1. Greening
Affordable Multifamily:
Credits and Beyond
David Abromowitz
Resources for Greening Affordable Multifamily Housing
Boston, MA, April 14, 2010
© Goulston & Storrs 2009. All rights reserved.

2. Overview
Recent Expansion of Sources for Energy Efficiency That Can Be Used For
Affordable Green Rentals
• IRS Incentives: Tax Credits and Depreciation
• Other Government and Utilities-Based Programs
• Potential Legislation for Additional Resources
© Goulston & Storrs 2008. All rights reserved.

3. Overview of Green Building Federal Tax Incentives* April 2010
Available Federal Tax Incentive 30% CREDIT 10% CREDIT 2.1 CENT CREDIT FIVE-YEAR DEPRECIATION ENERGY-EFFICIENCY BONUS
DEPRECIATION
Energy Investment Tax Credit: Energy Investment Tax Credit: Production Credit: Accelerated Depreciation:
Immediate credit for 30% of costs for Immediate credit for 10% of costs for Base rate 1.5 cent per Kwh credit for Five-year accelerated depreciable life Bonus Depreciation:
property placed in service before property placed in service before renewable energy sold to third parties. on cost basis for energy equipment. Deduction for the cost of energy
January 1, 2017 with basis reduction January 1, 2017 with basis reduction Rate based on 2002 year and subject §168(c). efficient property capped at $1.80 per
equal to 50% of credit. §48. equal to 50% of credit. §48. to inflation adjustment (2.1 cent as of sq. ft if building energy efficiency
May 22, 2008). §45. If the energy equipment is placed in exceeds 50% or more than the
Facilities placed in service in 2009 or Facilities placed in service in 2009 or service in 2009, 50% bonus ASHRAE 90.1-2001 standard ($0.60
2010 are eligible for a dollar-for-dollar 2010 are eligible for a dollar-for-dollar Taxpayers may elect to have certain depreciation will be available in year per sq. ft if meets lesser standard).
grant in lieu of the credit. grant in lieu of the credit. qualified §45 eligible facilities take the one with the remaining balance of the
30% immediate credit instead of the depreciation will be available in year The equipment must be installed as
2.1 cent per Kwh credit. If a taxpayer one with the remaining balance of the part of interior lighting, heating,
elects the 30% credit, and the project depreciation taken over the five-year cooling, ventilation, or hot water
is placed in service in 2009 or 2010, depreciable life. §168(k). systems, or the building envelope.
the project is eligible for a dollar-for- §179D.
Qualifying Technology dollar grant in lieu of the credit.
SOLAR Yes, but only for solar energy facilities
(Photovoltaic, passive hot water heat, Yes No placed in service before January 1, Yes Yes
solar tubling) 2006
Yes, for small wind or certain other
Yes, for wind property placed in
WIND wind if §48 credit elected instead of No Yes No
service before January 1, 2013
§45 credit
Yes, if §48 credit elected instead of
Yes, for electricity and cooling and
§45 credit for electricity, not for cooling
heating
and heating
Yes, for electricity produced from
GEOTHERMAL (geothermal that meets the definitions geothermal energy for facilities placed Yes Yes
(geothermal that meets the definitions
of qualified property in both §45 and in service before January 1, 2014
of qualified property in both §45 and
§48 is allowed either the 30% credit or
§48 is allowed either the 30% credit or
the 10% credit but not both)
the 10% credit but not both)
Yes, open loop biomass facilities
Yes, if §48 credit elected instead of placed in service before January 1,
BIOMASS (for electricity) No No Yes
§45 credit 2014 are eligible for reduced credit
equal to 1.1 cents as of May 22, 2008
Yes, for fuel cell (the maximum Yes, for microturbines (the maximum
FUEL CELL/MICROTURBINE (for amount of the payment may not amount of payment may not exceed
No Yes Yes
electricity) exceed an amount equal to $1,500 for an amount equal to $200 for each
each 0.5 kilowatt of capacity) kilowatt of capacity)
COMBINED HEAT AND POWER
No Yes No Yes Yes
(cogeneration)
OTHER TECHNOLOGIES
(Water Management (rain barrel), No No No No Yes
LED (Light Emitting Diodes)
*This chart and the included narrative are an overview only, and the tax incentives include significant transition rules, limitations and exceptions beyond those listed in this chart. This overview should not be construed as legal advice or
a legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult a lawyer concerning your situation and any specific legal questions you may have.
Pursuant to IRS Circular 230, please be advised that, to the extent this communication contains any federal tax advice, it is not intended to be, was not written to be and cannot be used by any taxpayer for the purpose of (i) avoiding
penalties under U.S. federal tax law or (ii) promoting, marketing or recommending to another taxpayer any transaction or matter addressed herein.
© Goulston & Storrs 2008. All rights reserved.

