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Equity investments in community wind projects. Presented by Clifford M. Kenwood. SANTA FE, NM. 7/26/2007. Rebirth Capital Overview. Rebirth Capital is specialty finance firm focusing on: Helping finance smaller renewable energy projects nationwide.

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Equity investments in community wind projects


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equity investments in community wind projects

Equity investments in community wind projects

Presented by Clifford M. Kenwood

SANTA FE, NM

7/26/2007

rebirth capital overview
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.

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

  • Focuses on tax credit equity investments in smaller commercial-scale renewable energy projects nationwide.
rebirth capital renewable energy fund
Rebirth Capital Renewable Energy Fund
  • Partnership between Rebirth Capital and TransCapital
  • Fund focuses on tax credit equity investments in renewables, including:
    • Wind
    • Solar
    • Small Hydro
    • Other technologies eligible for Federal PTCs
  • Investment size of $2 – 25 million
  • Streamlined documents and closing process help manage transaction costs
  • Community economic development background offers different investment perspective
capitalizing community based projects
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 – can be 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
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
deal structure basic flip structure
Deal Structure: Basic Flip Structure

Stage 1: Construction

Loan

Construction Lender

Project

Developer (Man. Member)

deal structure basic flip structure7
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 structure8
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 structure9
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.