Novogradac & Company Llp

Financial forecasts are a fundamental part of financing and developing any clean energy facility, particularly for evaluating investor and sponsor returns. This installment of the Renewable Energy Tax Credit Finance series delves into the key do's and don'ts of clean energy financial forecasts. Michael Novogradac, CPA, and Novogradac partner Tony Grappone, CPA, discuss valuable tips for construction costs, operational expenses, debt and equity sizing, and tax benefit analysis.

The first tax season to claim the elective pay incentive, sometimes called "direct pay," from the Inflation Reduction Act (IRA) of 2022 took place earlier this year. In this week's episode of Tax Credit Tuesday, host and Novogradac managing partner, Michael Novogradac, CPA is joined by Novogradac partner Alvin Lee, CPA , to review lessons learned from the incentive's first tax season. The conversation reviews the details of the incentive, which credits are available for direct pay and who can apply for it. Next, the conversation covers the reasons a taxpayer might opt for the elective pay option over other possibilities such as renewable energy tax credit (RETC) transfer. The conversation moves into two evolving issues facing the incentive around what qualifies as domestic content as well as the Jan. 1, 2025, switch for the solar investment tax credit (ITC) to a tech-neutral credit. Finally, the two discuss lessons learned from the first year of the incentive's tax season to apply to the 2025 season.

The tax credit equity market is affected by a variety of factors'and several looming factors could create upward or downward pressure on the pricing for low-income housing tax credits (LIHTCs), new markets tax credits (NMTCs), historic tax credits (HTCs) and clean energy tax credits. In this week's Tax Credit Tuesday podcast'the second of a two-part series'Michael Novogradac, CPA, discusses the issues that could affect equity pricing with three Novogradac partners: Brad Elphick, CPA; Tony Grappone, CPA; and Dirk Wallace, CPA. They begin by looking at how proposed Community Reinvestment Act (CRA) regulations might impact their respective credits, then look at the Basel III and Global Minimum Tax proposals and how they could affect tax credit equity markets. After that, they examine generally accepted accounting procedure (GAAP) regulations, as well as how proposed legislation could impact the markets and wrap up with what proposed tax law changes would have the greatest positive effect in the areas in which th

The tax credit equity markets for the federal historic tax credit (HTC), new markets tax credit (NMTC), low-income housing tax credit (LIHTC) and clean energy tax credits account for billions of dollars each year in investment in community development around the nation. In this week's Tax Credit Tuesday podcast'the first of a two-podcast series'Michael Novogradac, CPA, discusses the markets and their intersections with three Novogradac partners: Brad Elphick, CPA; Tony Grappone, CPA; and Dirk Wallace CPA. They examine pricing trends for HTCs, NMTCs, LIHTCs and clean energy tax credits, as well as what factors are playing a role in those trends and how each market affects the others. They then look at how the transferability and refundability provisions for clean energy tax credits under the Inflation Reduction Act of 2022 have affected all the markets. They wrap up with a preview of Part 2 of the series, which will deal with factors that will affect future pricing of tax credit equity.

In this episode of Tax Credit Tuesday , Michael Novogradac, CPA, and Tony Grappone, CPA, discuss the upcoming transition to technology-neutral clean energy tax credits. They provide an overview of the new technology-neutral clean energy investment tax credit (ITC) and production tax credit (PTC) rules taking effect on Jan. 1, 2025, and how different types of facilities qualify. They delve into the implications of the Inflation Reduction Act of 2022 and the stringent criteria for various technologies to qualify for the tech-neutral credits. Tony also shares ways to secure safe harbor provisions and insights on the shifting landscape of renewable energy finance. Tune in to learn how to prepare for these significant changes in the clean energy sector.

In mid-July, the Community Development Financial Institutions (CDFI) Fund announced that it would combine the calendar year (CY) 2024 and 2025 new markets tax credit (NMTC) allocation award rounds into a single $10 billion round. In this week's podcast, Michael Novogradac, CPA, and Brad Elphick, CPA, the head of the New Markets Tax Credit Working Group, discuss the announcement and its implications. They begin by looking at the possible timing of the CY 2023 awards announcement, then look at the possible timing of the opening of the CY 2024-2025 round before examining the number of awards and award sizes to expect from a $10 billion round, as well as the investor appetite for such a round. After that, they discuss the New Markets Tax Credit Working Group recommendations to the CDFI Fund, tips for community development entities (CDEs) and businesses interested in NMTC financing and resources for listeners.

