James Jensen:             Welcome to everyone. I'm sorry for the little extra delay this morning. We had a few technical issues getting panelists on board, but we've resolved those. We have a full agenda today, so let's get started. I'm James Jensen, today's webinar chair. I am a contractor supporting the Office of Indian Energy Policy and Programs Tribal Energy Webinar Series. Today's webinar, titled "Tribal Energy Business Case Studies and Success Factors," is the sixth webinar of the 2019 DOE Tribal Energy Webinar Series.

Let's go over some event details. Today's webinar is being recorded and will be made available on DOE's Office of Indian Energy Policy and Programs website in about one week. Copies of today's PowerPoint presentations will be posted to the web shortly after this webinar. Everyone will receive a post-webinar email with the link to the pages where the slides and recording will be located.

Because we are recording this webinar, all phones have been muted. We will answer your written questions at the end of the final presentation. You can submit a question at any time by clicking on the question button located in the webinar control box on your screen and typing your question.

Let's get started with opening remarks from Lizana Pierce. Ms. Pierce is a senior engineer and deployment supervisor in the Office of Indian Energy Policy and Programs, duty stationed in Golden, Colorado. Lizana is responsible for managing technical assistance and education and outreach activities on behalf of the office, implementing national funding opportunities, and administering the resultant tribal energy project grants and agreements. She has 25 years of experience in project development and management, and has been assisting tribes in developing their energy resources for nearly 20 years. She holds a bachelor's of science degree in mechanical engineering from Colorado State University, and pursued a master's in business administration through the University of Northern Colorado. Lizana, the virtual floor is yours.

Lizana Pierce:             Hello, everyone. I join James in welcoming you to the sixth webinar of the 2019 series. This webinar series is sponsored by the Office of Indian Energy Policy and Programs, otherwise referred to as the Office of Indian Energy for short. The office directs, fosters, coordinates, and implements energy planning, education, management, and programs that assist tribes with energy development, capacity building, energy infrastructure, energy costs, and electrification of Indian lands and homes.

And by this assistance, our deployment programs works within the Department of Energy, across government agencies, with Indian tribes and organizations, to help Indian tribes and Alaska Native villages overcome the barriers to energy development. Our deployment program is composed of a three-prong approach consisting of financial assistance, technical assistance, and education and capacity building. And this Tribal Energy webinar series is just one example of our education and capacity building efforts.

The webinar series is also part of the Office of Indian Energy's efforts to support fiscally responsible energy business and economic development decision making and information sharing amongst tribes. It is intended to provide attendees with information on tools and resources to develop and implement tribal energy plans, programs, and projects, to highlight tribal energy case studies, and identify business strategies the tribes can use to expand their energy options, and to develop sustainable local economies.

On today's webinar, we will take a broad look at a variety of economic opportunities in tribal energy and land projects. For a portion of this webinar, we will cover the tried and true business structures for financing solar and small wind projects, then we'll cover some opportunities that will likely be less familiar, such as opportunities to change land management practices, to generate carbon offsets which can be sold. Hopefully, the topics covered today spur some new ideas and leverage – for tribes to leverage the land and ownership for energy and economic development.

We do hope the webinar and the webinar series is useful to you. However, we do welcome your feedback, and so please let us know if there's any way we can make the series better.

Before I turn it back over to James, I did want to highlight a recent announcement that may be of interest. On September 26th, last week, during his closing remarks at the National Tribal Energy Summit in DC, Mark Menezes, Undersecretary of Energy, which is my boss's boss, announced the Office of Indian Energy Policy and Programs issued a notice of intent to issue a funding opportunity announcement, or a FOA, entitled "Energy Infrastructure Development on Tribal Lands 2020."

Through the planned FOA, the Department of Energy's Office of Indian Energy intends to solicit applications from Indian tribes which, for purposes of the FOA, include Alaska Native regional corporations and village corporations, intertribal organizations, and tribal energy development organizations, to: one, install energy generation systems, and/or energy efficiency measures for tribal building; deploy community scale energy generating systems or energy storage on tribal lands; or install integrated energy systems for autonomous operation to power a single or multiple essential tribal facilities during emergency situations, or for tribal community resilience; and finally, to deploy energy infrastructure or integrated energy systems to electrify tribal buildings.

DOE envisions awarding multiple financial assistance awards in the form of grants, and under the planned FOA, and as required by statute, a 50 percent recipient cost share of the total project cost is required and must come from non-federal sources, unless otherwise allowed by law.

Through the planned funding opportunity announcement, we are continuing our efforts to maximize the deployment of energy solutions for the benefit of American Indians and Alaska Natives, and to help build the knowledge, skills, and resources needed to implement those energy solutions. Please see the Office of Indian Energy's website for a link to the notice of intent, and a map and summaries of previously competitively funded projects. And with that, I'll turn it back over to James.

James Jensen:             Thanks, Lizana, for sharing that exciting news. Let's get started presenting our presenters. On today's agenda, we have four presentations, with a total of six presenters. I will each of the presenters now.

For our first presentation, we will hear from Payton Batliner. Payton is an economic development specialist within the Department of Interiors Division of Energy and Mineral Development. He has worked at DEMD since 2009. DEMD assists tribes with the exploration, development, and management of their energy and mineral resources. He works across all commodity groups in the division, and specializes in building – or excuse me, business planning, financial analysis, and tribal utility formation. Payton holds an MBA with an emphasis in finance and entrepreneurship from the University of Colorado at Boulder. He is an enrolled member of the Cherokee Nation of Oklahoma, and was born on the Pine Ridge Reservation in South Dakota.

Following Payton, we will have a joint presentation from Sara Drescher and John Clancy. Sara is the Forest County Potawatomi Community's in-house environmental and energy attorney working out of the tribe's Milwaukee office. Sara's energy-related work for the tribe includes a range of issues related to the tribe's green energy initiatives, including the development of green energy, implementing green energy projects, and commenting on energy policy. She is also involved in the tribe's class one air program and all other matters related to the tribe's environmental and energy programs. Prior to joining the Forest County Potawatomi Community legal department, Ms. Drescher worked in the Milwaukee offices of two national law firms representing a variety of clients in the areas of environmental and energy law. Sara has a BA and juris doctorate from Marquette University, and is working to complete her PhD from the University of Wisconsin Madison Nelson Institute for Environmental Studies.

John Clancy is a shareholder at the law firm of Godfrey & Kahn, and works out of Madison, Wisconsin. John has the privilege of working with numerous tribes on environmental and energy matters. John's environmental work with the tribes primarily relates to work to protect reservations from significant environmental impact, and has included working with tribes in obtaining treatment as state status with respect to air and water and class one air designation, as well as working to raise concerns and potential opposition to environmentally impactful projects that could cause significant ground and surface water and/or air pollution on reservations. John's energy work with tribes has included helping them to secure, federal, state, and private funds for projects, and helping them to develop those projects, including working to establish partnerships with _____ that can allow for tribes to take advantage of investment tax credits and other tax and financing incentives for the development of energy projects.

Following Sara and John's presentation, we will hear from Adam Rose and Michael Bland of Travois. Adam is Travois's business – or excuse me, director of business development. He has more than a decade's experience helping tribes and tribal housing authorities to develop affordable housing and other community amenities. Working with clients, tribal leadership, and community stakeholders, Adam listens and learns about needs, discusses and explores development possibilities with the low income housing tax credit program and other gap financing applications, such as grants through the Affordable Housing Program and the new Market Tax Credit Program. Adam helps clients to bring private investor funds and grants to build new homes, rehabilitate existing homes, and expand business services to help strengthen native communities. Adam graduated from Marquette University with a bachelor's degree in political science, and from the University of Wisconsin Milwaukee with a master's degree in urban planning. He is a housing credit certified professional designated by the National Association of Homebuilders.

Joining Adam is Michael Bland. Michael is responsible for maintaining Travois's new markets loan and investment portfolio, which includes loans servicing and compliance monitoring. He also projects community impacts of potential new market tax credit projects, and documents investment impacts once funded. Michael was previously employed by the Defense Intelligence Agency in Washington, DC, and holds a bachelor's of science degree in history and Middle Eastern studies from the University of Virginia, and a master's degree in Middle Eastern studies from the University of Texas.

Our final presentation, we will – for our final presentation, we will hear from Bryan Van Stippen. Bryan is project director at the National Indian Carbon Coalition. Prior to his work at the coalition, Bryan worked for Ho-Chunk Nation, where he served as a tribal attorney for the Department of Justice, before transitioning to the legislative office. As a legislative attorney, he was responsible for land acquisition and other land issues, including _____ trust leasing, rights of ways, and easements. He is a graduate of the University of North Dakota School of Law, the University of Tulsa College of Law, and University of Arizona James E. Rogers College of Law.

So with the introduction of all those excellent speakers, let's get started with our first presentation. Payton, please proceed once your slides are up.

Payton Batliner:          All right. Thank you, James. So I guess my goal today is to give a quick overview of our office and our services, and also provide a 30,000 foot level view of just generalized business structures. I hope to set kind of the playing field for today to go into a little bit more in depth conversations. So next slide, please.

So just a quick overview of who we are. We often get confused with DOE. We are actually DOI, and my office is called the Office of Indian Energy and Economic Development, or IEED. And I specifically work in the first division there under the red box, the Division of Energy and Mineral Development. So again, we're not DOE. We are DOI. And that often gets confused.

My boss, Stephen Manydeeds, will be giving a big overview of our office I believe in a week or two on the webinar series, so I'm not going to go too in depth on who we are, but please just know we're made up of three different divisions, the division of Energy and Mineral Development, Division of Economic Development, and the Division of Capital Investment. Next slide, please.

So the programs and services DEMD, my office, provides, are primarily two grant programs, and those are the Energy and Mineral Development Program, or the EMDP program, which annually gives out $5 to $8 million, and that's for basically everything up to development for energy projects. Basically, all the feasibility and the analysis you would need to do on tribal energy projects and mineral projects, because we also handle things that are not energy specific related, like aggregates and sand and gravel.

The next grant program that our office handles is the TEDC, or Tribal Energy Development Capacity grant program, and annually, we give away between $1 million and $1.5 million for that program. And that is the program that would focus on aspects of today's talk. So you could apply for grant funding for organizational and managerial capacity development, basically business structure development, if you need it.

And then the last thing that we offer is technical assistance, and we work across all commodity groups. We have specialists in our office. Our office is made up of about, oh, what is it now, 50 or 60 people. So we have a pretty big staff here that can assist you in pretty much any phase of pre – [audio glitch].

