WWW.BOOK.DISLIB.INFO
FREE ELECTRONIC LIBRARY - Books, dissertations, abstract
 
<< HOME
CONTACTS



Pages:   || 2 | 3 |

«Client Alert Beijing Frankfurt Hong Kong London Los Angeles Munich New York Singapore Tokyo Washington, DC For more information Clarifying ...»

-- [ Page 1 ] --

June 28, 2010

Milbank

Client Alert

Beijing Frankfurt Hong Kong London Los Angeles Munich New York Singapore Tokyo Washington, DC

For more information

Clarifying CommenCement regarding this Client Alert,

please contact any of the

of ConstruCtion: treasury attorneys listed below.

Simon Friedman Publishes new Q&a 213.892.4412 sfriedman@milbank.com Mark Regante Section 1603 of the American Recovery and Reinvestment Act of 2009 directs the 212.530.5236 United States Treasury to pay cash grants (“Cash Grants”) to owners (and, in some cases, mregante@milbank.com lessees) of certain renewable energy property the construction of which begins in 2009 or Leah Karlov 2010 and which is completed before specified outside dates. Program Guidance published 213.892.4522 lkarlov@milbank.com by Treasury in July 2009 and revised in March 2010 (the “Guidance,” a copy of which can be found here) addresses when construction of eligible property will be viewed as having Joanna Grossman commenced for purposes of qualifying for a Cash Grant. On Friday, June 24th, Treasury 212.530.5713 jgrossman@milbank.com published a series of questions and answers (the “Q&As”) to further clarify how they will apply the “Commencement of Construction” requirement. A copy of the Q&As is attached.

Thi

–  –  –

Physical Work of a Significant Nature Probably the most important news in the Q&As is a warning that “Treasury will closely scrutinize any construction activity that does not involve a continuous program of construction or a contractual obligation to undertake and complete within a reasonable time, a continuous program of construction.” Treasury provided this warning in the context of acknowledging that laying the foundation for a single wind turbine generator will satisfy the requirement that construction has commenced for a 50-turbine project. This seemingly new anti-abuse requirement that work done be part of a “continuous program of construction” likely will cause project sponsors and investors to rely more often on the 5% safe harbor.

The Q&As provide additional examples of what constitutes physical work of a significant nature while, at the same time, clarifying the boundary between eligible electrical generation equipment and ineligible transmission assets. For example, the Q&As clarify that physical work on a transformer that steps up the voltage of electricity produced at a facility is considered physical work of a significant nature because such equipment is specified energy property. In contrast, work on a transmission tower does not count as physical work of a significant nature because transmission equipment is not specified energy property.

Another example outlined by the Q&As addresses roads built on the construction site. Roads integral to the qualified facility (e.g., onsite roads that move materials to be processed and roads to operate or maintain the facility) are specified energy property. Starting construction on these integral roads will satisfy the commencement of construction standard. However, roads that provide access to the site and roads used solely for employee and visitor vehicles do not constitute specified energy property, and thus commencing construction of such roads cannot be counted as beginning construction.

Similarly, clearing land or erecting fences does not qualify as physical work of a significant nature; nor does dismantling an existing facility to build a new one.

As outlined in the Guidance, the Q&As provide that physical work of a significant nature performed by a third party for the applicant pursuant to a binding written contract only will count towards the commencement of construction standard if the work is commenced after the contract is entered into. If an applicant enters into a binding written contract with a supplier that produces the same goods for multiple customers, the contractor must be able to demonstrate that work has begun with respect to property that will be delivered to the applicant. For this purpose, the contractor may use any reasonable and consistent method to allocate work between customers.

Moreover, the production or manufacture of goods that are in the inventory of the manufacturer before an applicant has entered into a contract to purchase those goods cannot be counted as physical work of a significant nature.

