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EQUITY INVESTMENTS IN COMMUNITY WIND PROJECTS. SCOTTSDALE, AZ. 5/9/2008. Rebirth Capital Overview. Rebirth Capital is specialty finance firm focusing on: Helping finance smaller renewable energy projects nationwide. Helping the Gulf Coast recover from Hurricane Katrina.
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EQUITY INVESTMENTS IN COMMUNITY WIND PROJECTS SCOTTSDALE, AZ 5/9/2008
Rebirth Capital Overview Rebirth Capital is specialty finance firm focusing on: • Helping finance smaller renewable energy projects nationwide. • Helping the Gulf Coast recover from Hurricane Katrina. Rebirth Capital Renewable Energy Fund • Focuses on tax credit equity investments in smaller commercial-scale renewable energy projects nationwide. Two New Markets Tax Credit funds: • The Gulf South Rebirth Fund – business loans and investments in GO Zone • American Community Renewable Energy Fund – renewable energy, biofuels and green technologies.
Rebirth Capital Renewable Energy Fund • Fund focuses on tax credit equity investments in renewables, including: • Wind • Solar • Small Hydro • Other technologies eligible for Federal PTCs • Investment size of $500,000 – 25 million • Streamlined documents and closing process help manage transaction costs • Community economic development background offers different investment perspective • Layering in of New Markets Tax Credits possible
Capitalizing Community-Based Projects • Why is it so hard for community projects to attract tax equity? • Institutional investors don’t have the time to do small, one-off projects. • Transaction costs can be very high • Developers generally less experienced and financially sophisticated • Difficult to manage a portfolio of small projects • Why do we think equity investments in community projects are worthwhile? • High community impacts – important to some investors. • Can develop diversified portfolio to minimize geographic, technology and developer risks. • Life is too short to take the easy route!
Preparing a Project for Tax Equity Investment • Tax equity is generally the last money into a wind deal • Tax equity investors look for projects that: • Have turbines (the hardest part these days?) • Rebirth is currently investigating “frame agreements” with turbine manufacturers for community projects. • Are fully permitted • Have a PPA (merchant projects are possible, but not easy) • Have lined up non-recourse project financing and construction financing • Representation by an attorney with experience closing smaller deals is very important
Sample Project • GSG 3, Sublette, IL • Total cost of ~$5.25MM • Possibly smallest PTC wind deal in nation last year • Single Clipper C93 2.5MW project • First-time developer • Can serve as template for other small projects • NMTCs can also be used to close financing gaps
Deal Structure: Basic Flip Structure Stage 1: Construction Loan Construction Lender Project Developer (Man. Member)
Deal Structure: Basic Flip Structure Stage 2: Commercial Operation Date Debt Repayment Construction Lender Project Developer (Man. Member) Rebirth (Tax Equity Investor) Equity Capital
Deal Structure: Basic Flip Structure Stage 3: Pre-Flip Operations 95% distributed cash and tax benefits until target IRR achieved 5% distributed cash and tax benefits Project Developer (Man. Member) Rebirth (Tax Equity Investor)
Deal Structure: Basic Flip Structure Stage 4: Post-Flip Operations 95% distributed cash and tax benefits 5% distributed cash and tax benefits Project Developer (Man. Member) Rebirth (Tax Equity Investor) Other structures are possible, but with smaller projects it is best to keep it simple.