Our other divisions – I'm just going to quickly go over these, because our NABDI, Native American Business Development Institute grant, which is given our by our sister division, the Division of Economic Development, they have an annual grant program. It ranges between $500,000.00 and $1 million a year, and just last year and this year, I believe, they've started giving away grants for broadband and connectivity projects. So when we're talking about energy and utility formation, often, broadband, water, wastewater, all fit under that utility umbrella. So I think it's important to note that there's money available for those type of studies, too, through our offices.

And then finally, we have the Division of Capital Investment, which manages the loan guarantee program, which is a $90 to $120 million loan guarantee program that they – I won't speak too much to that program. It's a little out of the scope of this talk, though. But just be aware that we have a loan guarantee program, and you can apply through commercial banks for that. So next slide, please.

So the DEMD, my office, is active on 230 projects currently, in the space of renewable, oil and gas, minerals, TEDC, and we also have a mapping software program that we assist with the development of energy and mineral assets. Next slide, please.

So our grant programs – this slide is just a graph of the history of our grant programs, what we've given away, what we've been asked for, and what we haven't been able to give away. But the main takeaway on this slide and the next slide is that our grant programs are highly competitive. We get asked for a lot more money than we're capable of giving away. Next slide, please.

So this is our TEDC grant program, again. It just displays what we've been asked for and what we can give away. Next slide, please.

So the TEDC program is the program that I primarily work in. Next slide. And I want to highlight this first bullet – well, actually, the bullet under the first bullet, which says establish business entity structures and/or organizational structures related to energy resource development. So we can literally give you a grant to help you establish some of these business entity structures. And you can get really creative with what you ask for from us in this program. Next slide, please.

Typically, you see – these are the – the projects that we have funded over the past few years. We've had this program for three years, and we're about to issue our fourth year. And we're all over the country, and we do a lot of utility authority formation feasibility studies. So very relevant to energy development. Next, please.

So what are these business formation activities that we can fund? We can help tribes develop the legal infrastructure needed for business formation. That's the adoption of corporations codes, LLC codes, uniform commercial codes, the really basic things that tribal nations need to have, which all states have. We can also help establish tribally chartered corporations under those codes, so we can actually pay for some of that work to be done, and then we can also assist with paying for some of the work that needs to be done if you would like to charter under federal law.

Now what does all this mean? I'll cover it soon. But we can also help establish tribal utility authorities, and that's kind of the primary thing that our – that our program funds right now. Okay? Next, please.

We can also help fund HEARTH Act leasing, regulation development, and uniform commercial code development, and that's the secured transactions that you hear referenced. So next, please.

So energy capacity development. I think it's important to cover this. What does that mean? So generally, what that means and what our objective is is to get the tribe from simply paying their utility bills and paying no mind to who owns those power lines and those transformers that are sitting on their lands, to understanding what they're paying in those bills, who they're paying them to, why they're paying the prices that they're paying, if they're paying the correct prices, because we find a lot of times that the utilities bill incorrectly, and be really, really engaged in understanding who that is and why they're paying them that, because that really drives the type of development projects that you can put onto these systems.

So we want to get tribes to that engaged and active and innovative stages of this capacity development, and that really begins with collecting your bills and understanding them. Next slide, please.

So in this big framework of developing this capacity, we break it down into four primary categories, and these should be run congruently. So this isn't a analyze infrastructure first, review legal next. These should all be ran congruently, because it's an iterative process, really, based on the information that you learn.

So the main one that I'm going to be talking about today is the business entity option, aspect of this development chart. But just please understand that to get to a energy development project finish line, you really need to do all of these things. Analyze your infrastructure. What's on the ground? Who owns it? What you're currently paying, what your loads are. You really need to understand that basic information.

You also really need to understand what are the legal and regulatory issues out there? Do we have rights of way that are in trespass? What are the state and tribal laws that will allow us to develop certain organizations?

And then finally, what is – does this – does this make financial sense? Okay? Will we make or lose money, right? And next slide, and I'm going to talk about your business entity options.

So business entity 101. You can form business entities under three primary authorities: tribal authority, state authority, or federal authority, okay? And underneath these, tribes specifically have a wide variety of options for structuring business entities. However, and specifically in the energy space, where taxation and making use of ITCs, PTCs, potentially new market tax credits, bringing in outside investors, where that's such a critical element of these projects, that will really drive your entity selection, and it's important to be aware of what other entities are going to – or other outside partners are potentially going to require of you.

So generally, under tribal authorities, you can form instrumentalities, political subdivisions, tribally-chartered corporation or LLCs, but that's only if the tribes have adopted corporation codes and LCC codes already, so that's a little bit of that legal infrastructure talk.

States all have that legal infrastructure already in place, very common to form state corporations, state chartered LLCs. And then the federal, this is something that is very specific to tribes. Under the IRA Section 17, it allows you to form corporations that are 100 percent tribally owned. Next slide, please.

So what type of entities are typically formed under each one of these? Well, in the tribal instrumentality and political subdivision, usually, you see utility authorities or utility districts formed. These are special powers that have been granted by the tribe to an entity to manage utility assets. Tribally chartered corporations and corporate – and tribally chartered LLCs, these are generally – you would use this for a tribally owned small scale generation project, where you don't need outside investment. Think a community scale solar development, or a tribally chartered nonprofit utility.

Now under state chartered entities, this is your very typical operating LLCs, any size generation project. These are your standard corporations, your standard LLCs, and these can utilize a wide range of project financing and investment, and can engage a number of different partners.

And then under federal law, Section 17 corporations, because they are required to be 100 percent tribally owned, they cannot take outside investment. However, they can act as a holding company for state chartered LLCs or other entities as operating entities. So it's important to know that it's a very kind of strict entity type, but it's a stable entity type, and it can act as a holding company for project development in the energy space. Next slide, please.

So – oh, and before I move on to this, I'd just like to say I'm going to go through a quick pro and con for each of those entity types after this.

So what are the major considerations for entity selection when we're developing energy projects? I'm a finance guy. I'm not a lawyer. So generally, I think about how is this project going to be financed? I have this saying that he who holds the gold makes the rules. So if you're going to get any money from somebody else, they are generally going to want to tell you what you can do with that money and what sort of entities you can form with that money.

So let's run through some common sources of financing. So grants. Our office doesn't have any specific requirements, but there are other agencies out there that will require you to be 51 percent tribal owned. And I think DOE's grants, they allow you specifically to have tax equity flip models included, as long as the majority of equity is turned over – back over to the tribes. So when you take grant money, you're going to have to understand what these federal programs are going to require of you in the future when you actually form an operating business.

Same with commercial banks. Commercial bank loans and loan guarantees, which are run through commercial banks or government entities, like USDA, they're going to have very specialized requirements on the business entity selection that you choose. Typically, commercial banks are going to want you to form a state chartered entity. They're going to want you to waive sovereign immunity via a limited waiver of sovereign immunity, so that they don't have to go to tribal court if the project defaults on its loan. So it's very important to understand what potentially some of the liabilities are if you take money from commercial banks.

Then tax equity. That's a whole different conversation. Generally, large scale utility energy projects are highly sensitive to using ITCs or PTCs. And what does that mean? That means if you don't use the ITC or PTC, you – a lot of times you won't have a project. So Mr. Clancy will discuss more on this later, and some of the requirements and some of the partners that may be available for that.

And then the new market tax credit program, again, that's another tax credit program, meaning that you'll have to form a taxable entity to get that money. And they have very specialized requirements on their entity selection and who can be owners of those entities. So it's really critical to think about that.

And next, just as I referenced, the ownership model. Who is going to be involved in this project? Is this going to be a 100 percent tribally owned project? Do we have all of the money in our bank account to build, own, and operate this project ourselves? Right? You need to take an honest look at that. If not, you're going to be going outside to some other entity, asking for money, right? So that they're going to have some way on how you structure your business.

That goes to say to that next bullet, non-tribal equity investors. If you're going to have equity partners, you cannot be in 100 percent tribally owned entity, right? You're going to have to form some sort of sub-operating LLC to get them involved. And then tax equity partners, again, those are the people that bring in that – that – the ITC and PTC financing.

The last option, which a lot of tribes don't think about, is that even if you're just going to lease the land as a landlord, you may want to think about setting up a holding entity for that land. If you're doing pre-development work, NEPA work, any of the permitting work, working with the BIA regions, to get some of that work done before you lease it to a potential utility partner, you are doing work on the project, and you should get a developer fee, so that's something that a lot of tribes kind of overlook that may be a source of income, and it may require you to set up a legal entity.

Finally, other considerations. Existing tribal legal infrastructure, and I'm going to throw in this, it's very important, the tribal constitution and treaties that exist that may guide what sort of powers the tribe has in forming entities needs to be reviewed by lawyers that know what they're doing.

Also, if the tribe does not have LCC codes and corporation codes or uniform commercial codes, these are things that are absolutely essential for an economy in general, and tribal businesses specifically. So really important to think about developing these things if they're not currently at the tribe.

Finally, current tribal organization. How does this new entity fit? How does this business fit with how the tribe already operates? And then finally, again, I think I'm beating a dead horse. Taxation. These utility scale projects are highly sensitive to taxation. They – you always need to think about that. Okay. Next slide, please.

So business entity options. So I'm going to lump tribal instrumentalities and political subdivisions together, even though they're generally not the same thing. But when we're talking about energy development, utility formation often falls in this spectrum. The pros are that it's relatively quick and easy to form. These entities can be delegated specific powers by resolution and authorities via the tribal governing bodies. They often retain the sovereign immunity and tax status of the tribe.

The cons are that their formation depends on how they're chartered and how they're set up. They may or may not be a legal entity separate from the tribe. They may or may not lack separation of assets, which means that if these entities get sued, they may be able to go after the full assets of the tribe. They may or may not lack decision making from tribal politics. You turned off my mom's power, now I'm going to come after you politically, right? That may be an issue that you need to think about in how you structure utilities. It's something that's talked about often in some of the meetings that I have. No outside partner investment or investor participation is allowed, so no equity owners is what I mean by that. You can go out and get debt financing, commercial bank financing, potentially, or tax exempt bond. You may be able to issue those. So – but no specific equity owners in this entity type. Next slide, please.

