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Community Food Systems and Cooperatives Nebraska

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					 Community Food Systems and
       Cooperatives

Nebraska Sustainability Leadership
           Workshop
         April 30, 2009
          Norfolk, NE

          Michael Heavrin
Center for Rural Affairs – Lyons, NE
         Value-Added Programs
► In 2002, Value-Added
  Agricultural Product
  Market Development
  Grant was known as
  the Value-Added
  Development Grant
  (VADG) Program
► In 2003, the grant
  program became
  known as the Value-
  Added Producer Grant
  (VAPG) program.
      Community Food Systems
The food and agricultural systems in the US has
  changed a great deal through the last half of the
  20th Century:
   Trend toward industrialization of agriculture
   Trend toward centralization of production and
    processing operatives
   Farmer control over production, marketing and labor is
    being replaced by corporate control
   The farmer share of the consumer food dollar was 41%
    in 1920, while in 1990, it had dropped to 9%. The
    number is now only about 4%.
      Community Food Systems
The food and agricultural systems in the US has
  changed a great deal through the last half of the
  20th Century:
   The nation is losing thousands of farmers annually.
   Fewer farmers result in the deterioration of rural
    communities – both socially and economically.
   Today, few consumers really know where their food
    comes from
   In many areas of the country – especially in poverty
    areas – people are not able to access fresh, locally
    grown food
     Community Food Systems
According to Washington State University, a
  “community food system” is one in which
  sustainable food production, processing,
  distribution and consumption are integrated
  to enhance the environmental, economic
  and the social and nutritional health of a
  particular location.
     Community Food Systems
Today, food system issues include:
   Improving access to an adequate, affordable,
   good tasting, fresh and nutritious diet.
  Supporting a stable base of family farms and
   ranches that can and will supply local food to a
   specific area.
  Most consumers prefer to buy from producers
   who use fewer chemicals and less energy, and
   who emphasize local inputs where possible.
      Community Food Systems
Other issues include:
   Finding marketing and processing techniques that
    create more direct and beneficial links between farmers
    and consumers.
   Development of food and agriculture-related businesses
    that create jobs, re-circulate money in the community,
    and provide for community economic development.
         Value-Added Producer Grant program
         Farmers Market Promotion Program grants
   Creating food and agricultural policies that promote
    local food production, processing and consumption.
      Community Food Systems
It is essential that “community food systems” be
   established using a collaborative approach:
   Local participation and support is necessary.
   Relevant stakeholders throughout the food system
   need to participate in organizational activities:
      Local elected officials
      Farmers, ranchers or their associations
      Public health personnel and nutritionists
      Food processors and food retailers
      Food and agricultural agency representatives
      Small businesses and lending institutions
      Cooperative Extension, Non-Profits and Universities
      Area transportation, storage, labeling and packaging businesses
      Community Food Systems
Funding Resources are important to the successful
  formation of a community food system – some
  potential resources include:
   USDA programs – VAPG, FMPP, CFP
   Community, regional or national private foundations
    (i.e. Kellogg, Kraft, Noyes)
   Churches – national and local
   Civic Groups (i.e. Chamber, Rotary, Elks)
   Local, state or federal government programs including
    CDBG; SARE; EPA and DOE Sustainable Futures
   Individual donations, including fund raisers
     Community Food Systems
Due to the fact that farmers and ranchers will
 need to drastically revise the way they
 work, it is essential that funds be available
 to them in order to transition their farms
 from being “producers of feed” to being
 “producers of food.” One such USDA grant
 program is especially valuable – the Value-
 Added Producer Grant program.
    Value-Added Producer Grant Program

►   Program Description
►   Projected status of this year’s program
      Newest funding amount is uncertain at
       this point, but USDA expects the Notice
       to be released at any time.
►   Grant Purpose, eligibility, terms, &
    application process
►   Opportunities for projects
►   Funding; How & when to apply, preparing
    your application.
Value-Added Producer Grant Program

             Philosophy of the Program

 ► Help  producers expand the customer base
   (by opening EMERGING markets) for their
   products or commodities, and ensure that a
   greater portion of the revenues derived from
   the value-added activity is available to the
   producer – to allow farmers and ranchers
   capture a larger percentage of the consumer
   food dollar; and assist producers in their
   efforts to diversify their operations
    Value-Added Producer Grant
► Program  designed to assist eligible agriculture
  producers or groups of producers add value to
  their commodity production.

