Renewable Energy Benevolent Investor Structure for Tax-Exempt Entities

With the expiration of the 1603 grant at the end of 2011, the development of renewable energy facilities has become more challenging. The Affordable Housing, Community Development, and Tax Credit Syndication Group of Duane Morris has developed a benevolent investor structure to provide renewable energy facilities to tax-exempt entities. Under the benevolent investor structure the renewable energy facility is purchased by a pass through entity, owned by a group of investors, which supports the tax-exempt entity, (collectively the “Benevolent Investor”). The Benevolent Investor enters into a power purchase agreement with the tax-exempt entity pursuant to which the Benevolent Investor provides power to the tax-exempt entity at below market rates. The tax benefits in the form of the renewable energy investment tax credit and the bonus depreciation, together with the income from the power purchase agreement and renewable energy certificates and rebates, if available, provide the Benevolent Investor with a positive return on its investment in the renewable energy facility. The Benevolent Investor has the option after the expiration of the tax credit compliance period to donate the renewable energy facility to the tax-exempt entity.

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