Tribally chartered corporations or LLCs. So if the tribe has corporations, codes, and LLCs, then you can form under this. The pros are the sovereign immunity is generally preserved. Separation of business and politics is possible, because you can set up independent boards and independent managers within those LLCs and corporations. Outside partnership investment is possible. You can have outside equity investors.

The cons are that you must have this legal infrastructure in place. If the tribe doesn't have these codes in place, you can't form under them. You have to default to a state code to actually form under. The tax status can be in question, depending on where you do your business, where your point of sale is, where your managers are. All of that comes into kind of circumstantial evaluation on what your taxation status is.

The big thing is this may or may not be well understood by outside parties. Investors, you might have to spend a significant amount of time educating them on what your entity is and why it's stable and why they'll be able to sue and be sued, not in tribal court, or in state court – you know, all these issues come up when you have a tribally chartered entity. You need to be aware that potential partners may not have any idea what this is. Next slide, please.

Very standard, state law corporations and state chartered limited liability companies. Obviously, this isn't the whole suite of typical business entities under state laws. There's partnerships, sole proprietorships, professional limited liability companies. But for our purposes, just think state corporations and state LLCs.

Outside partners and investor participation is possible. Very well understand. Everybody knows what these entities are. They are very separate from – as legal entities from the tribe. The separation of business and politics generally exists here, which is very important for business decision making.

The cons are that the tax status and sovereign immunity is in question, and it depends on how it's structure. So next slide, please.

So finally, the federal Section 17 corporation, very specialized entity for tribes. Sovereign immunity and tax status is preserved. The ability to act as a holding entity – the IRS has issued special letter rulings stating that Section 17 corporations can be members of LLCs, so effectively, they can own parts of operating entities and retain their tax exempt or non-taxable status. They are usually completely separate legal entities from a tribe, with board separation and the requirement to hold quarterly at least meetings with meeting minutes, right? So this is a serious legal entity setup.

The cons are that it takes a long time. We're talking three to – or six to nine months to get secretarial approval. It depends on the region. Some regions are better at approving Section 17s than others. And it depends on how the charter is written. But generally, they go through the regions. That's important to note.

No outside partner or investor participation is allowed. It has to be 100 percent tribally owned. The shares are – can only be owned by usually tribal council seats or some other form where it's the tribal government that 100 percent owns this entity. This may not be well understood by outside parties. Again, they may have no idea what this entity type is. And then it takes an act of Congress to dissolve a Section 17. So if something goes wrong in this entity and you want to get rid of it, it literally takes an act of Congress to dissolve it. Next slide, please.

I want to talk about the organizational structure and the importance of tribal leaders to think about how this fits. So next slide.

How you structure your tribal utility or energy development entity within your tribe is just as important as the entity selection, and you need to fully understand how these things operate within your current tribal operations. Do you have billing capabilities? Do you have the finance office that's capable of running these entities? And if you don't, then you need to develop those capacities. So I'm just going to leave that there for now, and then next slide. I think that's it.

So this is just reiterating that we have – generally, business entity selection is just one aspect of the overall development process for energy projects, but it is a very important one. And I think that is it for me. There's my contact information. We have our website down there at the bottom. If you have any questions, please type them into the session here, and we can try to get those answered for you. Thank you.

James Jensen:             Thanks, Payton. Excellent presentation on a challenging request on our part to cover such a broad topic.

So next we've got Sara and John talking about more specifically solar and maybe a little bit of _____.

John Clancy:               Great. Thank you. Sara, are you on the line, too, then?

Sara Drescher:            I am here. Yes.

John Clancy:               Perfect. If you don't mind, let's go to the next slide, and Sara can introduce herself a little bit, and then I'll do the same.

Sara Drescher:            Hi. My name is Sara Drescher. I am the environmental and energy attorney for the Forest County Potawatomi Community. My job is primarily to help the tribe move forward with its energy mission. The tribe does have a goal of being carbon neutral using only green, renewable energy, and it's ultimately hoping to self-produce all of that green renewable energy.

This goal comes in part from the tribe's environmental mission statement, which is on the screen right now. And in order to accomplish this goal, we've currently – we currently have approximately 2.5 megawatts of solar installed. We have another 1.5 megawatt of solar coming online this year. And we operate a 2 megawatt biodigester in Milwaukee, Wisconsin. And John?

John Clancy:               Great. If you could just go to the next slide, then. So I'm John Clancy. I'm the basically head of our firm's environmental and energy practice, and fortunately been able to work with a number of tribes on both environmental protection and energy development work as noted in my original introduction.

My work with Potawatomi goes way back. We – actually, I worked with Sara in opposing a large sulfide mine near the reservation called the Crannit Mine that was resolved back in 2003, and I've been working – that kind of got me going in a big way with tribes, and then I've been able to work with tribes on a number of issues going forward.

If you could go to the next slide, I think there's – the two points to make here, or two ideas here. One is that we're going to talk about a particular example, but then we'll talk about principles that we hope we can apply to other projects as well. And these are really involved – these projects involve kind of both puzzles, putting the pieces together to make sure a project works, and planning, and really I guess planning to allow you to solve the puzzle. So we'll go through some of the key principles that come up in these projects. Some are financial, some are more practical or technical, but hopefully, how we can bring projects together. And we'll talk to basic strategy and then more particulars.

But the basic strategy I think is to – is to really know – it was talked about in the last presentation – know what your energy consumption is at your various buildings and what it costs, and to think about that not just as a cost, but as a – almost like an asset or an opportunity to take away that cost through a project. And does that benefit, you know, exceed the cost of the project, especially over time? And if it does, you can make a project work, especially if you take advantage of the next two things, which is really being aware of all the applicable federal, state, and utility and private grants and programs, including net metering programs that can make a project work, as well as in the appropriate cases – and these are _____ project that's a little bigger, potentially bringing in a taxpaying entity that can take advantage of the tax credits and depreciation on these projects. If you don't mind, next slide, please.

And one key issue is that energy costs vary throughout the country and actually throughout the state, and maybe Sara can speak to that a little bit, because Potawatomi actually is in two locations, has two utilities that serve it, and multiple size buildings, so you end up having multiple different cost items. And a lot of tribes face this. Homes, they charge one cost. Small administration buildings get charged another. Larger buildings charged another. And the amount you pay for energy helps – basically drives forward what the savings are from these kinds of projects.

Sara Drescher:            To echo that, I think that it's incredibly important to be aware of the individual cost structures for each building. So in putting some of these projects together, oftentimes, people think of them as large scale one megawatt projects, but they don't do the analysis, the underlying analysis, to see what the individual cost structure is for the building, which can very much skew the paybacks and the outcomes of these projects.

So just like with any individual tribe, the circumstances are all different in their energy outlook and picture, but you have to tap down to each structure in and of itself.

John Clancy:               Great. Thank you. The next slide. And so this slide and the next slide will just kind of show some example costs for energy, both residential on this slide, and then commercial – commercial/industrial on the next slide, and as you can see, especially, you can pull this – maybe after the seminar is done or the webinar is done, and look at the different prices. The prices vary a lot. Basically, the bottom line. In some states, they're much higher than others. The higher costs frankly make the projects easier to work, because you get more benefit from the project, which is producing energy, obviously.

But what we've found is that if you have the right mix of grants and other incentives, including tax credit incentives, you can basically make all these projects work pretty well, but you have to think through what's available for your particular project and how to make it work. Basically, it's planning work that all _____ on these projects. I'll go to the next slide, but Sara, I don't know if you have anything to add at this point further.

Sara Drescher:            No.

John Clancy:               Okay. Great. The next issue is key. Frankly, most projects tribes are looking at for renewable energy are not base load projects, although obviously there are projects that are base load, like the Potawatomi's biogas facility, which produces energy around the clock. But for wind and solar, especially, which a lot of tribes are looking at pursuing now and implementing now, they only produce energy at certain times. Obviously, the solar produces when the sun's out, not when it's dark, and wind produces when wind blows. Solar also produces a lot more in the summertime than the wintertime. So those kind of factors need to be taken into account, because, you know, your buildings use energy a lot of times around the clock. Sometimes homes use it more at night. Your tribal businesses and administration buildings probably use more daytime. So how do you get this all to match up, is the issue. And I'll go to the next slide.

So what's key oftentimes is what kind of net metering is allowed by the utility that serves your tribe's building? So in some – some areas provide very beneficial net metering programs that might even allow you to build a community solar facility or community wind project, for example, where you don't even have to hook up to the buildings or the homes that participate. Some provide for on site net metering, meaning you have to hook up the facility to that building. A lot of them limit the size of the systems that might hook up. Some are quite small, the limitations. Some are quite large.

I'm working on a project in New York where it's up to five megawatts, which is quite large, but we've worked on projects in parts of Wisconsin – Sara, I think it was _____ now or shortly that – where the limits are much, much more limited, or the restrictions are much more limited. So then you have to think through how do we make the project work without the net metering at the site?

And then finally, some utilities unfortunately for these kinds of projects, if you're over a certain size, they'll force you to sell the energy to them. So a lot of times there are a lot of negotiations that has to occur to try to make sure that you can keep that energy on site, potentially using, you know, the tribal regulatory authority as a lever to try to have that happen.

So there's also – you have to make sure that, you know, this is part of the process, making sure you can, you know, connect properly with the utility, because you're going to be – you're probably going to be behind the meter in many cases, meaning behind the utilities meter, but you still need to interconnect with the utility.

And the last thing here is this net zero. A lot of tribes are now starting to look at how can we make our buildings net zero, which really just means that you're using energy efficiency with onsite generation to meet all your energy needs for that building. But Sara, do you have comments on the net metering issue?

Sara Drescher:            I do. I think the net metering issue is key, primarily because it is different in every area. So every regulatory authority is going to have a different approach to net metering. And so while a project is Wisconsin may not work, that's not to say that project in the Southwest wouldn't work. So don't – one of the key factors with net metering is to both understand the regulatory scenario where you are, but also to think through how you can take advantage of it, whether, you know, you – if you have – for example, in Northern Wisconsin, there's a 20 kW net metering cap. So we have several buildings that we have installed solar on simply because we can take advantage of that cap, and those truly become net zero buildings.

But then if you're looking at the larger community scale in Northern Wisconsin, we have very limited options. So in thinking through your projects, the important piece of net metering is to understand how to maneuver within your goals and within the regulatory system to best create the most suitable project for you sites.

John Clancy:               Great. Thanks, Sara. Next slide, please. I guess the next slide, please. That's a little break slide, obviously.