4. IRS Incentives: Tax Credits
Renewable Energy Tax Credits
• Extended in fall 2008 and under ARRA
• Investment Tax Credit (Section 48)
 30% or 10% of equipment cost, based on technology
 Usually taken in year equipment placed in service (bonus depreciation thru 2009, possible extension in tax
extenders bill)
 Basis must be reduced if using LIHTC or other “subsidized energy financing”
 Credit tied to owner of renewable equipment not bldg. owner / energy user
 Coordinated with LIHTC but not allocated by agency
 May include Power Purchase Agreement (PPA)
• Production Tax Credit (Section 45)
 Per-kWh credit for energy generated using qualified energy resources at a qualified facility and sold by the
taxpayer to an unrelated person
 ARRA: option to elect ITC or PTC
• ARRA: Cash grants instead of credits, if construction started by end 2010
© Goulston & Storrs 2008. All rights reserved.

5. IRS Incentives: Tax Deduction
Energy Efficiency Tax Deduction (Section 179D)
• Deduction for the cost of energy efficient property
• Eligible multi-family residential properties must have more than 3
stories
• Equipment must be installed as part of interior lighting, heating, cooling,
ventilation, or hot water systems, or the building envelope
 Capped at $1.80 per sq. ft for energy reductions of at least 50% better
than reference building under ASHRAE 90.1-2001 standard
 Capped at $0.60 per sq. ft if at least 162/3% better than reference
building under ASHRAE 90.1-2001 standard
• Building envelope property may now be partially qualified if it achieves
only a 10% reduction in total qualified energy costs (Notice 2008-40)
© Goulston & Storrs 2008. All rights reserved.

6. Other Government and
Utilities-
Utilities-Based Programs
• State Programs (e.g. Massachusetts)
 Corp. Income and Excise Tax Deductions, Property Tax Exemptions
 Grant Programs: probably taxable income
 Commonwealth Solar
– Must use 50% of energy on site
– Prevailing wage if grant >$50,000
– Capped at 500 kW for multifamily projects and $20,000/unit
– REC revenue stream
 Green Affordable Housing Development Grants (DHCD): most renewables
 Commonwealth Wind: analogous to Commonwealth Solar
• Utilities-Based Programs: not taxable income (Tax Code Sec. 136)
 Electric and Gas Utilities
 “Decoupling”
 MA: Three-year energy efficiency plans
© Goulston & Storrs 2008. All rights reserved.

7. Solar Retrofit Example
Existing Building, Recently Completed LIHTC Rehab
Solution: Private For-profit Third Party Generator to Own/Install/Finance
Solar on Rooftops – will claim the 30% credit (cash in lieu)
LIHTC Owner enters into Power Purchase Agreement with Solar Owner
• Solar contract -- initially 14 cents per kWh, small annual adjustment
over 20 yrs, buyout option after 6 years
• Savings – Projected 14% below current bill, future depends on energy
market inflation
• Project size: 67 kw (76,000 kWh per year, 100% current common area
use)
© Goulston & Storrs 2008. All rights reserved.

8. Federal Legislative Proposals
Rep. Kilroy Bill (HR 4099)
• Creates a Green Dividend of 50% of energy/utility savings, please reasonable
costs (e.g. financing costs), notwithstanding other dividend limitations
• Permits use of dormant residual receipts and reserves for replacements to
achieve energy efficiency and utility cost savings
• Authorizes a study of building code pre-emption to “enable and encourage the
construction and installation in such projects of distributive energy generation
measures and water efficiency measures.”
© Goulston & Storrs 2008. All rights reserved.