Cherrytree Group LLC Blog

...by Warren Kirshenbaum

The top state energy official in Massachusetts marked Earth Day this week by announcing a new solar power initiative. The pilot program is aimed at bringing the power of the sun to the masses.

A grassroots marketing effort will attempt to sell solar power house by house and business by business and through volume discount pricing attempting to overcome a chief drawback, the high cost of installing solar power systems. Richard Sullivan, Secretary of the Massachusetts Executive Office of Energy and Environmental Affairs says the program called “Solarize Massachusetts” introduces a new business model for small scale solar projects for homes and businesses.

It is a way to aggregate and drive down the cost of installation.

Proponents of the program hope it will take solar energy in Massachusetts beyond the early adopters and reduce the need for substantial government rebates for solar. Sullivan says Massachusetts has one of the most ambitious clean energy programs in the country, but 80 percent of the roughly 22 billion dollars spent on energy annually in Massachusetts goes out of the state, most of it out of the country.

Since 2006, incentive programs have helped increase solar power by 20 fold in Massachusetts. The state has 45 megawatts of solar power installed and another 40 megawatts under contract for installation. By statute, 250 megawatts of solar power is to be installed by 2017.

The effort to increase adoption of solar power will begin this year in four pilot communities Hatfield, Harvard, Scituate and Winchester. These were selected at random from geographic regions and each meets certain criteria under the state's Green Communities Program.

The Massachusetts Clean Energy Center, partnering with the state to run the pilot program, is seeking bids from companies willing to provide homeowners and businesses with a turnkey solar power system on a tiered price schedule that lowers the costs for multiple installations. Existing state and federal renewable energy credits would also be available for purchasing the solar power systems.

The director for the Massachusetts Clean Energy Center says funding is available for up to 400 projects.

Funding for the solarization pilot project comes from a clean energy surcharge on Massachusetts utility bills and from the sale of renewable energy credits.

Original news story can be seen and heard WAMC Northeast Public Radio - Paul Tuthill

...by Warren Kirshenbaum

The Emergency Economic Stabilization Act of 2008 is legislation which contains a number of tax incentives designed to encourage businesses to make investments in solar energy, including extensions of the business solar investment tax credit (ITC). The following is a brief summary of the provisions directly and indirectly benefiting the solar industry.

Provisions Directly Benefitting the Solar Industry:

The Business Solar Investment Tax Credit bill extends the 30% Income Tax Credit for solar energy properties for eight years through December 31, 2016. The bill allows the Tax Credit to be used to offset both regular and alternative minimum taxes and permits public utilities to directly invest in solar facilities and claim the Income Tax Credit. The five-year accelerated depreciation allowance for solar property is permanent and unaffected by the passage of the eight-year extension of the solar ITC.

Provisions Indirectly Benefiting the Solar Industry:

Extension of Energy-Efficient Buildings Deduction. Current law allows taxpayers to deduct the cost of energy-efficient property installed in commercial buildings. The amount deductible is up to $1.80 per square foot of building floor area for property installed in commercial buildings as part of:

•   Interior lighting systems,
•   Heating, cooling, ventilation, and hot water systems,
•   The building envelope.

Expenditures must be certified as being installed as part of a plan designed to reduce the total annual energy and power costs with respect to the interior lighting systems, heating, cooling, ventilation, and hot water systems of the building by 50 percent or more in comparison to certain established standards. The bill extends the energy efficient commercial buildings deduction through December 31, 2013. (This is section 179D in the Internal Revenue Code).

Qualified Energy Conservation Bonds. The bill creates a new category of tax credit bonds, "Qualified Energy Conservation Bonds" to finance State and local government initiatives designed to reduce greenhouse emissions. QECBs can be issued to finance capital expenditures incurred for:

•   Reducing energy consumption by at least 20%;
•   Implementing green community programs;
•   Rural development involving the production of electricity from renewable resources.

The bonds can also be used to finance research facilities and provide research grants for, among other things, technologies to reduce peak use of electricity. There is a national limitation of $800 million, allocated to States, local and tribal governments.

...by Warren Kirshenbaum


There are numerous cities across the United States which can be considered "cleantech capitals." With a large array of renewable resources, a dedication by businesses and homeowners to become more energy efficient, and a large hub for research and development, a lot can be accomplished when it comes to creating new, efficient and sustainable clean technologies. There are many factors that make up a "capital for cleantech," and although there are more than ten cities around the nation that are involved in clean technologies, here are six of the top cities.

