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Publication

August 3, 2009Client Alert

Applications Now Being Accepted for Federal Grants in Lieu of Tax Credits

The American Recovery and Reinvestment Tax Act of 2009 created a program whereby the U.S. Department of the Treasury (the “Treasury”) would make grants to certain renewable energy projects in lieu of the investment tax credit. On July 31, 2009, the Treasury announced that it started accepting applications for the grants.

Treasury Grants Generally:
The Treasury grants equal either ten percent (10%) or thirty percent (30%) of the tax basis of certain tangible property used in a renewable energy project, depending on the type of project. The following energy facilities are eligible for the grants: wind, biomass, geothermal, landfill gas, trash combustion, qualified hydropower, marine and hydrokinetic, solar, fuel cells, microturbine, combined heat and power and geothermal heat pumps.

To be eligible for the grant, the qualifying property must become operational (referred to as being "placed-in-service") before December 31, 2010. Alternatively, if construction of the qualifying property began before December 31, 2010, the placed-in-service date may be extended to a later date (depending on the type of project).

A full description of the terms of the grant program is available in our client alert at: http://www.michaelbest.com/department-of-the-treasury-provides-guidance-on-grants-in-lieu-of-tax-credits/

Application Process:
On July 31, 2009, the Treasury announced that it started accepting applications for the grants. Applicants who placed a project in service in 2009 or 2010 should submit the application and the Terms and Conditions form at the same time after the project has been placed in service but before October 1, 2011. Applicants who have begun construction of a project during 2009 or 2010, and have not yet placed the project in service by the date of application should submit only the application (not the Terms and Conditions) before October 1, 2011. Once the project is placed in service, the applicant should submit both an updated application form and the signed Terms and Conditions document.

The grant application form is submitted online and is available at https://treas1603.nrel.gov/. The Terms and Conditions form is available at: http://www.treas.gov/recovery/docs/energy-terms-and-conditions.pdf

This client alert is one of a series designed to provide summaries of the American Recovery and Reinvestment Act of 2009 ("the Act") and information and guidance regarding opportunities and relief made available through the Act. All of the Act client alerts are available on Michael Best's Stimulus and Economic Recovery Team publications page.

If you are interested in learning about other provisions included in the Act, the Michael Best Stimulus and Economic Recovery Team is prepared to assist you in understanding the implications and in developing and implementing a strategy to secure the benefits of this unprecedented legislation. Specifically, we will assist you to identify opportunities, prepare appropriate proposals and make targeted contacts to secure funds. We will also work with you to ensure that your applications are tailored to meet your needs and that your funded projects proceed in compliance with award requirements and applicable laws.

Pursuant to the rules of professional conduct set forth in Treasury Department Circular 230, this communication was not written or intended to be used, and it cannot be used for the purpose of avoiding federal tax penalties.

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