Here’s a presentation that Joseph Sebik, CPA of Siemens Financial Services and I gave to the Energy Subcommittee of the Equipment Leasing and Finance Association on January 22: Tax Equity Energy Subcommittee 1-22-19 of ELFA.

Despite being to a leasing trade association, the focus of the presentation is the partnership flip structure.  The presentation includes appendices on the phase down of tax credits for solar and the phase out of tax credits for wind; the “start of construction” rules; and hypothetical liquidation at book value (HLBV).

On May 2, Mayer Brown and Alfa Energy Advisors presented the seminar/webinar Tax Structuring and Impact of Potential Tax Reform.  A copy of the presentation is available here.  The webinar was sponsored by Bloomberg BNA.

The webinar participants (but not the seminar participants) had the opportunity to answer polling questions.  The sample size, which varied by question, may not be large enough to be statistically valid. Here are the webinar polling results:

1.  How likely is it that a reduction in the corporate tax rate will be effective in 2018?

Answers:

Very likely – 0%

More likely than not – 42.9%

Somewhat likely – 57.1%

It is not going to happen – 0%

2.  How likely is it that the federal corporate income tax rate will be reduced below 30% during the current Trump administration?

Answers:

Very likely – 14.3%

More likely than not – 21.4%

Somewhat likely – 57.1%

It is not going to happen – 7.1%

3.   Which is your preferred partnership structure for solar tax equity transactions?

Answers:

After-tax IRR based flip – 72.7%

Time based flip – 27.3%

We are pleased to make available the materials from our June 29 tax equity seminar.

Here’s is the link to a PDF of the slides: Seminar Slides PDF.

The webinar audience submitted questions that we did not have time to answer.  The questions were:

1.  Why do balance sheet players have an advantage in obtaining power purchase agreements?

2.  What size of transaction supports the cost of the work needed for pass through and inverted leases?

3. Is there clarity as to a “reasonable” level of developer, project management, legal fees and finance costs as a percentage of the cost of the project?

4. For SolarCity stated tax equity returns in 2015 referenced in the presentation, in your experience, what have you generally seen the range of allocations for returns to be?

Our answers are available here: Q&A Link

Finally, I want to thank Gintaras Sadauskas of Alfa Business Advisors for presenting with me.

On June 29, please join David Burton of Mayer Brown and Gintaras Sadauskas of Alfa Business Advisors for a seminar presented at Mayer Brown’s Chicago office and as a webinar.

 

Topics addressed in the program will include:

  • The IRS’s updated “start of construction” guidance for tax credit qualification
  • Trends in the tax equity market
  • Flip partnership structuring
  • Financial modeling best practices, including a discussion of hypothetical liquidation at book value (HLBV) accounting

Location
Mayer Brown
71 South Wacker Drive
Chicago, IL 60606

Date & Time (Central)
Wednesday, June 29, 2016
3:30 p.m. – 4:00 p.m. Registration
4:00 p.m. – 5:30 p.m. Program
5:30 p.m. – 6:30 p.m. Reception

If you are unable to join in person, the program will also be available via webinar.

For those attending in person, the seminar will be followed by a cocktail reception.

For additional information or to register, please contact Carly Brandess at +1 312 701 8495 or cbrandess@mayerbrown.com.