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

BY ALEJANDRO SANTRA 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 laibility 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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FOSS & COMPANY SPOTLIGHT: MATT LAUER, VICE PRESIDENT, CARBON CAPTURE, UTILIZATION AND STORAGE

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.  Matt Lauer joined Foss & Company in July of 2021. In his role as Vice President for Carbon Capture, Utilization & Sequestration (CCUS), he is responsible for the identification of and development of new CCUS opportunities. He has over 10 years of experience working in all aspects of the tax equity space on projects including refined coal, solar, and CCUS.   Matt’s experience includes assisting in the development of refined coal opportunities, providing financing solutions (PPAs) to commercial solar customers and working with producers of mixed alcohol products and the associated capture of carbon dioxide. A graduate of California State University at Northridge, Mr. Lauer holds a B.S. in Business Administration with an emphasis in Finance.    Get to know Matt in the latest Spotlight Series Blog:   How did you get involved in the tax credit industry?  My background has always been in finance. I had been working for the last 10 years at a private equity firm and I was fortunate to work on some fairly complex and esoteric projects. One of those projects involved a refined coal tax credit (Section 45 Refined Coal), whereby, a tax credit was generated for reducing toxic emissions from coal fired power plants. While there, I gained broad experience both from developing tax credit projects as well as securing tax equity investments. In addition to the refined coal tax credit, I spent some time working at a solar EPC firm where I became intimately familiar with the Solar ITC.       What originally interested you…

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FOSS & COMPANY SPOTLIGHT: BRYEN ALPERIN, MANAGING DIRECTOR

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. Bryen Alperin joined Foss & Company in November of 2017. As Managing Director, Bryen leads all aspects of the investment, origination, and asset management process for renewable energy and sustainability funds. Prior to joining Foss & Company, he worked in commercial banking and led debt financing for a broad range of middle market businesses and commercial projects.  Bryen earned his BA in Economics and graduated magna cum laude from the University of California, Davis. He has an Executive Certification in Sustainable Capitalism & ESG from the University of California, Berkeley. He is based out of our Denver office.   Get to know Bryen in the latest Spotlight Series Blog:   How did you get started in renewable energy and sustainability tax credit industry? Prior to joining Foss & Co., I was a commercial underwriter at a community development bank. During that time, I was often tasked with underwriting our largest and most complex loans. I became the subject matter expert on loans to renewable energy projects, as well as low-income-housing projects and various other impact oriented products. While I enjoyed commercial banking, I was excited to join Foss & Co. so that I could spend more of my time focused on impact projects. I initially joined Foss & Co. as an investment manager for our real estate division, then transitioned to renewable energy to help expand our renewable energy and sustainable technologies division in Denver.   What interested you about tax credits? The government tends to offer tax credits to incentivize projects that have a…

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FOSS & COMPANY SPOTLIGHT: KIMBERLY CARLINI, SENIOR VICE PRESIDENT OF INVESTMENTS

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. As the Foss & Company team continues to grow, we have brought on new colleagues who will help us cultivate a top company culture and help us create an impact on the tax equity market. Kimberly Carlini joined the Foss & Company team in April of this year to help us do just that. As Senior Vice President of Investments, she leads the team that focuses on raising equity capital from our investors for Foss sponsored ESG friendly investments in state and federal Funds that generate transferable tax credits, cash flow, and other economic benefits. Prior to joining Foss and Company, she enjoyed over 20 years at JPMorgan Chase, initially as a Chief Financial Officer for Global Fixed Income where she advised business executives to improve profitability through expense, risk and capital management. Kimberly later directed a 150-person Middle Market banking organization covering nearly 5,000 relationships and finally led a global 450-person Credit Risk team responsible for managing over $110B in credit commitments through a six-year period of transformation. Kimberly spent the first years of her career employed by KPMG LLP, where she managed audits for government, non-profit, healthcare, university and manufacturing clients, applying her certification as a public accountant (CPA). Kimberly earned her MBA from Kellogg-Northwestern University, where she focused on Finance, Management & Strategy and Analytical Consulting.  She is based out of our Chicago office.   Get to know Kimberly in the latest Spotlight Series blog:   How did you get started in the finance industry? I was working in public accounting, auditing…

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