So what I'm going to talk about next is kind of what are the key federal grants that oftentimes tribes would want to consider for these kinds of projects? And the project we're going to focus on is a DOE project, was a DOE project. So we'll talk about the DOE tribal energy program, which obviously is very relevant to this webinar. But there's also others to think about. There's the HUD – both the housing block grant, and especially the competitive housing block grants, could be used for solar, that was recently released, and that may come out again in the future. But they also have the Indian Community development block grant, which many of you might have worked on or worked with for your tribes, and that can be very helpful for solar, too. So we'll talk about both of those.

There's also the USDA REAP program, which we won't go into slides on, but does provide grants and – as well as guaranteed – you know, guarantees for loans on projects, which can be helpful as well. But for this, we'll focus mostly on ICDBG and the DOE grants, so we can kind of talk about those, because those have been used successfully in a number of these projects that have involved tax credit financing, too. Next slide, please.

And so this is kind of a similar slide. In addition. I think a couple of things to point out. One is that especially with a DOE grant, we have a 50 percent share, you're going to have money probably left over to pay after the tax credits, after the grant. So a couple of things that come up. One is whether the investor will allow you to pay back over time, or wants the money more up front. And if the money up front helps the financing, it's helpful to know what loan and loan guarantee programs are out there. I just note here the Rural Utilities Service programs that USDA has, but there's other ways of doing it as well, like Title VI loans from HUD, as well as loan guarantees from BIA can work potentially, too. So that's probably an important thing to think about. How do we fill in that final gap if we have a final gap?

And then we'll talk about both federal, state, and utility programs and private programs, and obviously, the tax credits, and how those work, especially in the Potawatomi project. If you could go to the next slide, please.

So I'll talk about the ICDB's grant, and then we'll talk about the DOE grant. I think Sara will talk a fair amount about that, too.

So the Indian Community Development Block Grant is usable for basically facilities that are developed for low to moderate income persons, or especially Native American persons, the tribal members, basically. So there's this income limit here, and that's very important in thinking through will this project work for your tribe in your setting. Next slide, please.

And basically, tribes can apply for this, as well as tribal housing entities can apply for this, with the tribal approval to apply. And they've had various rounds. It comes out every year, basically. The last round came through where the applications were due at the beginning of this year. There'll probably be another one – I've heard it might be as soon as this fall. And I think they might be working towards a program where they have it run ultimately every other year, because they also have now competitive IHBG, which is Indian Housing Block Grant program. Again, that program that recurs could be used for these kinds of projects as well. It's very similar to ICDBG. It does promote somewhat more new housing over other projects, but I think you'd only lose three points if you did – you know, on a project that was solar for housing, compared to – out of the whole 100 point scale, so you could make it work either way.

And the next slide, this shows you that this grant is explicitly noted by HUD in its regulations to apply to solar, just because I, you know, quote this towards the bottom of the slide. And because of that, a number of tribes have now been using it for that in tribal housing authorities. Next slide, please.

And basically, one thing to note is that that slide is talking about there – is for housing rehabilitation. So if you're putting in solar for existing housing, it will definitely work. If you want to put in solar kind of independent of the existing housing, you could potentially do it on public facilities and improvements or private utilities as well, although most of the projects I've worked on, or actually all the projects I've worked on, have been ones where the tribe or tribal housing authority is using the solar on existing housing to drive down the utility bills for low income housing, which actually has worked really well because of the fact that tribes and tribal housing authorities can use, you know, the various programs they're involved with to lower the housing costs, but the members still have to pay the utility bills.

So if you can knock off on their utility bills as well, you make it truly affordable housing that way. Next slide, please.

And this just shows the maximum grant amounts per year available right now. If they combine the years together, they may change the amounts that are max. But for example, Eastern Woodlands, which includes Wisconsin, where Sara and I are from, that's a $700,000.00 limit. But if you bring in a cash credit financing, that could be a $1 million project, because of the 30 percent investment tax credit. So you could have a $1 million, $300,000.00 potentially comes in from the tax credits, $700,000.00 through the grant, and so that can work well to both grow the project. And then one more thing is that there's not the same federal – non-federal cost share requirements for these kinds of projects as DOE projects, but they give points for leveraging, and that allows you to meet the leveraging, because you'd meet a 25 percent leveraging requirement that way, too. So you maximize your points on the grant that way. Next slide, please.

This just shows in other areas – in the – this is the Southwestern ONAP region of HUD. The largest tribe there, which is the biggest number, is for Navajo, and then it's based on size for that region, which has a number of larger tribes. Next slide, please.

So that’s one grant. There's another grant that's key, and this is what we're really kind of focused on for this presentation, is the DOE grant. And as Lizana noted, there just was an announcement on that grant coming out, and we have a slide on that. So next slide, please.

And there's a number of topic areas here, and one thing to note is that for the kind of project we're talking about, where we're focused on one where we can, you know, utilize kind of all available funds, including DOE and tax credits and potentially other credits or other incentives or grants, you would probably need to be a big enough project where it makes sense to bring in the tax credit investor. And some of the projects that work well for that are the community scale size, topic area two, as well as the larger size for the autonomous operation, which might be solar plus battery storage, for example. And Sara, do you want to – I think your tribe has applied for grants in a number of these categories and been successful. I don't know if you want to comment on that.

Sara Drescher:            Yes. So the Forest County Potawatomi Community in the last grant cycle received an energy generating and energy efficiency grant for the future community center, which is currently being constructed. And then also, a community scale solar grant, and this will be the tribe's third community scale solar grant.

So we've gotten pretty adept at both working through those projects, sizing them appropriately, and finding the appropriate loads to serve. These grants are nice because they're flexible enough to allow you to individualize the project for a tribe's given needs, as opposed to simply moving forward with an expectation of, for example, one megawatt in one space. So the grants really are key to be able to work individually for a tribe's needs.

John Clancy:               Great. Thank you, Sara. And I guess one thing to note is that you can see that FCPC has been very successful at these grants and these projects, and one reason I think is because they do a lot of up front planning. They're very on top of these issues. And they've kind of worked out the puzzles that apply to their situation with the net metering and the funding and everything else.

And one thing I'll show at the end is that for tribes that are interested in this, HUD has a technical assistance that I've been fortunate enough to work with where they'll bring out free of charge to the tribe someone that works in this area, kind of like – well, I guess including me, that can come out to the reservation and go through this kind of analysis one on one with the tribal – appropriate tribal staff to go through these kinds of issues and plan out projects and have them ready to go after these kinds of grants and to be built and to think about things like net metering and the stuff we're talking about today. So there'll be a link at the end of the presentation. I want to make sure you're aware of that as a final topic.

But I'm going to go to the next slide, please, now. And this just shows the max amounts that were in last year's award or grant opportunity. I'm not sure they'll be the same this year. But you can see the grants can be quite large and can support larger community and other energy projects. Next slide, please.

And then one thing to think about here, too, when you're thinking about your projects, is that you need to I think match up to the energy usage of your buildings and what they need, but there also can be advantages now with economies of scale, especially – both solar and other technologies, they tend to be cheaper for larger installations. So it's probably important to think about what can we do based on the net metering rules that are available and other rules that apply to make – to drive down project costs.

So in some areas where you can have community solar, for example, you can perhaps build a facility much cheaper because you can put it all at one site, or perhaps you can group buildings together under a strategy for that, too. But again, balancing that against what the net metering requirements are for that area. And Sara, I don't know if you want to comment, but you've obviously had to work through this issue quite a bit to make your projects as successful as possible.

Sara Drescher:            Yes. Excuse me. I think one of the most important things, and John alluded to this on the last slide, FCPC has done a lot of preplanning, so we started close to 20 years ago by establishing a baseline and then working from that baseline with the goal of eliminating that traditional energy use.

And from the baseline, and then understanding what the individual building needs were, we were able to identify and plan those projects prior to being in a position where we had to apply for funding. So we have a sense of what will work before we ever have to put pen to paper.

And that's important for a couple of reasons, not just from the planning perspective, but also because with these – with these grants and the declining price of solar, there's a real opportunity to get more out of the process than what you could have gotten several years ago. So knowing at the outset exactly what your building will support or what your building needs from an electrical load standpoint helps you to take advantage of – especially this year, which may be the last year of the investment tax credit, which we will be coming to, but it helps you – if you're preplanning, it helps you to know more immediately what groups or grouping you can put together for a project.

John Clancy:               Okay. Great. And next slide, please.

I think that Lizana noted there's a 50 percent non-federal cost share on this grant, so that's why it's important to think about how can we fill in the gaps on this project. Next slide, please.

This is just the announcement that Lizana noted, that this grant will be coming out soon. Next slide, please.

One of their – I think I wanted to note – one of the grant opportunities, and this is a private grant, basically, it's funded by Wells Fargo, and there can be some – some tribes wanted to take advantage of this, and some had concerns about this, given the funder, but it's called the tribal solar accelerator fund. It's implemented by GRID Alternatives with money from Wells Fargo. And I'll just go to the next slide, please.

And it's basically to support the same kind of things that the DOE grant supplies, for energy projects that serve the community. Next slide. And they've had, at least in the last round, two kinds of categories. One is for match funds, and it's especially meant to match these DOE grants, so you can write a proposal up to $250,000.00 per project, which especially if you have the DOE grant plus the tax credits, would help fill that gap, to help bring down that gap for the tribe.

The second kind of project is really just one where you don't have a separate grant and would come in for up to $200,000.00 for solar or other kinds of projects, or – for solar projects. Next slide, please.

One thing – I just wanted to have the slide in there so you can see it perhaps more later on, too, is that there are certain public communication expectations by Wells Fargo. And so GRID wants to make – GRID is a nonprofit that works with tribes as well as other entities for – to help implement solar, especially for low income housing and low income individuals. But they want to make sure – GRID wants to make sure that everybody's aware of what Wells Fargo would want to do to talk about the project, and make sure that the tribes are comfortable. And so they have these statements. Next slide, please.

So in addition to federal and private sources of funding, I think it's really important to also be aware of the fact that there are oftentimes – sometimes really, really good state incentives where you're located. And one way to get at least the basics of what's going on is to go to the website that's listed right here, because it identifies by state what's out there. It's not necessarily always perfectly current, and it's good to check on what's out there, but it gives you a sense of the kind of incentives that are available in different states.

