The United States has used tax credits and accelerated deprecation since the 1960s as an inducement to companies to invest in areas in which the US is trying to direct capital. Few project developers can use these benefits, and so a core financing tool for industries in which such tax benefits are on offer is using the tax benefits to raise “tax equity” to help fund new projects. Chadbourne has been handling tax equity transactions since the 1960s. It was heavily involved from the 1960s through the 1990s in tax equity for airlines, railroads and power, mining, telephone, trucking and shipping companies. During this period, it helped develop many new structures and worked on many cutting-edge deals, including municipal, cross-border double-dip, C-FSC, O-FSC and turbo-FSC leases and sale-in-lease-out, lease-in-lease-out and service contract transactions.
Since 2004, most of the activity has been in the renewable energy sector. Chadbourne is widely viewed as one of the leading tax equity firms in this sector. For example, it was counsel in 17 of the 18 wind tax equity transactions in 2007. It has handled more than five dozen master tax equity facilities for rooftop solar installations. Term sheets and deal papers that the firm drafted for use in partnership flip and master inverted lease transactions are now standard documents in use in such transactions. It wrote separate manuals on tax issues and solar deal structures for the Solar Energy Industries Association and the Solar Electric Power Association.
The firm represents both sponsors and tax equity investors across multiple asset classes, including solar, wind, geothermal, biomass, fuel cells, and refined coal.
Deals in this market are sensitive to small changes in government policy. It is dangerous to work on such transactions without keeping an ear to the ground in Washington, DC. Unlike other firms, Chadbourne has a significant part of its team based in Washington and talks regularly to senior Treasury and IRS officials and to the tax staffs on Capitol Hill and plays a role in policy discussions.
Chadbourne Represents NRG in Tax Equity Financing of Portfolio of Wind Assets
Chadbourne represented NRG Energy in a tax equity financing of a portfolio of 12 operating wind farms in eight states. This is one of the largest portfolio tax equity financings ever closed. The wind farms were acquired out of bankruptcy from Edison Mission Energy in a US$2.65 billion deal.
Chadbourne Advises on OwnEnergy-BlackRock Joint Venture
Chadbourne represented a joint venture between OwnEnergy and a fund managed by BlackRock in connection with the construction and tax equity financing of the 68 MW Windthorst II wind project in Texas.
SolarCity Tax Equity Financing with Google
Chadbourne represented SolarCity in a leveraged master inverted lease financing of solar residential properties with Google as the tax equity investor.
Acquisition of Cash Flow from Tax Equity Interests
Chadbourne represented Macquarie in connection with the acquisition of cash flow from a portfolio of tax equity interests in 15 wind projects owned by JP Morgan.
Keith Martin is a transactional lawyer whose principal areas of practice are tax and project finance. He acted for 142 companies last year and worked on transactions in the United States and five foreign countries. He also lobbies Congress and the Treasury Department on policy issues. He is co-...