Using Partnership Flips to Finance Renewable Energy Projects: Evaluating Tax Risks, Navigating IRS Safe Harbors
Recording of a 90-minute CLE webinar with Q&A
Conducted on Thursday, January 26, 2017
Recorded event now available
This CLE webinar will provide guidance to counsel for parties involved in financing energy projects on using partnership flips tax equity structures. The webinar will be a deep dive into partnership flips and current issues in such transactions. The panel will also discuss broader trends in renewable energy financings.
Partnership flips are a financing tool in which a developer forms a partnership with a tax equity investor, allocating 99% of taxable income and loss to the investor until the investor reaches a target return, after which the investor's interest drops usually to 5% and the developer has an option to purchase the investor’s interest. Cash is shared in a different ratio. There are many variations in flip structures, including yield-based flips, time-based flips, pay-go, depreciation-only and cash-strip structures.
The IRS has guidelines for flip transactions in the wind market. It has said that the guidelines should not be relied on for solar projects. It also issued a series of benchmarks for tax equity transactions in the historic tax credit market in the wake of a US appeals court decision in a case called Historic Boardwalk. Most transactions stay within the parameters set by the IRS wind guidelines. Some stray.
Renewable energy tax equity is expected to be roughly a $13 billion market in 2016.
Corporate tax reform is likely in 2017. The risk of a change in law is starting to play into deals.
The webinar will be a detailed look at flip transactions. It will be structured so that both neophytes and experienced counsel will find it of value.
The panel will review these and other key issues:
- How the market is expected to be affected by corporate tax reform and what people are doing currently in anticipation of tax law changes.
- How the basic flip structure is evolving and what current issues are taking up time in deals.
- What tools people are using to adjust to a market where falling electricity prices mean less cash flow.
- What the pros and cons are of using a partnership flip versus alternative tax equity structures and of using different variations of flips.
Keith Martin, Partner
Chadbourne & Parke,
Mr. Martin is a transactional lawyer whose principal areas of practice are tax and project finance. He acted for 178 companies last year and worked on transactions in the United States and eight foreign countries. He also lobbies Congress and the Treasury Department on policy issues. He is co-head of the Firm’s project finance group.
Jorge Medina, Vice President and Assistant General Counsel, Tax
San Mateo, Calif.
Mr. Medina manages and negotiates tax issues in SolarCity tax equity transactions. He also manages and coordinates the company tax adminstration and provides advice to his company's senior managment regarding tax concerns across the company.
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