For example, New York has very, very good incentives and very, very good programs, net metering, other programs for solar, especially, and wind. Some of the states don't have quite as good, to tell you the truth. But Wisconsin, for example, also has the availability to get Focus on Energy funds, which can be very helpful for solar and wind as well as energy efficiency projects. And actually, most states have very good programs for energy efficiency. So if you think about those kind of projects, that can help meet your match, too. And we'll have an example at the end of how that was done once.

I don't – oh, I guess next slide. Next slide, please.

So now we want to get into how the renewable energy tax credit works, at least from like a 10,000 foot level, so you're aware of that, and kind of see how it worked in the Potawatomi project and some other projects.

Basically, there's an investment tax credit. It's available for solar and small wind. It basically is a 30 percent investment tax credit. And the good thing about solar especially, and generally wind, too, is that almost all or typically all of the projects costs are covered by this. So it's an important incentive for those kinds of projects. Next slide, please.

And this is kind of what Sara alluded to, that there's a key timing issue for this kind of tax credit, that it's at 30 percent right now. If you began construction on a project this year, you'd get that. It works its way down each year thereafter, down to 26 percent if you begin the project next year, 22 percent if you begin the project before the end of 2021, and then it goes down to 10 percent actually thereafter.

Now it might be extended. It likely could be extended. But we just don't know, so we need to think about projects in light of what it is now.

One thing is key, is that it's commencing construction, which doesn't mean you have to finish your project, but it doesn't mean you just have to start talking about your project. You have to do certain requirements. One is either to spend a certain amount of money on the project. Another one is to actually begin the physical construction of the project, which might be putting in foundations for some solar, that kind of stuff. But it has to be carefully thought through to make sure you know if you qualify for that.

And I want to just highlight a few business terms, and then we'll get into the Potawatomi project itself. So there's two tax benefits actually that the investor gets by partnering with the tribe or anybody else on these kinds of projects where the investor can get the tax credit. They get the tax credit, which is a dollar for dollar reduction against their income for tax purposes. So they actually get – if it's a $300,000.00 tax credit, they get that full tax credit.

Depreciation is their right to deduct costs over time, and in some cases, immediately, because of the new tax law. But especially the solar, it's either immediately or it's on a very quick basis. And that allows them to reduce their taxable income, which the amount of money they get from that is really dependent upon what their tax rate is. But that's a second value they get, and that's a reason why some investors are willing to give the full value of the tax credit to let's say a tribe that's partnering on a project.

Then a limited liability company is the partnership structure – it was just _____ on the last presentation, that can be used as a partnership between the tribe and the investor to own the project together and to allocate the tax credits to the investor and the depreciation to the investor. Next slide, please.

This slide just basically goes through how they work in Indian Country. The big thing is that tribes don't pay taxes, tribal entities don't pay taxes, so you need to bring in an investor that can quality for the tax credits. A lot of these projects are set up with a 99 percent ownership interest by the tax investor initially, and the key word is initially there. It's only until the tax credit period runs, which is five years that they have to be this way. And then you would work towards an exit, as was noted on the last presentation. It has to be at least five years, and it would typically be when the investor is paid off, which might be five or ten years down the road, depending upon how the payment structure is worked, especially – and that's assuming there's significant grant funds, like the DOE grant.

And then you have an exit strategy for the investor, basically, which is set forth up front. One way is for them to exit at being paid the nominal amount, might be as low as five percent of initial investment, with a backup oftentimes. If they don't leave, the tribe has the right to purchase, and frankly, it would be a situation at that point where the money would all go back to the tribe, if that occurred, based on the cash flows. So they would – so the investor is incentivized to take that first route out, basically.

But I wanted to give the next slide so we can talk about how this actually works in a real project. And the real project is the Potawatomi project. Sara, do you want to run through this, or do you want me to? But I don't know if you want to do this, or if you want to comment. How do you want to do this on the project itself?

Sara Drescher:            John, go ahead.

John Clancy:               Okay.

Sara Drescher:            I will _____ –

John Clancy:               Yeah, I will go through it and provide Sara the time to comment on it. But the basics are that this is a project that was done a little while ago. It was one of the first ones I think done with tax credits under the DOE grant. At that time, the maximum grant was $1.5 million, so that's why the numbers are what they are here.

It was a $2.8 million solar installation project, and the tribe applied for and received a $1.4 million grant from DOE. The way that that money is then used by the tribe – was used by the tribe, was to make a capital contribution under the LLC that it had formed with the investor. Again, the – for tax purposes, and really tax purposes alone, it was a 99 percent ownership by the investor, 1 percent by the tribe, and the only reason for that, to make that clear, is just so we get 99 percent of the tax credits monetized. And then once that period of time ends, the investor is set up to leave.

And the tribe then received full credit under the LLC operating agreement for this grant, which in part related to the cash flow. So at some point, we cut off the money going to the investor, which I'll describe in a second in the next slide, and at that point, if any money came in beyond that for the next $1.4 million, it had to go to the tribe, which then created a strong incentive for the investor to leave once it's paid off. Next slide, please.

Then we get into what the tax credit value is, and in this case, it's a $2.8 million project, so if you multiple 30 percent, the tax credit value, times 99 percent, you get the tax credit value, which is $831,000.00. And that was – that value was also provided by the tax credit to the tribe under the operating agreement. And the way that occurs is that we – the operating agreement provides that the investor cash flow was cut out – cut off about $570,000.00 ahead of what you normally would think, which would be it being paid back, the full $1.4 million.

So what ends up happening is that we have $569,000.00 still to pay off through the investor, and that's done through the power purchase agreement, which is the agreement that's set up where the LCC sells energy to the tribe, as well as through the right to sell that we talked about before, that five percent investment back to the investor.

So if we go to the next slide, then under the PPA, it was set up with two options, basically. It was a six year PPA where the tribe would pay 80 percent of its utility rates for those 6 years, or that was – which was enough then to pay off that $569,000.00 – or, I'm sorry, the $569,000.00 minus the 5 percent payback, or 5 percent exit cost.

Sara Drescher:            The exit payback. Right.

John Clancy:               Yep. Sorry. And – or to use a prepayment option, which is about $443,000.00. The $443,000.00 resulted in a savings of about $40,000.00 or $50,000.00 over paying over time, so that was attractive to the tribe.

And then – I was wanting to point out, this next point is not – is more general, that this prepayment option I think is attractive to investors, because then they know that they're paid. They know they're paid, that they're all paid off, and there's nothing else to worry about. So that – I worked on projects where there's been prepayment sometimes put into escrow, so it can be paid out once a project is completed, once it's up and running, to give the investor more comfort.

And then the investor had the right to leave at the end of year five for about $70,000.00, meaning the total payments by the tribe were $513,000.00, as opposed to the $569,000.00 that you'd think might be applicable if you added up the numbers, and the amount of the tax credit, subtracted from the $1.4 million.

So that's the basic structure of it. The basic structure is the grant paying for half, the tax credits paying for an additional almost 30 percent, and the PPA and the exit right payment for the investor covering the rest of the money, and then the investor is gone essentially after five years, and the tribe owns the system itself, and operates it. And if you want to –

Sara Drescher:            And I just wanted to – a couple of things. First of all, I want to highlight a point that John just made. I think that the prepayment of the PPA is – if the tribe is able to do that prepayment, it really helps to give the investor a comfort level. Oftentimes, investors that don't work in Indian Country are nervous about sovereignty. They don't necessary understand some of the systems. You're installing solar production or other generating systems on reservation land, so there's a certain limitation on the rights of those outside parties.

And so that prepayment options really becomes a mechanism to give that investor a level of comfort that the deal is going to work. And if – I encourage tribes, both as a money saving – it saves tribes a lot of money to do the prepayment, but also as just a comfort measure for the investor, it really helps to just grease the wheels a little bit to move these projects forward.

And then the other thing I would say with respect to the investor right to leave at the end of year five, I think tribes are going to have to be very diligent in watching that and in encouraging that the investor is – making that payment and encouraging that investor to leave. Now the way FCPC has that set up, it will then just take full ownership of the LLC.

Now that is important for a couple of reasons. The tribe is hopefully moving towards a tribal utility model, so having an LLC in place that owns those panels will make it easier in the long run to transfer assets to the tribal utility. But additionally, with respect to that end of the year payment and the investor departure, what happens is that the tribes then still have 15 years of energy production, and they own the panels outright, and at that point, those projects are typically paid off, and you're gaining free energy.

John Clancy:               Great. Next slide, please.

Sara, did you want to comment on the savings?

Sara Drescher:            Yes. So this is – this shows how this project worked. So with the – the solar system is all the way to the left, and this was the first project. But then what you end up seeing at the very far right side, we went from estimated paybacks that were anywhere from three years to over ten years, our estimated payback for some of these projects dropped down to closer to two years.

When we calculated these projects, we were very conservative in what the production would be. We used numbers that would give us estimates of what production would be. And what we found is that we're overproducing significantly from what those estimates were, and the project's value has actually increased. The more energy we make and the faster those units are paid off individually, the more that we're gaining value from these. So they really can work.

John Clancy:               Great. Next slide, please. And these are just some pictures of the facilities. Next slide, please. Which obviously the most important thing in the end, what gets done. And then next slide, please.

If you don't mind, I'm going to just – I know we're running out of time. I'm going to – you can read through the – what's here on the different agreements. It just kind of reinforces what we've been talking about. I want to highlight one set of agreements, because we didn't talk about them yet, and that's the next slide.

And this is important, one more important principle for this kind of structure. Since it's separate – it's an LLC that's not the tribe itself, we need to have some kind of access for that LLC to demonstrate its ownership to the IRS that it owns the panels, actually. So they need to lease or some other kind of permission to be there. And if you go to the next slide, please, well, basically, there's – BIA, if it's going to be a lease, the BIA needs to approve the lease.

Alternative, if the lease – under the HEARTH Act, a tribe can create its own leasing ordinance that's been approved by BIA, and then the tribe is able to basically approve the leases themselves. So that can be an important feature of this, if you need a lease for something that's going to be there, where the LLC is going to be around long enough that it will require a lease, or if the investor just wants that for other reasons.

The second slide, next slide, please, a second way of addressing this issue, though, and this is what Potawatomi did, is that BIA does not require approval for something that's considered a permit, an access permit, as opposed to a lease. And they have a little bit of vague terms of what they require for this, but basically, they expect it to be shorter, and for the tribe to have the right to end the lease, or end the permit, I'm sorry, at any time, and so revocable at any time. And as long as the investor is comfortable with this approach, where it's protected under other documents that you – so the tribe can't do anything that would be harmful to the investor, basically, this can be a very helpful approach, because you don't have a HEARTH Act. It still allows you to have the access given without BIA involvement. What it requires under this is that you provide the access permit to BIA, and they get ten days to say if they think it's actually a lease that needs approval. But we've never had any problems with that, where the BIA has always just stayed away, and I think, you know, silently basically said this is okay to do under that approach.