On July 30, 2024, the Senate Finance Committee invited four financial experts to testify at the Tax Tools for Local Economic Development hearing, including Tax Credit Tuesday host and Novogradac managing partner, Michael Novogradac, CPA. In this 76-minute episode of Tax Credit Tuesday, Novogradac is joined by Novogradac partners John DeJovine, CPA, Brad Elphick, CPA, and Jason Watkins, CPA, to expand upon issues and questions discussed during the Senate hearing regarding the historic tax credit (HTC), new markets tax credit (NMTC) and the opportunity zones (OZ) incentive. The group discusses the legislative outlook for the various incentives, how the economic development tools can be combined with other incentives and issues specific to each incentive.

In this Tax Credit Tuesday episode, Michael Novogradac, CPA, and Novogradac partner Charlie Rhuda, CPA, dive into the intricacies of accessing 4% low-income housing tax credits and tax-exempt bonds in a competitive market. As part of their 'So You Want to Be a LIHTC Developer' series, they discuss the basics, provide historical context, and offer practical strategies to enhance the economic benefits of such financing. The episode also covers challenges developers face in obtaining bond financing and essential tips for competing effectively in this space. Featuring real-world examples and expert insights, this episode is packed with valuable information for both new and seasoned LIHTC developers.

In this episode of the Tax Credit Tuesday "So You Want to be a LIHTC Developer" series, Michael Novogradac, CPA, and guests Novogradac partner Susan Wilson, CPA, and Novogradac principal Robert Bennett, CPA, delve into the critical benefits of low-income housing tax credit (LIHTC) audits. This episode focuses on six ways audits provide value to LIHTC owners and developers, including eligible basis calculation, tenant compliance, first-year credit optimization, cash waterfall distributions and analytical review procedures. Learn how specialized expertise can enhance decision-making, sustain property feasibility and save time and money for developers and stakeholders in the affordable housing sector.

Year 15 marks the conclusion of the initial compliance period for a low-income housing tax credit (LIHTC) property, a milestone that brings tax complexities for the investor and the developer. In the latest installment of Novogradac's Tax Credit Tuesday podcast series, "So You Want to Be a LIHTC Developer," Michael Novogradac, CPA, and Kevin Wilson, CPA, discuss accounting issues around Year 15. First, they discuss the ways investors and developers report LIHTC transactions on their generally accepted accounting principles (GAAP) statements, discussing the differences between approaches such as the equity method, proportional amortization and consolidations. They also discuss issues facing investors and developers such as impairment, exit taxes and resyndications.

Year 15 is a crucial period in the life cycle of a property financed by low-income housing tax credit (LIHTC) equity, one filled with significant decisions by the property owner and their investor partner. In this week's episode of Tax Credit Tuesday, Michael Novogradac, CPA, and Novogradac partner Nicolo Pinoli, CPA, discuss some crucial issues, including the right of first refusal (and related tax issues), the qualified contract process and resyndication. In the discussion, they examine some of the assertions and some potential challenges to different approaches, including what could motivate developers to pursue different outcomes.

Developing affordable rental housing with low-income housing tax credits (LIHTCs) is a process that can take multiple years, from conception to placing in service, beginning operation and beyond. In this week's episode of Tax Credit Tuesday, guest host Dirk Wallace, CPA, and Karie McMillen, CPA, provide an overview of the stages of the development process, from forming a partnership to annual compliance and many other stops along the way. First, they discuss the most common financing structure for a LIHTC development. With that scope established, McMillen details 11 key moments during the development process, discussing several in greater detail. Finally, the two share insights for developers who are just getting started in the development process.

Under the Inflation Reduction Act of 2022, certain energy facilities can qualify for a 10% bonus tax credit for solar, onshore wind and battery projects that have a minimum amount of domestic content. The IRS in May released new guidance making it easier to determine whether a project qualifies for the bonus credit. In this episode of Tax Credit Tuesday, guest host Brad Elphick, CPA, and Tony Grappone, CPA, dive into the recent domestic content bonus credit guidance for renewable energy projects. They discuss implications for developers, investors and lenders, as well as how Novogradac can provide agreed upon procedures services to help project partners assess whether there are any issues in the way of a facility meeting the domestic content criteria.