► This program provides grants for planning
  activities or for working capital to implement a
  value added venture.

► Created via the 2002 Farm Bill, Reauthorized in
  2008 Farm Bill
     What is an emerging market?
►   An emerging market is a new or developing market
  for the applicant. That is, a market the applicant
  has not traditionally supplied. The venture must
  be focused on this new or developing market.
► An example of this emerging market is the
  “community food system.” Farmers and ranchers
  are encouraged by this grant program to diversify
  their operations and enable them to supply fresh,
  healthy and safe food products to their own area.
 Value-Added Producer Grant Program

► Nationwide Allocation   Funded in Nebraska
► FY02 $37.0MM              $1.6MM    13 projects
► FY03 $28.7MM             $3.7MM     18 projects
► FY04 $13.2MM             $1.3MM      7 projects
► FY05 $14.3MM             $1.1MM     16 projects
► FY06 $19.7MM             $1.2MM     18 projects
► FY07 $19.5MM              $681,176   8 projects
► FY08 $18.4MM              $123,000   4 projects
Value-Added Producer Grant Program

► Three   Categories of Eligibility

   Applicant Eligibility

   Product Eligibility

   Purpose (value-added activity)
    Eligibility
      Value-Added Producer Grant
               Program


► Applicant    Eligibility (4 Categories)
     Independent Producers
     Farmer or Rancher Cooperative
     Agriculture Producer Group
     Majority-Controlled Producer Based Business
      Ventures
      (Producers have 51% or greater ownership and
      control)
Value-Added Producer Grant Program

  1. Independent Producer
   An individual producer of agricultural
    commodities or products (including products
    from aquaculture, fish harvesting, and wood
    lot enterprises).

   An association of producers such as a
    producer owned corporation, LLC, or LLP
    solely owned by producers.
Value-Added Producer Grant Program

1. Independent Producer
(continued)

  A steering committee composed of
   agricultural producers in the process of
   organizing an association to operate a
   value-added venture.
    ► An independent producer can not
      produce under contract or joint
      ownership with any organization other
      than their own.
Value-Added Producer Grant Program
2. Farmer or Rancher Cooperative
   A business incorporated under state
    cooperative or corporation statutes that is
    farmer or rancher owned, farmer or rancher
    controlled, and benefits are returned to the
    farmer or rancher owner on the basis of
    patronage of the cooperative.

   Farmer or rancher owned cooperatives must
    propose ventures that are entering into
   emerging markets.
Value-Added Producer Grant Program

 3. Agricultural Producer Groups

   Any organization that represents
    independent producers such as a producer
    trade association or a state or national
    commodity group. Agricultural Producer
    Groups must propose ventures that are
    entering emerging markets.
   Corn Growers Association; Hog Producers
    Association; Cattlemen; and Grange are
    examples.
Value-Added Producer Grant Program
 4. Majority-Controlled Producer Based
 Business Ventures
►A  corporation, LLC, LLP, or other type of
  business structures where producers have 51%
  or greater ownership and control of the entity.
  Majority-Controlled Producer Based Business
  Ventures must propose project activities that
  are entering emerging markets.


* No more than 10 percent of the grant funds will be awarded to
these ventures.
Value-Added Producer Grant Program

►Value-Added Products
  Four distinct categories are considered
   value-added.
►A   Value-Added Product Must:
   Expand the customer base for the product or
    commodity, AND
   Result in a greater portion of the revenues derived
    from the value-added activity that is available to the
    producer.
Value-Added Producer Grant Program

► Value    Added Product Eligibility

 1.The changing of the physical state or
 form of the product to the extent that it
 cannot be returned to its original state.
   Examples include processing wheat into flour, corn into ethanol,
    slaughtering livestock or poultry, or slicing tomatoes.
Value-Added Producer Grant Program

►Value       Added Product Eligibility

 2. A product produced in a manner that
 enhances its value, as demonstrated
 through a business plan.
   An example is organically produced products.
   This category is not eligible for PLANNING funds.
Value-Added Producer Grant Program