So then the next slide – we'll skip some slides, because, again, they go into a little more detail, but really on the deal documents that I think we're running out of time for. So then if you can go to the next – skip the next slide, and the next slide, and the next slide. And then we'll go on. And the next one, too. So you can look at those. If you have any questions, please feel free to get a hold of – well, me. I don't want to speak for Sara, but you can ask any questions you like about these things.

Then a couple more projects, just to give you a sense of how this has worked for other – in other situations, to give you a little more of a full sense. Go to the next slide, please. This is the _____ Housing Authority solar far that's being built right now. It's 1.25 basically megawatts. Next slide, please.

And I wanted to point this out, mostly. This is an example where the state rules allow for more beneficial net metering, which is not applicable up north, in Northern Wisconsin, where you can do community solar, and it can really work well. And mostly because of the fact that you can install it cheaper, and because then you can virtually hook up the homes, basically, or other buildings that are taking advantage of the solar. And this one allows for under New York rules all the residents that are part of this will get credited about $0.10 or $0.105 per kilowatt hour, and there'll be a number of low to moderate income subscribers to this facility, as well as for the – they call it Sunrise Acres campus, that provides housing for elders at the reservation.

And then – and this actually allows for an approach where you can charge for those credits, so you can help meet that kind of final bit of cost share or whatever operating costs you have for the facility, and that's where they're working out right now, what the small percentage should be for those – those credits. And then the next slide, please.

This one I think is important just because it's the _____ Housing Project, again, because it shows how you take advantage of the HUD grants involved. This is an energy efficiency project. But here, you have no tax credits, but because of the great NYSERDA incentives that are available for similar type of project, for the overlapping kind of projects, they're able to meet all the leveraging, and actually, probably about 50 percent leveraging there, or more, and that allowed them to expand their project and serve 97 homes as opposed to about 50 homes.

So it shows the benefit of leveraging and making sure you're aware of all the state and other programs that are out there. Next slide, please.

And this final example is the Spokane project, and what's important to note here I think is that it shows bringing all the kinds of funding. It has the DOE funding, it has the tax credits, worth about $600,000.00, and it also has Wells Fargo funding and that grant program we talked about before. And this was the first year, so they allowed them to get almost $500,000.00 in funding from it. It allowed them to fully pay for these systems on their homes and buildings. So it's a good project that way, and shows how planning – you potentially cover a lot of your project, and in some cases, like this – if you're somewhat lucky, the whole project. Next slide, please.

And this just shows the breakdown of the homes and the business – and the tribal buildings that were involved and the production and size of the facilities. Next slide, please.

And here are some pictures of the installation occurring. They actually had tribal members working on the project to install the systems, which is great. Here's the fish hatchery operation with the solar installed. Next slide, please.

Okay, just quick takeaways. There's a lot of incentives out there. The key thing is how do you plan for your project to take advantage of whatever is applicable to you in light of the net metering and other requirements. Next slide. And this just shows the importance of planning. You need to be thinking ahead of what your project should be like, how you could – what funding you can bring in, what are the rules of the game, how do you take advantage of things most beneficially.

And then last slide – I think this is the last slide – this is just that HUD training, technical assistance program I talked about. The good thing about it is it's just like a one or two page thing you fill out. It's similar actually to filling out the NREL requests, I think. It's very short, very simple. It allows for then this onsite, in depth analysis of what can work for your tribe or your tribal housing authority or whatever folks in the tribe are trying to make things work. Because it's HUD, they want to have things focus at least generally on housing, but oftentimes, the discussion spills over to housing plus how do we cover our other tribal buildings. It allows you to really make a plan of action for your projects.

And that's it.

James Jensen:             Thanks so much, John and Sara. Excellent presentation and a lot of good stuff there. I'll actually be interested to listen to the recording again and extract more information from it.

Just to – I guess a note to our audience, it looks like we're probably going to be pushing a little bit beyond the 1:00 mountain time stop, so just stick with us if you're able to. And questions, we'll probably have to send to our panelists, and they can respond, if they're able to, via email. So please continue to submit questions. We probably just won't have a lot of question session.

All right. Let's get started with Travois.

Adam Rose:                 Hello, everyone. This is Adam Rose from Travois, sitting with my colleague Mike Bland, who heads up our new markets tax credit team. We're going to talk specifically about two different tools that are primarily for housing and economic development efforts, but they're also very, very useful in developing and paying for clean energy that might be part of your projects.

Michael Bland:           Good afternoon. Good morning. My name's Mike Bland. I'll start off with the new markets tax credit program. Just like any tax credit programs we discussed earlier on the call, this is a dollar for dollar reduction in a tax credit investor's income taxes. It's a 39 percent tax credit spread out over a 7 year compliance period. Generally, these tranches of credits are awarded in $3.5 billion amounts every year to organizations called community development entities. Travois is a community development entity. There are hundreds of them across the country that do specific things, or have specific investment areas. We only work in Indian Country.

And lastly, the most important part of this presentation is new markets can pay for roughly 20 to 25 percent of your total development cost of your projects, whether that be solar or charter schools or anything like that. Any renewable energy projects are – there are only five or six uses that are not allowed in this program. Next slide, please.

So the eligibility for the new markets tax credits are determined by geographic location of the project and also by the business type. So if your project is located in a low income census tract, you qualify for new market tax credit investments. And if your business type – in this case we're talking about renewable energy projects, so those are certainly qualified for this tax credit program. The things that are not qualified are those six items I have listed there. So it's a very flexible _____ tool with lots of applicable business types. Next slide, please.

Let's skip that slide in the interest of time. Next slide, please.

So this is just a general graphical representation of sort of how the tax credit program works. It's a leveraging tool. So the top left hand box here with the $7 million under it, that would be a tribe. You come up with the 75 percent funding, and this is a hypothetical $10 million project. So you would leverage that $7 million to generate roughly $3.5 million from a new markets tax credit investor, typically a big bank.

Those two pots of money are pooled in an investment fund, which is – and then there's an equity investment made from the investment fund into the CDE, which is the lender in this structure. Here, we have Travois as the lender.

And then those two loans are made from Travois or from the CDE, are made to the project. The difference in this program, listening to the earlier presentations, is the QALICB or the business at the bottom is 100 percent owned by the tribe. There's no partnership here with the investor. The tribe retains total control over the project for the full seven years.

And then after the seven year compliance period is over, the new market tax credit investor has received the full seven years' worth of tax credits that they paid , you know, $0.82 on the dollar for. So in this $10 million hypothetical project, the tax credit is available – on this project is $3.9 million, but they're going to buy it at $0.82 on the dollar, so they make their return on this investment based on the difference between how many tax credits they're getting and how much they pay for it.

So what that means is they don't seek repayment – any repayment on that $3.5 million. So at the end of the seven year compliance period, after the exit, essentially, the new market subsidy that has been given to the project is forgiven. Next slide, please.

These are just a couple of different projects that we have been involved in that have – they're not – obviously, they're not renewable energy projects, but they have a sizeable renewable energy component. This is the Colville Reservation's new government center. Their old facility burned down, so they used a combination of insurance proceeds, their own cash, and the new markets program, to fund the development of this facility here, which is I think totally like a $40 million facility. They were able to do three different new markets transactions on this, and the cool energy connection here is the building is heated by geothermal. Next slide, please.

This was a project that was – is actually already exited. The tax credits came from Wells Fargo, and Wells Fargo was also the tax credit investor on this project. As you can see, it has some solar panels on the roof. It's a government building. It has a tribal courthouse, credit union, but they were able to install some renewable – some solar panels on the roof to help with the utility bills. This was like a $12 million project.

I guess I should mention, too, that $5 million is kind of the minimum project that you need to have in order to make it feasible. These transactions have a number of attorneys on them, on the phone, on these weekly calls, and you certainly benefit from scale. So the – a $20 million project is going to get you more benefit than a $5. And I think industry-wide, $5 is – you'll see some $4 million deals, but it gets difficult to realize a subsidy with a very, very small deal. Our deals are typically between $10 and $11 million. We've gone as low as $4, and we've gone as high as I think $27 million. So there's a lot of flexibility there. Next slide, please.

And this is an elder assisted living facility that we invested in with tax credits from US Bank. This is a roughly $8 million facility in rural Alaska. It's a consortium of eight tribes got together and built this facility to help keep their elders in their community. So it is – we participated in this financing to do all of the energy upgrades, so there's the solar panels on the roof that you see here, and then there is also a wood pellet burner, furnace installed. The temperatures in rural Alaska can get well below zero, as far down as 20 below, and so this was a necessity for the operations of this facility, to have a lower utility bill. So this – again, this is another way you can use new markets.

This one didn't have any – this one doesn't have any renewable energy components to it, but it was a – you know, you can do rural health centers as well. This was done in the Upper Peninsula of Michigan with US Bank tax credits. The Chickasaw Nation has a CDE. They were the CDE involved in this transaction. They only work in Indian Country as well. So if you're interested in pursuing new markets, you can reach out to Travois, and we can put you also in touch with the Chickasaw Nation. Next slide.

Again, just another idea of what you can do. This is an Educare facility, early childhood development. It's the first one on tribal lands. So there's no renewable energy component here, but as you can see, there's a lot of nice things you can do. This one was – the tax credit investor was Chase, and Travois was the CDE. I think it was a roughly like $11.5 million deal. And it serves 192 children on the Winnebago Reservation in Nebraska. It's a wonderful project. Next slide, please.

And you can do hospitality as well. I show this one to – just to highlight the fact that if you are not located in a low income census tract, which this project is not, this in Mendocino County, California, so it's surrounded by wineries, but the new markets program does allow for you to do a project that is not in a low income census tract if you agree to hire low income persons to work at the facility, or a majority of the customers that you serve are low income persons, and a low income person is someone defined as 80 percent of AMI, makes 80 percent of AMI.

So on this deal, we obviously couldn't test the incomes of all the potential customers of the hotel, so we chose to use the workforce test. So 50 percent of the employees at this facility will be tested at their hire date to make sure that they are low income persons, and as long as you stay above the – the statutory requirement is 40 percent of your employees, but we usually put in a little extra to – as a buffer. So as long as we stay above 50 percent of our employees being low income persons, then this hotel qualifies in Mendocino County, California. Next slide, please.