1) Boston, Massachusetts. Boston is said to enjoy some of the most supportive policies in the United States for energy efficiency and renewable energy. After California, Boston is second in clean technology venture capital investments. With an environment that is ripe for cleantech startups, numerous companies are moving their business to Boston. The MIT Clean Energy Prize is a venture and innovation creation competition that encourages clean energy innovation. Its objective is to provide educational opportunities and supply incentives to ventures demonstrating the clean energy affordability. As well, the development of MIT's cleantech incubator will provide Boston with more access to cleantech flow, increasing the demands for all future building to be constructed in accordance to LEED standards set up by the U.S. Green Building Council.

2) San Jose, California. San Jose, part of California's Silicon Valley, has been very productive in clean technologies. The city has expanded a number of clean technology investments and because of the research and development institutions in the area, many cleantech companies are coming to make their home in San Jose. San Jose's, "Long-time leadership in engineering know-how, combined with semi-conductor, nanotechnology and optics R&D gives it a leg up in renewable energy development, particularly in solar energy applications." San Jose is also home to the Environmental Business Cluster, a non-profit technology commercialization center assisting startup cleantech companies developing goods and services to positively impact the environment.

3) Austin, Texas. Austin has long been Texas' hub for solar, wind, geothermal, and biomass power, as well as fuel cell technologies. Its commitment to the environment and sustainability has made it not only a national cleantech player, but a global one as well. Austin is home to some of the largest cleantech companies on a global level. A large research and development hub, the University of Texas at Austin has created several research expenditures to elevate research into energy efficiency and renewable energy. This includes a project by the College of Natural Sciences to create biofuel from blue-green algae and hybrid-electric automobile programs developed by The Center for Electromechanics.

4) San Francisco, California. California is one of the top cleantech states in the United States and it is cities like San Francisco that makes it happen. Currently, San Francisco is well on its way to becoming the first city to be completely run by renewable energy by the year 2020. With projects like Sunset Reservoir Solar Project, which is the largest municipal solar facility in the state, and a new $250,000 grant to increase renewable energy capabilities.
 
5) Seattle, Washington. Seattle has been leaving its mark in cleantech society by increasing the need for green standards. The Green Building Sustainable Communities Program, for example, creates city projects that meet sustainable outcomes. Tax breaks and loans are provided to businesses and residences that utilize green practices. Seattle has been a leader in using their garbage to get electricity. They have invested into electricity from garbage landfills.
 
6) Chicago, Illinois. Over 20 percent of total power in Chicago is coming from renewable sources. Due to the increase in the need for renewable energy and energy efficiency, Chicago has been able to create numerous job opportunities while, at the same time, increasing solar power and saving on CO2 emissions. Chicago is also becoming one of the major investment locations for international businesses. Chicago also has a number of green initiatives, including the Chicago Green Office Challenge.

Kirshenbaum Law and Cherrytree Group LLC can help you structure your tax credit transaction. Let us guide you through the process of applying for and securing renewable energy tax credits. These transactions typically require a lawyer, a consultant, and a syndicator, and Cherrytree Group and Kirshenbaum law can act in all three capacities, saving you time and money on your transaction.

The original article was written by Shawn Lesser, and can be seen at http://www.reuters.com/article/2011/03 /28/idUS317857292020110328

....by Warren Kirshenbaum

Acquiring capital for real estate investments is a difficult and daunting task in this weak economy.  The uncertainty of the real estate market has become a strong barrier between investors and real estate developers, leaving developers with very few options for obtaining capital.  The absence of eager/willing investors has prompted real estate developers to seek innovative means of financing.  One attractive source of financing is through foreign investment that is generated through the EB-5 Green Card program.  EB-5 is part of the Immigration Act of 1990 established for the purpose of attracting foreign capital to the United States.  Under this program, 10,000 green cards are set aside every year for qualifying candidates.  A qualified candidate must satisfy three basic requirements in order to be considered for approval.  These basic requirements include 1) establishing a U.S. business or investing in an existing business that was created or structured after November 19, 1990, 2) the foreign national must have invested $1 million in the business or $500,000 when investing in targeted employment areas and 3) the newly created business must create full time employment for 10 U.S. workers for a specified amount of time.  Once these requirements are met, the EB-5 investors must also demonstrate that they, their spouses and their children under the age of twenty-one have resided in the U.S. for two years by means of conditional visas.  

The EB-5 Program promotes the infusion of foreign capital into the American economy. This benefits real estate developers seeking additional investment capital for their projects.  The U.S. developer can obtain financing from the foreign investor in order to commence or complete local development projects.  This is a great opportunity for American developers to secure capital for their projects in an economy where banks are denying loans and U.S. investors are reluctant to invest in new endeavors.  The program not only benefits U.S. developers, but also offers incentives to foreign investors desiring to live out the American dream.  In exchange for the investor’s capital being put to work in the U.S., they receive green cards for themselves and their families as long as all of the program requirements are met.  This is a win-win situation for both the U.S. developer and the foreign investor in achieving their goals of real estate investment/development and expedited permanent residency status, respectively.  

