Hecate Energy LLC – AGG Helps Solar Project Developer Realize Maximum Tax Benefit

Challenge

Nashville-based Hecate Energy LLC sought to develop the second largest solar project in Georgia on 300 acres in Jenkins County northwest of Savannah. Georgia Power will purchase the solar farm’s 20 megawatt output. Hecate formed a special entity for the project, Hecate Energy Old Midville Road, LCC, and called on Arnall Golden Gregory to renegotiate an unfavorable property tax abatement offer, and to structure and implement a $47 million tax incentive bond and equipment sale/leaseback transaction to support the eventually agreed-upon tax abatement agreement. Arnall Golden Gregory won the work because of a recommendation from another solar energy developer.

Approach

In explaining how solar project tax abatement works in Georgia without jeopardizing federal tax credits, Arnall Golden Gregory briefed the following:

• Special federal tax counsel for the tax incentives bond structure on preserving the federal 30 percent investment tax credit.
• Auditors and income tax advisors on the income tax treatment and financial reporting for the project, title to which was held by the Jenkins County Development Authority, which leased the project to a single purpose limited liability company, Hecate Energy Midville Road LLC
• Lenders to explain the tax abatement structure and to provide acceptable subordination documents

Result

Arnall Golden Gregory successfully renegotiated a more favorable tax abatement schedule that substantially increased the tax savings for the client. Adding the solar project’s low cost of power to the grid will help Georgia Power reduce the cost of peaking power, when consumers pay the highest rates during peak demand.