Alert: Incentives for the Real Estate Industry in Recent Energy Legislation

Real estate projects should benefit from recently introduced or extended financial incentives for investments in energy efficient buildings and alternative energies.  Pennsylvania, New Jersey and the federal government enacted legislation that supports these investments through additional financing alternatives and tax subsidies.  The discussion below provides a brief summary of some relevant parts of the legislation.  Currently, there are active investors who will invest in energy improvements in return for a pass through of the tax credits available for these projects.

Pennsylvania

In Pennsylvania, the “Alternative Energy Investment Act of 2008” authorizes up to $650 million of incentives that, once implemented, will include:

·        $100 million in loans, grants, reimbursements, and rebates for small businesses (100 or fewer employees) and home consumer energy conservation projects  (limited to 25% of installed cost)

·        $25 million in grants and loans to building owners for projects that meet energy performance standards to be outlined in upcoming regulations

·        $165 million for grants and loans for clean energy projects and alternative energy projects, other than solar

·        $100 million in loans, grants, reimbursements, and rebates for small business and home solar energy projects (limited to 35% of installed cost)

·        $50 million in state production tax credits for alternative energy projects (limited to 15% of investment cost and an annual maximum credit of $1 million per taxpayer) 

Federal Government

Real estate projects should benefit from recently introduced or extended financial incentives for investments in energy efficient buildings and alternative energies.  Pennsylvania, New Jersey and the federal government enacted legislation that supports these investments through additional financing alternatives and tax subsidies.  The discussion below provides a brief summary of some relevant parts of the legislation.  Currently, there are active investors who will invest in energy improvements in return for a pass through of the tax credits available for these projects.

Pennsylvania

In Pennsylvania, the “Alternative Energy Investment Act of 2008” authorizes up to $650 million of incentives that, once implemented, will include:

·        $100 million in loans, grants, reimbursements, and rebates for small businesses (100 or fewer employees) and home consumer energy conservation projects  (limited to 25% of installed cost)

·        $25 million in grants and loans to building owners for projects that meet energy performance standards to be outlined in upcoming regulations

·        $165 million for grants and loans for clean energy projects and alternative energy projects, other than solar

·        $100 million in loans, grants, reimbursements, and rebates for small business and home solar energy projects (limited to 35% of installed cost)

·        $50 million in state production tax credits for alternative energy projects (limited to 15% of investment cost and an annual maximum credit of $1 million per taxpayer) 

Federal Government