EB-5 applicants invest foreign capital through Regional Centers that have varying investments programs.  The Regional Center may be a state government agency, a corporation or a private venture.  Companies or private entities that are approved EB-5 Regional Centers can directly contact foreign investors who are interested in participating in the immigration program. The Regional Center must verify that the investor’s capital was earned through lawful activity; otherwise it cannot be utilized for the program.  Once all of the required elements are met, the Regional Center can begin the application process for the foreign investor.  Don’t know where there is a regional Center? The Cherrytree Group can help you find one in your area.

At the Cherrytree Group we have extensive knowledge in structuring investments to achieve the optimal return on investment. The EB-5 provides valuable investment to new real estate development projects.

Rob Bennett for The Wall Street Journal

... By Warren Kirshenbaum

Construction is nearly complete on a $37 million classical music center for Orchestra of St. Luke's slated to open in Hell's Kitchen in March.

Complete with rehearsal and recording space to accommodate a full symphony orchestra and chorus, a music library café and even showers for musicians, the 20,000-square-foot building will be the orchestra's first permanent home since its debut in 1974.

The center will also serve dozens of arts groups that rent space in the city's increasingly crowded rehearsal and performance spaces, including the New York Pops and the American Symphony Orchestra.

Raising money for building projects in the past few years hasn't been easy for the city's nonprofits. Decreases in donations and a tightening grip on public dollars have hurt funding for capital projects by charities in particular. Many donors also have focused their attention on emergency programs for the hungry and homeless.

With traditional funding harder to obtain, the Orchestra of St. Luke's became one of a growing number of nonprofits turning to a federal tax program for capital financing. This week, it will announce it has received a $4.6 million equity infusion from financial institutions including Goldman Sachs Group Inc.'s Urban Investment Group, Solomon Hess and United Fund Advisors through a federal program that provides tax credits to investors putting money into community development projects.
[ORCHEST2] Rob Bennett for The Wall Street Journal

Street view of the center at 450 W. 37th St., which is also home to the Baryshnikov Arts Center.

"We needed these tax credits to ensure the project would happen on time and as planned," says Zev Greenfield, the orchestra's vice president of finance and Operations. "While we received $4.6 million directly, we saved millions more on financing and fund-raising costs."

In 2008, the orchestra and the Baryshnikov Dance Foundation closed on a three-party deal for 450 W. 37th St., which formerly housed a consortium of theaters. The orchestra paid $16.6 million for 20,000 square feet, taking on a $7 million mortgage and a $5 million line of credit from M&T Bank.

To fund the deal, the orchestra had received multimillion-dollar pledges from donors including financiers Joe DiMenna and Victor Elmaleh, and an $8.5 million pledge from the city's Department of Cultural Affairs. However, when the financial crisis deepened, additional fund-raising slowed and donations were delayed.

"Donors were supporting the project but needed to do it over a longer period of time, and that's why the credits became such an essential piece of the puzzle," says Katy Clark, the orchestra's president and executive director.

To fill the funding gaps, the orchestra hired a consultant and applied for the federal New Markets Tax Credit Program, rushing to close on financing before the end of 2010. Created in 2000 to spur economic revitalization through private sector investment, the program allows financial institutions to provide equity to projects in depressed neighborhoods and receive federal tax deductions in return.

The interest in tax credits heightened after the financial crisis hit, leaving cities eager for ways to tap the federal funding faucet to spur economic growth.

The New York City Economic Development Corp. partnered with financial-services company United Fund Advisors in 2008 to stimulate more projects using tax credits in the city.

Since then, they have financed more than $500 million of development costs, utilizing $89 million in New Markets tax credits.

The credits have allowed the city's nonprofits to raise financing for other large capital projects such as a new 75,000 square-foot museum and condo for the Museum for African Art on Fifth Avenue.

Slated to open this year, the museum received $18.8 million in New Markets tax credits. Other projects include a $13 million conversion of warehouse space in Lower Manhattan into a recreational sport facility called Basketball City USA, to be completed this summer.

The city and United Fund Advisors hope to obtain an additional $135 million allocation in tax credits later this year.

Still, nonprofits say qualifying for the tax credits generally requires the use of paid consultants, months of paperwork and complicated financing structures.

"It's an incredibly complex set of processes," Mr. Greenfield says. "You have to really spend the time to delve into the details."