Finance & Legal minutes: 2011-04-25

Minutes:

Notes from Joint F&L and Solar Currents Committee Meeting

4-25-11



F&L Members Present: Mary, Aaron, Amy, Carl

Guests: Solar Currents Ad Hoc Committee: Elph, Mac, Adi, Judith

Facilitator: Mary



At the last community meeting, we heard overwhelming support for having
solar panels on the garages at Great Oak, and there were also concerns about
the financial aspects of how this would work.



Tonight we will identify questions and concerns related to financial
aspects, then work through them to identify possible solutions.



Brainstorm of large categories of financial concerns:

- how much is being invested?

- who is investing?

- If an outside investor steps in, who writes the contract and what
are the details?

- what would be the return on investment?

- who will do record-keeping?

- what are all the costs over 25 years?

- contingency plan if $20,000 fed money does not come through?

- liquidity/cash flow issues for reserve fund and general fund?

- clarify income from DTE

- what’s relationship between DTE income and payments to investors? Eg
what happens in winter when energy generation is lower?

- replacement costs of whatever we install – will we replace it? does
this intersect with reserve fund update in 5 years?

- If we generate more energy than we use, and we generate income,
would the IRS view this as a taxable event?



Elph provided this outline of a “Simple Plan” for how the project could
work:



The Simple Plan

1. Pick an installer with a simple way to pay for the project.

a. Right now our preferred installer would take care of the paperwork to
apply for the DTE and Federal subsidies. We would not have to front this
money from GOCA.

2. Pick simple terms for the loan that can be easily accomplished (if we
decide to structure this as a loan to GOCA)

3. Have a simple payment system

4. Have a simple lender situation (again, if we decide to structure this
as a loan from to GOCA)

5. Have maintenance and long-term issues clearly assigned to some group.



REC = Renewable Energy Credit



A long discussion followed with wide-ranging discussion about risks, how the
finances might be structured, and a lot of clarification around how the
project would be structured.


A few notes (much of the conversation was not minuted):



Elph proposes a complete buy in from the Reserve. The $50K can be seen as
an investment from the Reserve. The maintenance could be folded into the
Reserve. All income goes back into the Reserve, pays back $50K within 11-12
years. You place $96K and earn $61K, with the best estimates we can make. All
of the payments that come from DTE would go back to the Reserve.



Adi suggests thinking of this as stock in a new business. So how do we feel
about risking the Reserve Fund in this way?



We need to look at what’s in the Reserve Fund and the liquidity. If we pull
out $50K in cash this will potentially create cash flow problems by the end
of 2012, assuming that the three obligations for the CH Loan are assumed by
the Reserve fund in May and June of 2012. There is $95-96K earmarked for
Reserve expenditures in 2012. Fortunately, however, if we get through 2012,
2013-15 expenditures are not estimated to be very large. It’s possible that
GOCA’s cash reserves could bridge any crises. There’s risk involved here. We
can probably do it, but people should know that there’s a risk. The most
likely risk would be in 2012.



This is assuming that the Reserve Fund takes over the whole CH Loan in 2012
(~$42K). If the community decides the Reserve should not take this on, we
would have plenty of liquidity.


The conversation went on until we were too tired to continue.



Elph and Adi both felt that they had provided all the information they had
researched and presented in table form, and that from here on out it was up
to F&L to decide whether to champion this project.



F&L later decided to meet on Sunday, May 1 at 7 pm to continue the
discussion with an aim to presenting a proposal at the May 4 alternative
meeting.
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://gocoho.org/pipermail/finance-minutes_gocoho.org/attachments/20110508/b6638812/attachment.html>