  ►Value      Added Product Eligibility

   3.   The physical segregation of an
   agricultural commodity or product in a
   manner that results in the
   enhancement of the value of that
   commodity or product.
     Examples: include an identity preservation system for a
      variety or quality of grain desired by an identified end-user
      or the traceability of hormone-free livestock to the retailer.
Value-Added Producer Grant Program


 ►Value      Added Product Eligibility

    4.    The term “value-added agricultural
     product” includes any agricultural commodity
     or product that is used to produce renewable
     energy on a farm or ranch.
      Examples: collecting and converting methane from
       animal waste to generate energy
Value-Added Producer Grant Program

► Planning
   a defined program of economic activities to
    determine the viability of a potential value-
    added venture including feasibility studies,
    marketing plans, business plans and legal
    evaluations.
► Working         Capital
   Funds which are used to operate the
    venture and pay the normal expenses
    associated with the operation of the
    venture.
      ► Completed   feasibility study & business plan
        on specific venture required.
Value-Added Producer Grant Program

Costs that are Not Eligible include:
►   Plan, repair, rehabilitate, acquire, or construct a facility
►   Purchase, rent, or install processing equipment
►   Pay for the preparation of the grant activity
►   Pay expenses not directly related to the funded venture
►   Pay costs incurred prior to receiving the grant
►   Fund political and lobbying activities
►   Pay any expenses related to agricultural production
Value-Added Producer Grant Program

► Maximum    Planning Grant Amount $100,000
   Priority points for smaller requests
► Maximum    Working Capital Grant is $300,000
   - Priority points for smaller requests
► Applicants must provide matching non-federal
  funds at least equal to the grant
   Matching funds must also meet the purpose
    eligibility
► NOSA   can be downloaded from web-site.
       VAPG Application Process
► An   Application consists of these things:
   SF-424 “Application for Federal Assistance”
   SF-424A “Budget Information - Non-Construction Programs”
   SF 424 B “Assurances - Non-Construction Programs”
   Table of Contents
   Proposal Summary
   Eligibility Statement
   Proposal Narrative
      ► Project Title
      ► Information Sheet
      ► Goals of the Project
      ► Evaluation Criteria
   Verification of Matching Funds
  VAPG Opportunities/Scenarios/Examples
► Goat producers initiating a feasibility study.
► Meat Cooperative requesting funds to complete
  a business plan and marketing plan.
► Cooperative requesting funds to hire a
  marketing manager.
► Producer requesting funds for advertising costs
  and office equipment.
► Cooperative requesting funds to pay for
  attorney fees.
     VAPG Future Funding Periods
► Callfor applications once a year
► Application announced via NOFA
► Information can be found on USDA RD website
  or can be mailed to you by contacting the
  Center for Rural Affairs or USDA RD:
         --joan.scheel@ne.usda.gov
         --mikeh@cfra.org

► Template      based on this year’s NOFA found at:
   http://fpc.unl.edu/marketing/grant.htm
   Other USDA Rural Development
         Funding Resources
► Business & Industry Guaranteed loan program
► Business & Industry Cooperative Stock
  Purchase Program
► Rural Business Opportunity Grant (RBOG)
► Rural Business Enterprise Grant (RBEG)
► Rural Cooperative Development Grant
  Program
        Center for Rural Affairs
          Rural Opportunities &
          Stewardship Program
           Kathie Starkweather, Director




Cooperative Marketing
  Nebraska Sustainability Leadership
             Workshop
      Madison County Extension Office
               April 30, 2009
             Norfolk, Nebraska
     What is a Cooperative?


► Cooperatives are owned and controlled by
  the people who use them.
► Cooperatives operate for the benefit of
  members, rather than earn profits for
  investors.
► Cooperatives are incorporated under State
  Law.
What are the differences between a cooperative and
                 other businesses?

