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Window of Opportunity Opens for Towns to Pursue Funding for Projects Using "Clean Renewable Energy Sources"
by Edward Paul Greiff
Putnam Valley Supervisor Sam Davis received in June 2007 a letter and a thirty-one page document from New York State Senator Charles Schumer outlining procedures for the municipal issuance of "Clean Renewable Energy Bonds," (CREBs) for the funding of renewable energy projects. This window of opportunity comes at a very timely moment as the PV Town Board, at their June 20, 2007 meeting, began discussing the merits of funding a Photovoltaic project for Town Hall.
The key concern and stumbling block for adopting Photovoltaic as a source of solar- powered electricity is how long will it take for the Town to realize a profitable return on their investment in "Solar panels" as an alternative source of electricity for Town Hall. The CREBs initiative can make funding for the project a little more acceptable even though it is not a gift but a project loan with a five-year repayment schedule.
The concept of Clean Renewable Energy Bonds, besides being a source of project money, has its motives steeped in a desire to reduce dependency on oil and to preserve the environment. The technology for clean energy sources is available but what the federal government feels is needed are incentives to explore and use these alternative sources of energy. CREBs are one of those incentives.
The United States Treasury Department has been authorized to make available $1.2 billion to fund CREB projects, and the U.S. Internal Revenue Service has been authorized to provide Federal Income tax credits to entities purchasing the CREBs for participating in such projects.
Section 54(j) (5) of the Internal Revenue Code states that "A qualified borrower is defined as a mutual or cooperative electric company or a governmental body."
PV Supervisor Davis and Town Attorney David Gordon have been reviewing the document and will shortly be presenting it to the Town Board. However in a recent discussion with Supervisor Davis it became apparent that the potential for CREB projects extends far beyond Photovoltaic Panels for Town Hall.
The same Internal Revenue Code recognizes nine qualified facilities for clean renewable energy sources including wind, geothermal, solar and municipal solid waster burning systems.
Some of the possible projects discussed included the formation of a committee to examine electricity needs at the various municipal Town entities such as Town Hall, Highway Department, Parks & Recreation, Town Park, Library, Fire Department, Ambulance Corps, VFW Post, and Historical Society Museum.
Based on these energy needs and geographic locations the Town will debate what would be the best source of supplemental energy. Could any of the streams or mountains in Putnam Valley be used as a wind facility or irrigation facility to produce clean renewable energy? Finally there is the cost justification for such a project - there just might not be enough of a savings to warrant a renewable energy project at this time.
The Clean Renewable Energy Bond project basically enables a municipal entity such as the Town of Putnam Valley to engage in the sale of interest free U.S. Treasury "Clean Renewable Energy Bonds to fund qualified and engineering approved electricity projects. Bond purchasers, instead of receiving interest on the bond, would receive Tax Credits proportionate to the value of their CREB portfolio. For the Town it amounts to an interest free loan for an approved clean renewable energy electricity project. However there is a five-year time constraint by which the loan needs to be satisfied.
The Internal Revenue Service has extended the expiration date for a municipality to file an application to participate in a CREB until December, 2008.
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