5% Safe Harbor

–  –  –

In general, costs are not treated as incurred for purposes of the safe harbor until purchased property or services are delivered or title to the property passes to the applicant (the so-called “economic performance” rules). If an applicant seeks to rely on the work of a contractor to satisfy the 5% safe harbor, the applicant may treat costs as paid or incurred when costs are paid or incurred by the contractor. Applicants also may count costs paid or incurred by a supplier that manufactures property or components for the applicant pursuant to a binding written contract.

As in the case of the standard discussed above relating to physical work of a significant nature, costs must be incurred after the binding written contract is entered into and must be reasonably allocated to the specified energy property of the applicant. Costs incurred by a component supplier to a contractor will not be treated as incurred until the components are provided to the contractor (not as the costs are paid or incurred by the supplier).





Treasury also has clarified that the cost of components will be treated as having been incurred when title to the components is transferred to the applicant, even though the components may be stored at the manufacturer’s premises.

Additionally, the Q&As repeat the rule expressed in the Guidance that it is not sufficient to show that an applicant reasonably expected costs incurred by December 31, 2010 to exceed 5% of the project costs. Rather, the costs incurred must be equal to or greater than 5% of the actual total cost of the specified energy property. But, if a project includes multiple units of specified energy property and less than 5% of the cost of the eligible property in the entire project has been incurred before year’s-end, an applicant can elect to treat the project as including less than all the units of property and apply for a Cash Grant on that lesser number.

Proof

In order to establish that physical work of a significant nature has begun on a project with an anticipated cost of $1 million or more, the applicant must provide a report from an independent engineer, signed under penalties of perjury, describing the project’s eligibility (including construction schedule, budget, description of work that has commenced, and invoices for work performed). To establish eligibility under the 5% safe harbor for such a project, the applicant must submit a statement from an independent accountant, signed under penalties of perjury, attesting to the accounting method used and including a detailed description of the costs that have been paid or incurred, evidence of these costs (invoices or other records) and an estimate of the total cost of the specified energy property. When the applicant seeks to rely on costs paid or incurred by a contractor, the application must also include a copy of the binding written contract and a statement from the contractor, signed under penalties of perjury, attesting to the costs paid or incurred and that they are allocable to the applicant’s project.

Clarifying CommenCement of ConstruCtion: treasury Publishes new Q&a 4 June 28, 2010

–  –  –

Q1. How does an applicant demonstrate that construction has begun on a project in 2009 or 2010?

A1. There are two ways to show that construction has begun. One is to begin physical work of a significant nature. The other is to meet a 5% safe harbor.

Physical Work of a significant nature

Q2. What does it mean to begin physical work of a significant nature?

A2. This means that physical work on the specified energy property has started. Physical work of a significant nature includes any physical work on the specified energy property at the site. Physical work of a significant nature also includes physical work that has taken place under a binding written contract for the manufacture, construction, or production of specified energy property for use by the applicant’s facility provided the contract is entered into prior to the work taking place.

Q3. What is included in specified energy property in the case of a qualified facility described in section 45 of the Internal Revenue Code?

A3. In the case of a qualified facility described in section 45, specified energy property is limited to tangible personal property and other tangible property used as an integral part of the activity performed by the qualified facility and located at the site the qualified facility. For such a facility, specified energy property includes property integral to the production of electricity, but does not include property used for electrical transmission. Thus, physical work on a transmission tower located at the site is not physical work of a significant nature because the transmission tower is not part of the qualified facility. However, physical work on a transformer that steps up the voltage of electricity produced at the facility to the voltage needed for transmission is physical work of a significant nature because power conditioning equipment is part of the qualified facility.

Q4. How much physical work is required? Is laying the foundation for one wind turbine that is part of a larger wind farm sufficient?

A4. In general any physical work on the specified energy property will be treated as the beginning of construction even if such work relates to only a small part of the facility, but see Q5/A5 below.

Q5. Once physical work has begun, must physical work on the project be continuous to satisfy the requirement that construction has begun? For example, if a single foundation for a wind turbine is laid in 2010 but no other physical work on a 50 turbine project takes place until 2012, has the requirement been met?

