From: Albert Pope [mailto:aapope12@gmail.com]
Sent: Monday, June 28, 2010 11:11 PM
To: Monty Bannerman; Allen Draa
Cc: Chick Wassell
Subject: Fwd: Treasury Cash Grant: When "Construction Begins"
From: "Edmundson, Daniel C." <Daniel.Edmundson@troutmansanders.com>Date: June 28, 2010 5:48:31 PM EDTTo: "Edmundson, Daniel C." <Daniel.Edmundson@troutmansanders.com>Subject: FW: Treasury Cash Grant: When "Construction Begins"I should have known this wouldn't be long in coming!Dan Edmundson
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Treasury Cash Grant: When "Construction Begins"
June 28, 2010
Last week the Treasury issued new guidance in the form of questions and answers (FAQ) as to when "construction begins" for renewable energy projects that may be eligible for a cash grant in lieu of an investment tax credit under section 1603 of the American Recovery and Reinvestment Act of 2009. This alert summarizes the Treasury guidance to date on this issue, including the FAQ. You may access a copy of the new FAQ here, the Treasury Guidance document here and Treasury's earlier FAQ here. Our prior report on the cash grant program is available here and here.
The new guidance is important and timely because of the impending deadlines for the cash grant program. To qualify for a grant, qualified energy property must be placed in service in 2009 or 2010 or, if "construction begins" in 2009 or 2010, it must be placed in service by the applicable credit termination date (currently the end of 2012 for wind, the end of 2013 for biomass, geothermal and other resources, and the end of 2016 for solar). Whether Congress will extend the cash grant program to projects commenced after 2010 is uncertain. While extensions have been proposed by legislators, the likelihood of passage this year remains unclear. Because of the deadline and the uncertainty surrounding extension, we expect project developers to attempt to "begin construction" this year on those projects that have a practical chance of crossing that threshold in 2010.
There are two ways to show that construction has begun. One is to begin physical work of a significant nature. The other is to meet a 5% safe harbor.
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