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WASHINGTON, DC-Tucked away in the 1,100-page bill–the $787 billion economic stimulus package passed in February–is a provision that will allow business owners–a constituency that includes developers, of course–to take a grant instead of a tax credit in the form of a subsidy  for any investments made to a building to improve its energy efficiency. Various estimates by Congress and Treasury have placed the aggregate value of such grants as $100 billion or more. 

It is a significant measure, and just because of its potential size, John Michel, Grant Thornton’s Real Estate Tax practice leader, tells GlobeSt.com for the simple reason that in this economy fewer companies are in a profit-making position. In other words, a subsidy would do a profitable company not as much good because of its likely–that is, in the black–tax position. 

A grant, on the other hand, is money in the door–something that even profitable firms can appreciate in this climate. According to the language in the new law, Michel says, a company can opt for either a grant or a subsidy. If it opts for the grant, it will receive 30% of the amount of the qualifying investment. Qualifying investments would be such technologies as wind turbines, solar or geothermal energy, he says. The grant is applicable to any such investment made between Jan 1, 2009 through the end of 2010. Thus far, companies have been unable to take advantage of this provision because the Treasury Department has not released the protocol to apply for the grant, Michel says. That, though, may change next month when it is widely expected for Treasury to release the protocol, he explains. 

Besides building owners, tenants in such buildings could also benefit from the program–but only if they structure their leases appropriately, Michel says. “Unless the tenant negotiates it in the lease, these savings belong to the building owner.” Conversely, if tenants make leasehold improvements to their space that would qualify for this program, the savings belong to them–unless the landlord negotiated otherwise in the lease. 

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