A5. Treasury will closely scrutinize any construction activity that does not involve a continuous program of construction or a contractual obligation to undertake and complete within a reasonable time, a continuous program of construction. Disruptions in the work schedule that are beyond the applicant’s control (for example, unusual weather or a site at which work can only be performed during certain seasons) will be taken into account in determining whether or not an applicant has undertaken a continuous program of construction.

Clarifying CommenCement of ConstruCtion: treasury Publishes new Q&a 5 June 28, 2010 Q6. Is starting work on roads physical work of a significant nature?

A6. Only work on specified energy property is physical work of a significant nature for purposes of showing that construction has begun. In the case of a qualified facility described in section 45, roads on the site that are integral to the qualified facility are specified energy property; these include onsite roads that are used for moving materials to be processed (for example, biomass) and roads for equipment to operate and maintain the qualified facility. Starting construction on these roads constitutes the beginning of construction. Roads for access to the site, or roads used solely for employee or visitor vehicles are not specified energy property; starting construction on these roads is not starting physical work of a significant nature on specified energy property.

Q7. Is preliminary work such as clearing land, obtaining permits or putting up fencing physical work of a significant nature?

A7. Preliminary work such as clearing land and obtaining permits is not physical work of a significant nature on specified energy property. Erecting a fence (or beginning to erect a fence) is not the beginning of physical work of a significant nature because, generally, fencing is not an integral part of the qualified facility.

Q8. An applicant plans to build a new facility for the production of electricity from wind power. The facility will be constructed on an existing wind facility site. In order to construct the new wind facility, the existing facility will be dismantled and removed. If an applicant begins to remove portions of the existing facility has physical work of a significant nature commenced?



Pages:   || 2 | 3 |


Similar works:

«BANKROLLING CLIMATE CHANGE Published by urgewald, groundWork, Earthlife Africa Johannesburg and BankTrack urgewald heffa@urgewald.de Tel: (49)-2583-1031 www.urgewald.de groundWork team@groundwork.org.za Tel: (27)-33-3425662 www.groundwork.org.za Earthlife Africa Johannesburg seccp@earthlife.org.za Tel: (27)-11-339 3662 www.earthlife.org.za BankTrack yann@banktrack.org Tel: (33)-688-907868 www.banktrack.org urgewald Authors: Heffa Schücking, Lydia Kroll, Yann Louvel and Regine Richter Research:...»

«Nationale Kapodistrias Universität Athen Philosophische Fakultät Fachbereich für Deutsche Sprache und Literatur Seminar: DLA66 Brecht, Kafka, Thomas Mann Seminarleiter: Lektor Dr. Stefan Lindinger WS 2009/10 Code-Switching in Thomas Manns „Zauberberg“ vorgelegt von: Felix Romanik Matrikelnummer: 1565 2008 00104 [2] Inhaltsverzeichnis Vorwort Was ist Codeswitching? Der „Zauberberg“ als polyglotter Ort Das Berghof-„Rotwelsch“ Settembrini, Behrens, Stöhr Codeswitching zwischen...»

«Second Skin The Erotic Art Of Lingerie Sinisa kommt Welt als bestehende Pressekonferenz Weinzierls Second skin: the erotic art of lingerie steht durcheinander. Mehr Opfer ist stetig geschickt oder Wecker und Inhalt gemacht? Die zu Second skin: the erotic art of lingerie 4 brennenden, am Projekten richtig Bundesrepublik bekannte Verbrauch, werden am Hunt im Propaganda genommen geworden, dass den Einzelhandelskauffrau der Entwickler an Wahrheit wie nicht erfolgt scheinen. Plus wurde ein...»

«Amtliche Mitteilung Zugestellt durch Post.at AMTSBLATT März 2010 MARKTGEMEINDE MATREI IN OSTTIROL Bezirk Lienz – A-9971 Rauterplatz 1 Gemeinderatsperiode 2010 2016 Elisabeth Mattersberger LA Dr. Andreas Köll Vizebürgermeisterin Bürgermeister Seite 2 Matreier Amtsblatt/März 2010 Liebe Matreierinnen und Matreier! Am 14. März 2010 fanden Gemeinderatsund Bürgermeisterdirektwahlen statt, welche folgende Ergebnisse gebracht haben: Wählergruppe: Stimmen Mandate Bürgermeisterliste LA Dr....»

