Treasury Cash Grant: On-Line Form Follows Construction Guidance
The Treasury Department recently revised the on-line application for cash grants in lieu of tax credits under Section 1603 of the American Recovery and Reinvestment Act of 2009. Under the Section 1603 program, instead of claiming production tax credits under Internal Revenue Code Section 45 or the investment tax credit under Section 48, qualified applicants can apply to Treasury for a cash grant equal to 30% of the cost of certain renewable energy projects.
The revisions to the form of application only pertain to projects which will be placed in service after December 31, 2010. Such projects will be eligible for the grant if “construction began” in 2009 or 2010 and work is completed before a specified date (January 1, 2017 in the case of solar projects, and January 1, 2013 in the case of large wind facilities). The revised application provides more detailed (but not new) guidance to applicants to demonstrate that the requirements for “beginning construction” are met. For more information on when construction of a project is considered to begin, please see our prior report, “Treasury Cash Grant: When ‘Construction Begins’” available here.
The revisions to the form of application do not change the September 30, 2011 application deadline. The revisions also do not affect projects that have been placed in service by December 31, 2010. However, revised sections of the application will now be used for projects that expect to begin construction by December 31, 2010 but be placed in service after that date. For projects relying on the construction deadline, applications will be submitted in two successive filings. Initially the applicant will provide the beginning of construction information in newly-revised sections of the form. Second, after the project is placed in service the applicant will provide in a separate filing the placement-in-service information as well as a signed “Terms and Conditions” document.
The new two-part application will accommodate projects relying on the construction deadline where completing the grant application will require input from two different parties. For example, in a sale-leaseback transaction where the purchaser-lessor is claiming the cash grant, the developer-lessee could file the initial application by the September 30, 2011 deadline, and the purchaser-lessor could file the updated application after the sale-leaseback occurs (provided the sale-leaseback is closed within three months of the original placed in service date).
For additional information about the Treasury cash grant program for renewable energy, please see the following prior alerts:
Treasury Cash Grant: When "Construction Begins"
Update: Financing Renewables With Treasury Grants
Annual Filing Required by Recipients of Section 1603 Cash Grants