With five months until the general election, possible outcomes are varied'and the stakes are high for community development stakeholders. In this week's Tax Credit Tuesday, Michael J. Novogradac, CPA, and Peter Lawrence, Novogradac's director of public policy and government relations, discuss why this election is so important and the effects of different possible outcomes on community development tax credits. They begin by talking about the expiring provisions and why tax legislation is almost certainly on the agenda for the next Congress, then they look at the state of the races for president, the Senate and House of Representatives. After that, they examine each scenario and what each might mean for community development tax incentives.

Year 7 marks the end of the compliance period for a new markets tax credit (NMTC) transaction, marking seven years since an investor made its qualified equity investment into a community development entity (CDE). In this week's episode of Tax Credit Tuesday, Michael Novogradac, CPA, and Greg Clements, CPA, discuss the most-common type of Year 7 NMTC exit, the put-call structure. After defining the structure, Novogradac and Clements outline the roles and viewpoints of the investors, qualified active low-income community businesses (QALICBs) and CDEs during a Year 7 exit. Later, Clements gives his perspective on the value of planning, timing and communication between the parties.

Property compliance is multilayered for owners and managers of low-income housing credit (LIHTC) properties, with complexity increasing for mixed-income properties, which are properties whose renters make up to varying levels of the area median income, often including market-rate apartments. In this episode of Tax Credit Tuesday, Michael Novogradac, CPA , and Stephanie Naquin, HCCP, COS , delve into compliance for mixed-income properties that use the LIHTC. They discuss the definitions of 100% affordable housing and mixed-income housing, recertifications, the next-available-unit rule and more.

The Inflation Reduction Act of 2022 reduced the base rate of the then-26% renewable energy investment tax credit to 6% for renewable energy projects. Few projects are financially viable with just the 6% credit, but projects can qualify for a 30% credit if they satisfy two criteria: prevailing wage and apprenticeship (PWA) requirements. In the latest installment in Tax Credit Tuesday's recurring Renewable Energy Tax Credit Finance series, Michael Novogradac, CPA, and Tony Grappone, CPA, discuss the credits and technologies to which PWA criteria apply, how to meet PWA criteria and how to provide investors comfort with PWA compliance.

Eligible basis is a foundational factor to determine the maximum amount of low-income housing tax credits (LIHTCs) generated by an affordable housing property. In this week's podcast, Michael Novogradac, CPA, and Mark Shelburne, a Novogradac housing policy consultant, discuss the fundamentals of eligible basis and the implications for properties ahead of a special six-part online course offered by Novogradac. They examine the purpose of that course series, then look at the role eligible basis plays in determining the tax credit allocation amount. After that, they look at the challenges in determining what parts of an affordable housing development are depreciable and what constitutes eligible basis, including examples of challenges faced. They wrap up by talking about opportunities to learn more about the nuances of eligible basis.

Many developers are familiar with the challenges when using historic tax credits (HTCs) to preserve America's history, including issues such as climbing interest rates, rising insurance rates and increasing costs of construction and labor. In this week's episode of the Novogradac Tax Credit Tuesday podcast, Michael Novogradac, CPA , and John DeJovine, CPA , discuss gap financing solutions for developers involved in historic preservation. First, the conversation covers the use of bridge loans, tax increment financing (TIF), payment in lieu of taxes (PILOT), property assessed clean energy (PACE) funds and other state, local and municipal sources of financing. Later, Novogradac and DeJovine discuss how the HTC pairs with other affordable rental housing and financing community development using such incentives as the low-income housing tax credit (LIHTC), new markets tax credit (NMTC), opportunity zones (OZ) equity, and renewable energy incentives such as the production tax credit (PTC) and investment tax credi

The U.S. Department of Housing and Urban Development (HUD) released 2024 rent and income limits earlier this month'limits that determine renter eligibility for HUD-assisted programs and for properties financed by low-income housing tax credit (LIHTCs). The limits also determine the maximum rents that owners of LIHTC properties can charge tenants. In this week's podcast, Michael Novogradac, CPA, and Novogradac partner Thomas Stagg, CPA, discuss the rent and income limits. They look at key takeaways, how the new 10% ceiling affected limits, what geographic areas saw income limit growth that was below the national average of 6% or decreased and how the income limits affect (or don't affect) HERA special properties. They also look to what to expect in 2025 and key dates for data release that will affect those 2025 limits.