, Foss & Company had the unique opportunity to be featured in the Vision 2045 campaign. This campaign supported the United Nations and its objectives for the institution’s 100- year anniversary in 2045 and aimed to inspire businesses and people to take collective action to ensure a better future for all. As part of this multi-faceted campaign, Foss & Company produced a short, documentary-style video that highlighted…
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Generally Accepted Accounting Principles (GAAP) are a set of guidelines and rules that companies use to prepare their financial statements. These principles are established by the Financial Accounting Standards Board (FASB) and provide a consistent framework for companies to report their financial information to investors, analysts, and regulators. Renewable Energy Tax Credits (RETCs) require specific accounting principles to which companies must adhere to accurately reflect the economic benefits of these credits in their financial statements. One of the key principles is the deferral method, which allows companies to recognize the tax credits over a period of time rather than all at once. The deferral method is used to reflect the economic benefits of the tax credits in a more accurate and realistic manner. When tax credits are recognized all at once, it can lead to overstating the value of the credits and can result in a mismatch between the tax benefits and the associated costs. By spreading the recognition of the tax credits over a period of time, companies can align the tax benefits with the associated costs, providing a more accurate representation of the economic benefits of the credits. To use the deferral method, companies must determine the period over which the tax credits will be recognized. This is typically the same period as the project’s useful life, which is the period over which the project is expected to generate economic benefits. Companies must also determine the amount of tax credits that will be recognized in each period. This is typically done by using an estimate of the expected tax credits for the period and adjusting it as necessary based on actual results. In addition to the deferral method, companies must also follow other GAAP principles when accounting for RETCs. These include properly classifying the credits as either a…
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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. Drew Goldman, Vice President of Investments for Foss & Company, spent 18 years in financial services and held roles including equity syndication, strategic M&A, global investment banking, corporate lending, and commercial real estate before joining Foss & Company in 2019. Drew has an MBA from Emory University’s Goizueta Business School and earned his BBA from The University of Texas at Austin. Get to know Drew in the latest Spotlight Series blog: How did you get started in the tax credit investing industry? After working in the corporate finance and investment banking industries, I moved “back home” to Atlanta in 2005 and found myself in charge of business development for an apartment management company; a large portion of the third-party units were in the Low-Income Housing sector, so I learned a lot about tax credits by absorption. With 2008 – and the “Great Recession” an opportunity to raise capital for a large LIHTC syndicator presented itself. I then transitioned into tax equity. Since then, I have migrated from Housing into Renewable Energy and Historic Preservation. When did you join Foss & Company and what interested you about the company? I joined Foss in January 2019 with a growing interest in financing Renewable Energy and other Sustainability-focused initiatives. Foss has a highly entrepreneurial culture, and a flexible approach to our evolving marketplace. What do you find important or interesting about tax credits? I have been in financial services since the 1990s – tax credit equity is well-proven for mobilizing private sector capital into…
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In November, Foss & Company Managing Director Bryen Alperin and Associate Vice President of Renewable Energy Investment Operations Annie Amrhein travelled to Sharm-El-Sheikh, Egypt to join business leaders from around the world in sharing best-practices that promote the United Nation’s Sustainable Development Goals (SDGs) within their organizations. We have included their reflections from the conference below: Climate change is a global problem. What insights did you gain through the lens of a global assembly of leaders and experts that differ from US-focused events? One major reflection I took away from this type of global assembly is how climate change, associated impacts, and overall management of these impacts, has no bounds. There were so many different industry players present from product manufacturing to electric vehicles to real estate management to professional sports to public officials. This varied representation was significant and showcased quite clearly how climate change issues are not contained nor confined to one sector. I think where there is variation is how companies and industry players are choosing to enact sustainable solutions. Although the underlying goal may be the same, due to the nature of a company’s core mission, revenue stream, position within the market, etc., these differing factors influence how decision-makers not only develop but ultimately implement within their given business structures. Throughout discussions, what were some general consensuses between global leaders and experts concerning sustainability? What were some of the biggest differences in perspectives? The conference showed evidence that the “sustainability and environmental initiatives are bad for business” argument no longer holds merit. In fact, I think the opposite is now the case of if a business representative is unable to speak to what the company is taking to decarbonize infrastructure, minimize waste, promote sustainable measures throughout its employee base, then it may result in negative business…
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Launches Innovative Funding Platform for Solar Developers September 11, 2017, Las Vegas Nevada (Solar Power International trade show), San Francisco California: Foss & Company announces the launch of TaxEquity.com, a web platform designed to optimize the tax equity investment process for renewable energy developers. Arranging financing for commercial and industrial solar projects is notoriously challenging, and getting to a term sheet with a qualified tax equity investor that can close is arguably the most difficult part of assembling the capital stack. There are only a handful of highly active tax equity investors, and the whole process can often seem cumbersome and confusing due to high variability in each project, intricacies of tax code, deal structure and interests of debt providers. Because of this, a considerable amount of due diligence must be conducted on each project, driving up costs and resulting in a slow evaluation process. These factors set a relatively high barrier to entry for developers; most professional tax equity investors won’t work with developers with projects or portfolios less than 3 megawatts in size. Foss Renewable Energy Partners Managing Director Alex Tiller said “The goal with TaxEquity.com is to allow more capital to flow to more renewable energy projects. We can achieve this by standardizing the way we interface with developers and evaluate their projects. Additionally, we will work with debt providers to generate standardized and preapproved documents that a developer can choose to use, which leads to a streamlined evaluation process. Combining the two previous steps with algorithm driven analyses, we hope to cut the time to terms sheet down to hours, rather than days.” Tiller added that in the near future, they would like to find a way to fund projects as small as 100 kilowatts in size. Renewable energy project developers can evaluate the system on…
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