On April 2nd, the Internal Revenue Service issued a notice soliciting applicants for the next round of Clean Renewable Energy Bonds allocations. The CREBs program provides governmental entities, municipal and cooperatively owned utilities an incentive to develop renewable energy projects. Ultimately, an interest free financing tool, CREBs are a substitute for renewable energy production tax incentives that these entities are not able to use because of their tax exempt status. Applications must be filed by July 13, 2007.
The IRS notice provides guidance on the following: (1) eligibility requirements that a project must meet to be considered ; (2) application requirements and the application form; (3) the method (generally, a "smallest-to-largest" method) that the Internal Revenue Service ("IRS") and the Treasury Department will use to allocate the CREBs authority.
The Energy Tax Incentives Act of 2005 (Pub. Law No. 109-58), originally provided for a total national volume cap of $800 million for CREBs to finance eligible clean renewable energy projects with no more than $500 million of that amount going to qualified borrowers which were governmental bodies (with the balance to be allocated to qualified borrowers which were cooperative electric companies).
See this previous story in Democratic Energy that reports on the first round of successful applicants.
The Tax Relief and Health Care Act of 2006 (Pub. L. No. 109-432), amended the CREBs program in three respects. First, the 2006 Act increased the total national volume cap for CREBs from $800 million to $1.2 billion. Second, the 2006 Act extended the expiration date for the issuance of CREBs under the total authorized national volume cap of $1.2 billion from December 31, 2007, to December 31, 2008. Third, the 2006 Act increased the maximum allocations or reallocations to qualified borrowers which are governmental bodies from $500 million to $750 million (with the balance to be allocated to cooperative electric companies).
- IRS Notice on Clean Renewable Energy Bonds – Internal Revenue Bulletin, 2007-14, issued April 2,2007.