Can improvements to a brownfield be considered when filing for a 1603 grant?

Date May 5th, 2011 - Question submitted by Guest
Posted in Category Grants
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Question:

In a brownfield repowering, is the brownfield facility part of the eligible basis for the grant or only the “improvements”. For example, if I bought a mothballed facility for $10mm, and then put $10mm more into it to get it running, is the basis for the grant $10mm or $20mm??

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Answer:

Thanks very much for your question.  While we can’t give you an official legal opinion without knowing more details about your project and application, we can say generally that according to the Treasury’s guidance and FAQs, the cost basis for the system would only include the parts of a facility that are integral to the qualified energy generation.  The energy property cannot include, for example, the cost of a building, but it can include the cost of a building’s structural components (if they are integral to the energy generation).  In other words, you can only include the cost of the energy producing system itself and not extraneous things like the building.
So, if the rebate is considered taxable income (and it seems like it should be in this case), then the recipient does not need to subtract the rebate from their cost basis.
Please feel free to be in touch if we can be of further assistance: questions@cleantechlawpartners.com or visit us online: Cleantech Law Partners.

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