“PACE” – Is it the new buzzword? Lately, it seems I keep hearing about securitizations backed by PACE financings. What is a PACE financing program, and what is happening in the securitization market?

“PACE” stands for Property Assessed Clean Energy. Under PACE programs, municipalities and counties form special tax districts to help residential, commercial or industrial property owners finance energy efficient upgrades or renewable energy installations to their properties through payments of additional property taxes. While the specific details vary by state, the basic premise is that the property owner is allowed to finance 100 percent of the cost of the energy property through increased property tax assessments – the “PACE” assessments. The PACE assessments are typically for 15 to 20 years and operate similar to loan payments in that these property tax payments repay the initial financing cost for the energy upgrade. The PACE assessments, however, are legally property tax assessments and, thus, have the benefit of being secured by senior liens against the taxpayer’s property.

The way the financing works is specific to the individual programs, but the funds typically come from some form of private / public partnership, which allows the state or municipality to encourage identified property upgrades to achieve environmental and energy efficiency goals without having to raise funding, and provides investors with new opportunities to invest in a secure asset in the green energy space. The benefit to the property owner is typically the ability to realize immediate cost savings in reduced energy costs while paying for the improvement over a 15 to 20 year period, and also being able to finance 100 percent of the cost.
Continue Reading “PACE” for Residential and Commercial Renewable Energy Projects – What is it?

Oklahoma governor Mary Fallin (R) recently released her proposed 2018 Executive Budget, which includes two new anti-wind tax proposals.[1] The first proposal would end the zero-emission tax credit for wind facilities placed in service after 2017. The second proposal would begin taxing the production of wind energy at $0.005 per KwH produced.

Oklahoma is facing a budget shortfall that has been projected to be nearly $900 million. One of the primary causes of the revenue shortfall is less tax revenue due to low oil prices and an increase in wind energy production resulting in greater tax credits. Governor Fallin’s tax proposals would reduce the amount of tax credits available for wind energy production and increase revenue by imposing a new production tax of electricity generated by wind.[2]
Continue Reading Oklahoma Gov. Proposes New Tax on Wind, Early End to Wind Tax Credits

Below is a link to my presentation addressing state tax credits to Tax Executives International’s New Orleans chapter.  The presentation (i) discusses the federal tax treatment of state tax credits, (ii) outlines several transaction structures involving both state tax credits and the federal investment tax credit and (iii) provides an overview of renewable energy state

First published in State Tax Notes on August 11, 2014

David Burton discusses a recent ruling from the Missouri Department of Revenue that is intended to address the sales tax consequences of a synthetic lease transaction. Burton argues that the DOR misapplied the term ‘‘synthetic lease,’’ leaving taxpayers without reliable guidance.

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