Opportunity Zone program stimulates development in distressed communities

A new federal program will encourage investment in distressed communities — Opportunity Zones — through tax incentives (see our April 10, 2018 blog post). The Opportunity Zone program allows taxpayers who invest in low-income areas specifically designated by the state and federal government to take advantage of up to three benefits: a temporary deferral, a reduction in gain realized through basis adjustment, and exclusion for capital gains on the investment. To qualify for these benefits, the investment must take place through a designated Opportunity Fund, an entity organized to acquire and hold for investment purposes equity interests in businesses or properties in Opportunity Zones. Ohio has 320 designated Opportunity Zones; there are 8,000 nationwide. For more, read our full article.

Economic Development, Federal Updates, Financial Incentives, State Updates

U.S. DOE offers up to $6M in funding for wind R&D

The Wind Energy Technologies Office of the U.S. Department of Energy (DOE) has released a funding opportunity announcement (FOA) “aimed at catalyzing technical and operational solutions to reduce environmental compliance costs and environmental impacts” of wind turbines, nawindpower.com reports. The “Advanced Wind R&D to Reduce Costs and Environmental Impacts” FOA will provide up to $6 million in funding, according to the article. The FOA will provide $2 million each to three research areas: reducing costs and environmental impacts of bat curtailment at wind plants, developing “advanced components and other instrumentation for advanced bat-deterrent technologies,” and developing “offshore wind instrumentation for environmental monitoring and mitigation.” For more, read the full article.

Environmental, Federal Updates, Project Finance, Renewable Energy

Columbus turned $50M into $500M for Smart City through public-private partnerships

Winning the Federal Department of Transportation’s national Smart City challenge was a huge coup for Columbus (see our June 21, 2016 blog post), but turning the $50 million in grant money that came with the win into $500 million is “one of the greatest feats” the city has ever accomplished, TechRepublic reports. Investments from the private sector have helped Columbus accomplish that goal, and are expected to continue to bring in more funding, according to the article. Among the local investors: American Electric Power has pledged $170 million, The Ohio State University has pledged $64 million, and Nationwide Insurance has pledged $2 million. In the two months between the time the federal grant was announced and the application deadline, Columbus officials “were able to pull together $90 million in pledges from local businesses,” which impressed federal officials. Mike Keller, CIO of Nationwide, said, “[t]here was a high degree of public/private/academic participation prior to the grant and that made it a lot easier to come together.” For more, read the full article

Federal Updates, Smart Cities, State Updates

FERC votes to remove barriers to “participation of electric storage resources” by RTOs

The Federal Energy Regulatory Commission (FERC) said its recently released final rule on electric storage participation will “enhance competition and promote greater efficiency in the nation’s electric wholesale markets,” nawindpower.com reports. The FERC “voted to remove barriers to the participation of electric storage resources in the capacity, energy and ancillary services markets operated by regional transmission organizations (RTOs) and independent system operators (ISOs),” according to the article. The commission noted in a November 2016 Notice of Proposed Rulemaking that “market rules designed for traditional generation resources can create barriers to entry for emerging technologies such as electric storage resources.” The final rule helps to remove those barriers by requiring each RTO “to revise its tariff to establish a participation model for electric storage resources that consist of market rules that properly recognize the physical and operational characteristics of electric storage resources.” For more, read the full article.

Federal Updates

New U.S. tax law lessens federal historic tax credit, putting projects at risk

A federal tax incentive that “has helped revive more than 42,000 buildings” and “yielded about $30 billion in federal tax receipts” was “eroded” by the new U.S. tax law that President Donald Trump signed in December, Fox Business reports. The federal historic tax credit “provides reimbursement for 20% of certain costs” for renovations of historic buildings, but the tax-law changes mean the “payback is now spread over five years instead of one,” reducing its value to developers, according to the article. In Dayton, developer Cross Street Partners “rushed to complete long-term leases” on a project to “overhaul a long-vacant collection of buildings known as the Dayton Arcade” before the change took effect after the end of 2017. Senior development director David Williams said “the weakened version [of the incentive] could have threatened a carefully constructed financing plan that includes multiple tax incentives.” For more, read the full article

Federal Updates, Financial Incentives, Legal Developments

FirstEnergy proposes up to 2 percent rate hike for grid improvements

FirstEnergy wants to make $450 million in grid improvements, and the utility is asking the Public Utilities Commission of Ohio to approve an electricity rate increase of up to 2 percent to fund that work, Cleveland.com reports. Doug Colafella, a spokesperson for FirstEnergy, said the utility “will improve power lines that have had extended power outages in the past,” using new technology that “would allow workers to isolate the outages, restore electricity to nearby customers and then repair the affected lines,” according to the article. The increase would be lower in the first year and gradually rise over three years. Improvements are also needed to modernize electrical distribution for “smart grid” capabilities including “smart meters informing customers how much energy they are using throughout the day.” For more, read the full article

Federal Updates

Conference agreement on tax reform: Private activity bonds, stadium bonds spared; Advance refundings and tax credit bonds axed

The Tax Cuts and Jobs Act (TCJA) was released on December 15, 2017. The Committee of Conference chose not to follow the House’s repeal of authorization for private activity bonds — a financing vehicle used to finance 501(c)(3) institutions, such as private universities and hospitals, as well as other projects, such as low-to-moderate income housing. Additionally, the prohibition on the use of tax exempt bonds for professional stadium financing was, likewise, not included in the TCJA, preserving that option for governmental issuers. Read more >>

Federal Updates, Financial Incentives, Legal Developments

Tax Reform’s Restrictions on Municipal Bonds

In the early morning hours of Saturday, December 2, 2017, the United States Senate, by a vote of 51-49, approved its version of H.R. 1, the Tax Cuts and Jobs Act of 2017, commonly referred to as the Senate's tax bill. The Senate bill, unlike the House's version, does not repeal private activity bonds. However, the Senate bill contains the repeal of the authorization for advance refundings that first appeared in the Chairman's Mark. The Senate and House are expected to attempt to reconcile the two versions this week in order to produce a single piece of legislation that must pass both chambers of Congress before finding its way to the desk of President. Read more >>

 

Federal Updates, Legal Developments

House of Representatives and Senate Finance Committee pass Tax Cuts and Jobs Act

The House of Representatives passed H.R. 1, the Tax Cuts and Jobs Act, on November 16, 2017, by a vote of 227 to 205. The House bill continues to contain the repeal of private activity bonds and advance refundings. The Senate Finance Committee passed its version of tax reform hours later, 14-12. The Senate bill is silent on private activity bonds but contains the advance refunding repeal. The full Senate is expected to consider its version after Thanksgiving. Read more >>

Federal Updates, Legal Developments

Senate releases its version of the Tax Cuts and Jobs Act

On November 9, the Senate Finance Committee released the "Chairman's Mark," which is a summary of what the Senate's version of the Tax Cuts and Jobs Act is expected to contain. Unlike the House's version of tax reform, the tax exemption for private activity bonds is not repealed. However, the repeal of authorization for advance refunding has been included in the Senate version. Especially with the appearance of the prohibition for advance refundings in both the House and Senates tax bills, modification of financing techniques that provide significant flexibility to governmental issuers and 501(c)(3) entities and help them take advantage of falling interest rates is likely on the horizon. Read more >>

Federal Updates, Legal Developments
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