«First Contact Imaging of nanoparticular siRNA – From synthesis to application of a prodye concept Dissertation Zur Erlangung des Grades “Doktor der Naturwissenschaften” im Promotionsfach Pharmazie am Fachbereich Chemie, Pharmazie und Geowissenschaften der Johannes Gutenberg-Universität in Mainz vorgelegt von Herrn Apotheker Okan Osman Oglou geboren am 20.03.1986 in Xanthi, Griechenland Mainz, Mai 2015 II Vom Fachbereich Chemie, Pharmazie und Geowissenschaften der Johannes...»

«Get Free Read Online Ebook PDF PROJEKTAUFGABEN MASCHINENELEMENTE GESTALTET UND BERECHNET 217280 at our Ebook Library. Get PROJEKTAUFGABEN MASCHINENELEMENTE GESTALTET UND BERECHNET 217280 PDF file for free from our online library PROJEKTAUFGABEN MASCHINENELEMENTE GESTALTET UND BERECHNET 217280 PDF Are you looking for PROJEKTAUFGABEN MASCHINENELEMENTE GESTALTET UND BERECHNET 217280 PDF?. If you are a reader who likes to download PROJEKTAUFGABEN MASCHINENELEMENTE GESTALTET UND BERECHNET 217280 PDF...»

«1 Revista Patagónica de Filosofía, 2, 2, 2000, 7992 The mystery of Frege's Bedeutung Ignacio Angelelli University of Texas at Austin 1. Introduction The German word 'Bedeutung' has two meanings— on the one hand we may say, for example, that the Bedeutung of the singular term 'Bariloche' is this town; on the other hand we may say that the Bedeutung of Bariloche, the town Bariloche, is great for the Argentinian touristic development. Briefly, we may speak of the semantic meaning and the...»

«Der für seine strategischen Analysen bekannte US-Autor F. William Engdahl warnt den Westen eindringlich davor, einen Atomkrieg mit dem auch wieder militärisch erstarkten Russland zu riskieren. Friedenspolitische Mitteilungen aus der US-Militärregion Kaiserslautern/Ramstein LP 219/15 – 02.12.15 Wollen die USA und die NATO wirklich einen Dritten Weltkrieg mit Russland riskieren? Von F. William Engdahl New Eastern Outlook, 16.11.15 (...»

«Oldtimer Rallye Das Handbuch Fur Fahrer Und Beifahrer Bei Schandfleck Oldtimer-Rallye: Das Handbuch für Fahrer und Beifahrer eines neue Zielgruppe Klebestiften erlitt mit Basel zwei Veranstalter sprang. 127,5 Kraftaufwand bei sie werde bis Angaben festgestellt. Im Oldtimer-Rallye: Das Handbuch für Fahrer und Beifahrer Quartals im Gelegenheit hatte er noch Patrick. satt Sofia haben im 4 erforderlich ihrerseits auf Braunau, soweit Karlsruhe Boyhood mit dem Spiel als Bestandteil heutige...»

«IRLE IRLE WORKING PAPER #34-91 August 1991 Present At The Beginning: Some Personal Notes On OB's Early Days and Later George Strauss Cite as: George Strauss. (1991). “Present At The Beginning: Some Personal Notes On OB's Early Days and Later.” IRLE Working Paper No. 34-91. http://irle.berkeley.edu/workingpapers/34-91.pdf irle.berkeley.edu/workingpapers Institute for Research on Labor and Employment UC Berkeley Title: Present at the Beginning: Some Personal Notes on OB's Early Days and Later...»





 
<<  HOME   |    CONTACTS
2016 www.book.dislib.info - Free e-library - Books, dissertations, abstract

Materials of this site are available for review, all rights belong to their respective owners.
If you do not agree with the fact that your material is placed on this site, please, email us, we will within 1-2 business days delete him.