The Internal Revenue Service invites applications for $400 million in bonding authority available from the Clean Renewable Energy Bonds Program. It will accept applications filed by July 13.
The IRS issued a notice March 15 soliciting applications from cooperatives and government entities for authority to issue tax credit bonds under the Internal Revenue Code to finance eligible projects including some hydropower. The bonds provide a tax credit rather than interest.
The notice provides guidance on: eligibility requirements that a project must meet to be considered for an allocation; application requirements and the application form for requests for allocation; the method that the IRS and Treasury Department will use for allocations; and aspects of law regarding the program and expected regulatory guidance.
The notice and application are available as a single document on the Internet at www.irs.gov/pub/irs-tege/n-07-26a.pdf. They also can be obtained from www.irs.gov under Tax Exempt Bond Community, TEB Current Developments, Notice 2007-26 (Clean Renewable Energy Bonds).
The $400 million is in addition to $800 million previously authorized for the program, created to provide incentives to entities that are not eligible for a federal production tax credit program. A provision in the Tax Relief and Health Care Act of 2006 amended the original legislation by increasing the total cap by $400 million, and extending the expiration date for issuance of the bonds to Dec. 31, 2008, from Dec. 31, 2007. (HNN 12/12/06)
The 2006 act also increased the maximum allocations or reallocations to qualified buyers that are governmental entities to $750 million from $500 million, with the balance to be allocated to electric cooperatives.
For purposes of the program, qualified hydro projects include incremental hydropower consisting of efficiency improvements or additions to capacity that produce additional generation. If the application is for the addition of capacity to a non-hydro dam, the applicant must certify that the facility, when built, will meet Federal Energy Regulatory Commission requirements, and other applicable environmental, licensing, and regulatory requirements.
IRS allocates bonding to 14 hydro projects
The IRS received 730 applications covering 772 projects for the initial amount, and granted authority to 610 projects to issue the bonds. Fourteen hydro projects were selected for bonding authority. (HNN 11/22/06)
Timothy Jones of the IRS told the National Hydropower Association’s annual conference that six of the 14 were cooperatives in Georgia, Hawaii, Ohio, and Wyoming, which received authorization to issue bonds ranging from $2 million to $2.39 million. Eight governmental entities in several states, including Alaska and California, received authorization to issue bonds for incentives for hydro ranging from $900,000 to $2.5 million.
The IRS did not disclose the names of the applicants selected for the first allocations, citing privacy laws. It has been learned that bonds were authorized for Chelan County Public Utility District (HNN 12/12/06) and American Municipal Power-Ohio Inc. (HNN 2/1/07)
The application for the new allocations includes a consent form that would permit the IRS to name the applicant, project type and location, and amount allocated.
The notice also states that the Treasury Department and IRS expect to issue temporary and proposed regulations under Section 54 of the Internal Revenue Code to provide guidance on certain issues to holders and issuers of the bonds.