And I think I've covered most of these. These are some frequently asked questions. Yes, you can use new markets with – there are actually state new markets programs as well. I know Oregon has one. I believe Nebraska has one. There are other states as well. You can double up and get state credits and federal credits. You can also use federal and state grant money as part of your capital stack on your – on the leverage portion, 75 percent that you have to come up with. I already covered the second point. And the last point is there's really two timelines. There's the project timeline, or sorry, a program timeline. So right now, we are applying – CDEs are applying for credits right now. The application is due at the end of October. The awards will come out probably in the second quarter of next year. And once that happens, there's sort of a feeding frenzy over these credits. You want to spend them or I should say invest the credits as quickly as possible, if you're a CDE, so that you can go back in and apply for more.

And so one of the ways to improve your – if you're on the project side, one of the ways is to get in touch with a CDE now and get into one of their applications, so that if you're featured in a CDE's application, you have a higher chance of working with them in the future and in helping them win more credits. It's too late at this time to probably get in somebody's application for this coming round, but it's never too late to start talking with CDEs about getting set up for starting your investment – starting your development in late 2020 or perhaps the next funding round. Next slide, please.

All right. I'm going to turn it over to Adam to handle the low income housing tax credit program.

Adam Rose:                 Yeah, my name's Adam Rose. I've worked with Travois for 12 years, almost exclusively on our housing development side, working with tribes to use the low income housing tax credit program to meet their housing needs.

So again, this is a tool that its primary objective is housing development, low income housing development, 60 percent area median income or below, but those housing projects can certainly include things like solar, community solar projects kind of attached to facilitate a larger project, geothermal, other energy efficiency improvements.

The big thing I want to point out on this slide is that when you hear about the low income housing tax credits, it's totally separate and allocated completely different from the new markets tax credits. This is a ten year credit, so if you see an award of credits in the size of $1 million to a project, effectively, that's $10 million over a 10 year period. Right now, the market facilitates purchase of those credits at about $0.83, $0.84 on the dollar for tribal projects. So a $1 million allocation means about $8.5 million of equity in your project at the front end to help make the project feasible.

So the investor makes a return on the tax credits, you benefit from a significant injection of equity to help make your project feasible. Next slide, please.

So the low income housing tax credits, similar to the structure that John talked about before, does require a limited partnership structure, a state limited partnership structure. And the reason for that structure is that tribes typically don't have a federal tax liability themselves, so they partner with them being the sole general partner, meaning that they control the entire management function, waiting list function, you know, paint colors, moving in and out tenants, and then their investor limited partner takes benefits from 99.99 percent of the tax credits that flow to the project. But typically, it is a state limited partnership as the structure through which the housing tax credits flow. Next slide, please.

So again, when we talk about low income housing tax credit awards, it's always automatically times ten. So when you apply for an receive an award of housing tax credits, you do not have to do anything to receive those tax credits in subsequent years. So if your project receives $500,000.00 of tax credits, effectively assuming that the project remains in compliance and that you rent to low income families, you'll receive a benefit of – or the project will receive a benefit of $5 million over a 10 year period.

And so the way that the structure works is that the investor will essentially pay for that stream of tax credits up front, providing you equity into your project. Next slide.

So again, this is just a real high level example of that. So let's say you had a $10 million project for maybe 20 units of housing, 25 units of housing. If you got a $1 million allocation of tax credits, that's effectively $10 million over a 10 year period. Your tax credit investor partner is going to essentially invest in those credits up front for between $0.80 and $0.85 on the dollar, so they'll give you $8 million as equity to help complete the construction of the project. They'll then receive a benefit of $10 million over a 10 year period. So the gap that you have to fill as the tribal entity is greatly reduced from $10 million down to $2 million, making it a much more viable project than taking on a large housing _____. Next slide, please.

So I want to walk through really quick just a real scenario of what this would look like. This is a real project in California. And so all – in this particular project, in tax credit projects, you can combine rehabilitation with new construction, but you're not limited to just that. It can be new construction alone, it can be rehab alone, you can combine the two together. So this particular project had a combination of both. So there were some units that were to be rehabilitated. There was also some infrastructure that had to go in as part of the project, about $1.7 million for the new units. There was another $11 new units built in the project, so about $2.8 million of expense that was the new component.

They rehabbed the units and put about $40,000.00 per unit in each of the rehab units, and then are building another standalone community amenity that will benefit the residents and the neighborhood that lives in the low income community.

Of course, you'll have contractor fees that are included in that transaction, so those are paid for effectively with proceeds from the tax credits. And then a construction continency, which you can also include, which earns tax credits as well.

Professional fees, that includes everything from architect to engineers to surveys. That can be expensive on a tax credit project. Unlike a _____ project, where you might not have to have full construction documents for a rehab project, that is the expectation, 100 percent construction documents on a rehab tax credit project. So you will incur a fairly significant amount of soft costs.

There's also some unique soft costs in a tax credit transaction. You pay a fee to the state allocating agency. Sometimes, states have a unique fee, like a fee in Washington that – a donation to a nonprofit that you have to make as part of your competition for these tax credits.

One of the nice benefits of the tax credit program for tribes is that you are able to earn a developer fee in the process, and that developer fee comes back to the tribe or the tribal housing authority as non-program income. And then consultant fee, whether that's Travois or someone else, may be involved in your tax credit transaction.

And then on this project, they prefunded a reserve, which will actually be an asset to the project. So all said and done, this is about a $9.4 million total project. Next slide, please.

So in this particular scenario, the tax credit equity, including the benefit that they received from federal housing tax credits, state housing tax credits, and solar tax credits, that generated about $8.2 million of equity, $8.3 million. So really, the difference between those two numbers, the total project costs, and the amount of equity raised from the proceeds of the tax credits, is what the housing authority in this instance had to pay. So again, this is a specific example of a project under construction right now by the Yurok Indian Housing Authority in California. Instead of having to contribute $9.4 million to do the project, they only had to come up with $1.1 million of their own money, with the rest of the project paid for by the tax credit proceeds.

The energy efficiency and clean energy component, all of these units will get solar as part of that rehab, and all of the new units will also enjoy the benefits of solar as well. These are old, old units that were highly inefficient, and they'll get all new insulation, flooring, fixtures, mechanical systems, to really reduce down that utility burden for the – for the low income families.

Once the developer fee comes back to the housing authority, they'll have completed the $9.4 million project for just about $633.000.00 of their own funds. So you can see that extremely valuable leveraging through the housing tax credit program as well. Next slide.

Yeah, and this just summarizes what we talked about, the benefit, especially once that investor – the developer fee comes back to the housing authority. They'll basically have broken even on this effort to do a major housing effort. Next slide. Next slide.

So one thing I do want to point out here is that under the tax credit program, the income limits are slightly different from in – under NAHASDA, where you can serve 80 percent area median income families or below. Under the tax credit program, it would be 60 percent area median income or below, and then oftentimes, a more restrictive commitment than that based on the competition for whatever state you're competing in. Next slide. Next slide. Next slide.

So just to give you a snapshot of what other tribes are doing – next slide, please. So you can use the tax credit program for single family homes, apartments, community facilities. These are units at _____ upper left. The _____ tax credit project, _____ Mountain, has done eight tax credit projects. You can use it for scattered sites or subdivisions. Next slide.

Really, you can use it for any population that your community has a need for. So it could be elder housing, veteran housing, large family housing. You can rehab units. The picture in the middle there is a unit that _____ rehabbed an old motel into supportive veterans units. Next slide.

And just a snapshot of what tribes are doing with the low income housing tax credit program. So now, about 198 – 90 tribal organizations have done about 190 projects across the country. So tribes didn't start using the tax credit tool until 1995, when we helped the Red Lake Reservation Housing Authority with their first project. But now, tax credits are being used throughout the country to meet large scale housing needs. Go ahead. Next slide.

And you can flip through these pretty quickly. These are just a snapshot of what other tribes have done. Next slide.

Oh, a project in mission. Next slide. Elder project. Work force housing in Minnesota by the Milacs Tribe, single family units. These have geothermal as part of this project in Kansas. Next slide. Next slide. Blackfeet's working on their seventh tax credit project. Units at Colville. Next slide. Spokane has done – actually, the project mentioned previously – these are Spokane units – one of the housing tax credit projects, so it can certainly be used along with other solar programs as well. Next slide.

These are single family units at a Yavapai – they're working on their seventh tax credit project. Next slide. Next slide. This is the first tax credit project that the Pueblo of Yakama – more single family units. So a lot of our California projects now all have solar automatically assumed. That was at Kiley Valley. All of those units will have solar as part of each of the residential units.

So I think that wraps up my discussion on how we can use – how tribes can use the low income housing tax credit and the new market tax credit transactions to fund a larger effort that might include a significant clean energy component.

James Jensen:             Thanks, Michael and Adam. I really appreciate that presentation. Excellent stuff int here. A reminder to our audience, we are scheduled to end at the top of the hour here. However, we're going to just keep on rolling. So if you're able to stay on, please do, and we have one last presentation. We will not be taking any questions live on the webinar. However, if you submit written questions, we will forward them to the appropriate contact, and hopefully, they can get back with you over email.

All right. With that, let's dive into our last presentation. Bryan, you may proceed.

Bryan Van Stippen:     All right. Well, thank you, everyone, for hanging around today. I am the program director for the National Indian Carbon Coalition. I am a tribally owned and operated not for profit entity. I have received funding from the USDA Conservation Innovation Grant to expand funds in Indian Country. So if you get anything out of the presentation today, I have money that I need to expand in Indian Country. I am trying to look for tribal nation partners to do feasibility studies on natural resources. So if you could go to the next slide, please.

Essentially, what is carbon? We talk about carbon sequestration, carbon climate change, carbon issues that are occurring throughout the United States and affecting our tribal lands. Carbon is basically shorthand for carbon dioxide. Next slide, please.

So everyone has a carbon footprint, so usually, when I'm doing these presentations _____ a group that I travel to – fortunately, for this event, I am working from my office today, but I still had to travel from my home to my office. And as I do that, I have also – I utilize fossil fuels, including gasoline, getting into my vehicle, driving here, the electricity, heat for the building that I'm in. So essentially what we're trying to do is offset our carbon footprint by establishing carbon sequestration projects on tribal lands. Next slide, please.

A carbon offset/carbon credit is reduction in the emissions of the greenhouse gases that we're talking about. Specifically what we want to focus on is the measurability, quantifiability, permanence, variability, and enforceability of these carbon credits that would be created. You can go to the next slide, please.

So this is just a visual of how it works. We have industry that creates emissions, and then we have a process in which we try to reduce emissions by doing carbon capture. An industry can only do so much energy efficiency on their facilities to reduce their emissions, so there's always going to be some emissions that are going to be released into the atmosphere, and that's where the carbon offsets come in, so _____ become carbon neutral. Next slide, please.

When the California Air Resources Board created the cap and trade program, there was offsets project registries that were developed. If anybody recalls the previous Chicago Carbon Exchange, there was not a lot of oversight that was conducted on that California Carbon Exchange, which is one of the reasons why that exchange has failed.

So when the California Air Resources Board and the State of California established the cap and trade program, they created the registries. You can go to the next slide, please.

The registries that were created are setting standards and methodologies. The three main ones are American Carbon Registry, Climate Action Reserve, and VERRA. My entity, the National Indian Carbon Coalition, has worked with each one of those as we move forward to development of projects on tribal lands to ensure that we are adhering to the requirements set by the California Air Resources Board. Next slide, please.

So what are methodologies? The methodologies are basically the scientific data that has been developed through offset registries to ensure that each one of the projects that is being developed is doing what it's saying it's doing. So again, looking at the Chicago Carbon Exchange, projects would be entered into, and as soon as the project would be entered into, there would _____ be – no longer any _____ sort of information or data that was developed or collected. So for instance, you entered into the Chicago Carbon Exchange with a forest carbon project and clear cut your forests, there was no follow-up data to determine whether or not that forest was still standing. So again, that was one other main reason why a lot of those carbon exchanges failed, was because there was no follow-up through there, so the methodologies that had been developed through the offset registries through California ensure that tribes are doing – and anybody that's entered into the California market, is continuing to do what they're stating that they're doing. Next slide, please.

So some of the methodologies that are very popular right now, energy generation, switching from non-renewable biomass, energy demand, transportation, which could be used for tribes improving the efficiency of fleet vehicles that _____, gasoline powered vehicles for their fleet over to compressed natural gas or to electric, you could derive a carbon sequestration credit. Waste handling and disposal. If anybody out there has a landfill on tribal lands, they can do methane collection. That would be a – one of the main ways to enter into the California market. Next slide, please.

And the three that I – or the four that I'm _____ methodologies I'm mainly working with are improved forest management, avoided conversation of grasslands and shrublands to crop production, compost additions to grasslands, and then thermal energy production with or without electricity. So those are the four methodologies that we've been promoting at the National Indian Carbon Coalition. I'm working with tribes on each one of those, dependent upon what the natural resources for each tribal nation that they have, of which methodology that we would pursue.

So for instance, with the improved forest management, I'm currently working with the Fond du Lac Band of Lake Superior Chippewa, Leech Lake Band of Ojibwe, and the Keweenaw Bay Indian Community out of Upper Peninsula, Michigan. Avoided conversation of grasslands, I'm working with the _____ Sioux. Compost additions to grasslands, I'm working with Santa Ana Pueblo. And then the thermal energy production with or without electricity, as a most recent protocol that we had developed in conjunction with the _____ Energy Facility that is 51 percent owned by the _____ Community. Next slide, please.

So how does the market work? Currently, we have the buyers, we have the developers, and we have the sellers. Tribes would be under the seller category. What my organization does is help the tribal nation, the tribal entity, determine what their natural resources are through a carbon feasibility.

Once we conduct a carbon feasibility, then we can have idea of, well, this is what are available, the protocols that we can use, and the actual revenue that can be generated, from entering into a carbon sequestration project. We do have to work with project developers in order to get the project established, and most of them are very familiar to the California Air Resources Board. It's a complex industry. There's not a lot of fly by night organizations, although there tries to be, but the individuals, the project developers that can actually get projects on the market, are very well-established.

And then you have your buyers. In the California market, it's going to be industry based out of California that is required underneath the state legislation in order to purchase carbon credits through the cap and trade program. Next slide, please.

Determining economic feasibility. Again, my organization has received federal funding to help tribal nations determine what their natural resources are on their tribal lands, how they may be able to enter into a carbon sequestration project, develop carbon credits, and these are the two things that we need: how much land do you have, and what is the type of natural resources on that land, whether it be grasslands, forested land, peat bogs. There's many different types of opportunities. It's dependent upon what each tribal nation has on their land themselves. Next slide, please.

And this is a quick and dirty outline of the steps that it takes for the feasibility. Once we were to enter into the relationship, it takes about three months. We then look at the inventory quantification, growth/yield model, harvesting, all that fun stuff. That takes about nine months.

And then the verification and registry review, which is done by an outside third party, which would be one of the registries, that is the entity that would take between six to nine months, but it has been a little bit longer. It depends upon how complex the project is. Currently, we're in that process with a couple of projects that I'm working on with the tribal nation, and it's slow going at points in time.

Once that occurs, then the credits are developed, and depending upon the market that you enter and go into, it's going to vary on how long those sales are going to occur. And then stage five is monitoring, report, and verification, dependent upon the duration of the project, between 40 and 100 years, so there'd be some sort of internal and external monitoring requiring verification. Once per year, internal staff will have to do a report. And every six years, there'll be a outside third party that would verify that the project and the tribal nation is doing what they said they were doing and _____ natural resources and the practices that are occurring are still continuing on that land. Next slide, please.

So there are two different types of markets. I've been speaking about the California cap and trade, and it's connected with Ontario, Canada's cap and trade market. So industry out of Ontario, Canada can also participate in the California market, but there is also a voluntary market. The Air Transport Association is going to be developing theirs, which has been announced very recently in the airline industry, _____ being mandated, being offset in their carbon footprint, has decided to enter into a voluntary market. That should be coming online here in the very near future, as well as what we call social responsible organizations, Google, Microsoft, Best Buy, Patagonia, Ben & Jerry's, I would even state Shell Oil, now that they've dropped out of a bunch of their petroleum _____ in the United States, are interested in helping support projects on a voluntary market.

The concern with voluntary markets is that the rate of the carbon credit is much less than what is on the California market. Currently, on the California cap and trade, carbon credits are selling for around $15.50 a metric ton. On the voluntary market, they're selling between $3.00 and $5.00 a metric ton. So there is a considerable price difference, but it's dependent upon what the tribal nation is interested in doing, because there are positives and benefits to both markets. Next slide, please.

So California cap and trade program, the market is based on the cap rate. Here, you can see on the graphic where a lot of the emissions come from. California back in 2003 decided that they wanted to enter into a cap and trade program and try to offset their carbon footprint, so they allow industry to release emissions up to a certain point if they can no longer use any technology to reduce those emissions, and then they are able to purchase credits or trade credits from other entities that are doing savings, such as tribes that may be able to enter into the carbon market. And so there's a little bit of give and take on each end, but at the end of the day, it's going to be a revenue generator for tribal nations. Next slide, please.

So there are some current that are on the California market. This is the compliant market, the most recent one that I'm aware of. The Spokane tribe has also entered into the California market. The Chugach Alaska Corporation has about a $100 million carbon sequestration project. Pueblo and Apache has a few that they've done now ,and I believe so has _____. Next slide, please.

And then on the voluntary market, again, we're looking at social responsible organizations. What we want to try to do with these _____ is get them to support tribal projects at a higher rate than what is normally on the market, as I stated, between $3.00 and $5.00 a metric ton. Next slide, please.

And as I mentioned, one of the offset registries that I'm working with is VERRA. They have a community and biodiversity standard. This allows tribal nations and smaller land owners and landholders to consolidate many processes into one. If you're doing LED lights within the facility, you're doing energy efficiency projects, you have a small land _____ with some forested land, you've got a small land _____ of agricultural land, through this standard, you have the ability to enter into the carbon market with one big combined project. Next slide, please.

This is just a little bit more about the CCB program. Next slide, please.

And the positives and negatives. Potential for revenue generation obviously is the main point of entering into any sort of carbon sequestration project. If you have forested land, this complements the BIA integrated resource management plan practices. And of course, then you'd be being a steward of your land, protecting your natural resources. Rather than doing exploitation or extraction of your natural resources, you're protecting them for generations to come. Next slide, please.

The negatives, duration of the projects that could potentially be up to 100 years. If you're going to enter onto the California market, that is a requirement. It requires a limited waiver of sovereign immunity, time commitment from internal tribal staff, restrictions on land use – cannot do any sort of development of those lands, and then, of course, if there's any sort of natural disaster _____ is an issue. However, there is an insurance program built into the market in which there is a buffer pool, but there is concerns of natural disasters. Next slide, please.

So here are the current projects that I mentioned. The Lower Brule Siouux, Fond Du Lac, Leech Lake, Keweenaw Bay, Koda. The different methodologies that we're using, some of the acreages that we're focusing on. Next slide, please.

And so as I mentioned, I am a tribally owned and operated not for profit entity that's created by the Indian Land Tenure Foundation and the Intertribal Agriculture Council, two very well-known and established organizations working in Indian County. I do have federal funding from the USDA, again, which I'm looking for tribal partners, so please feel free to reach out to myself, either through this webinar or through my information on the screen right there if you have any further questions. I'm always looking for developing additional projects in Indian County, and have money to spend. So thank you for your time today, and appreciate everybody hanging around for this final 15 minutes.

Lizana Pierce:             I think James may be having some technical difficulties. So this is Lizana Pierce again. I want to thank everyone –

James Jensen:             Hi, Lizana. Sorry.

Lizana Pierce:             Did you jump on? Okay.

James Jensen:             I'm back on. I'm back on. I had muting issues, I guess. I'm sorry. Yeah. Thanks, everyone, for your presentations today, and appreciate everyone staying after. Let's wrap up. Excellent, excellent presentations. There are a couple of questions. I'll forward those on to the appropriate individuals on the panel, and hopefully, they can get back to you over email. We're very interested in your suggestions, audience, on how to strengthen the value of this training, so please do send us any feedback you have.

And here's a slide of our remaining webinars in the 2019 series. Our next webinar is "Federal Resource and Collaborations Supporting Indian Energy Development," and that'll be held at the end of this month on October 30th. We hope you can join us for that.

And in general, thanks to all for your interest and attendance today, and we look forward to you joining us on future webinars. This concludes are webinar today. Good day. Thanks.

[End of Audio]