►Differences can be expressed
 in three basic principles:
     ►the User-Owner Principle
     ►the User-Control Principle
     ►the User-Benefit Principle

► Cooperatives are a form of
 corporation, and as such, have
 some protection from risk
      Why organize as a marketing
             cooperative?
► Increase  supply for larger markets
► Improve bargaining position
► Reduce costs
► Expand new and existing market
  opportunities
► Improve product or service quality
► Increase income
► Enhance the local economy
► Efficient management of risk
        Cooperatives involve:
► Member-Ownership     and Control
► Risk Management advantages
► Benefits (Common marketer)
► Opportunity for larger markets
► Quality and production standards are
  uniform
► Connections (Market and Production)
Nebraska Food Cooperative

               Our Mission: To foster a local food
               community and promote a culture of
               stewardship by cultivating farmer-
               consumer relationships, promoting
               the enjoyment of healthful food,
               increasing food security through
               diversity, and enhancing overall
               rural sustainability.
Join the Co-op

Join the Co-op as a Shopper
Click here to join so you can purchase from the cooperative.

Join the Co-op and register to sell
Want to buy and sell through the Co-op? First complete this membership form. Then
you will have the opportunity to continue to the producer application.

Current members register to sell (you will need to login first)
Click here if you have products you would like to offer for sale and you're already a
member.

Gift Memberships
Click here if you would like to purchase a membership for someone. (You don't need to
be a Food Co-op member to purchase a gift membership.)

If you've already registered
If you've registered as a member but haven't yet paid for your membership, click here.
   Steps in Organizing a Marketing
             Cooperative
► Identifya market, product or project
► Form a leadership group of potential
  members (steering committee)
► Authorize Feasibility Study
► Prepare a Business Plan
► Secure Legal Assistance
     ►Organizational   structure
     ►Liabilityissues
     ►Articles of Incorporation
   Steps in Organizing a Marketing
             Cooperative
► Contact CPA for financial advice
► Contact resource persons for advice
  regarding risk management
    ►Insurance  coverage
    ►Farm Liability
    ►Product Liability
    ►Risk analysis

► Holda meeting of potential members to
 determine interest in forming a marketing
 cooperative
   Steps in Organizing a Marketing
             Cooperative
► Conduct    a survey of producers to determine
  feasibility of forming a marketing
  cooperative
► Raise start-up capital
     ►Seed Contribution from members
     ►Grant Funding
             ► USDA Value-Added Producer Grants
             ► Nebraska Cooperative Development Center
             ► Foundations

     ►Loans
     ►Investors
   Steps in Organizing a Marketing
             Cooperative
► Compile  an inventory of current and future
  product availability and supply
► Present a financial analysis to potential
  members (CPA)
► Develop a marketing plan
► Hold a general membership meeting to
  discuss current plan and determine whether
  or not to proceed.
   Steps in Organizing a Marketing
             Cooperative
► Prepare  Articles of Incorporation
► File the Articles of Incorporation with the
  Nebraska Secretary of State Office in Lincoln
► Establish membership standards
► Prepare Cooperative Bylaws
► Hold a general membership meeting
     ►Adopt  Cooperative Bylaws
     ►Elect Board of Directors
     ►Board will elect officers of the Board
    Steps in Organizing a Marketing
              Cooperative
► Callfirst meeting of the Cooperative Board of
  Directors
► Board of Directors should elect officers
► Secure working capital as outlined in the
  Business Plan:
     ►Membership  / Stock Certificate
     ►Grant Funding
     ►Loan Funding
     ►Investor Funding
 Steps in Organizing a Marketing Cooperative
    necessary staff (Complete with
► Hire
 compensation package and job descriptions):
     ►Manager   of the Cooperative
     ►Marketing Representative
     ►CPA
     ►Attorney
     ►Logistical Coordinator
           ► Transportation / Shipping
           ► Storage
           ► Distribution of products

     ►CertifyingOfficer (Farms/Feed Facilities)
     ►Quality Assurance / Control Officer (Meat)
   Steps in Organizing a Marketing
             Cooperative
► Contract with buyers
► Contract with distributors
► Contract with shippers
► Contract with Cold Storage facilities where
  necessary
► Acquire facilities (if necessary)


► Begin   operations
Potential Problems
                      Pitfalls
► Lack of rewarding market
► Lack of a clearly identified mission
► Inadequate planning
     ►It is not enough for the cooperative to decide WHAT
      SHOULD be done -- it must also determine HOW
      THINGS should be done
     ►Detailed plans must be adopted to achieve the goals
      of the cooperative, and to accomplish the Co-op’s
      Mission
                      Pitfalls
► Lack   of “Member” Leadership:
    ►Input and prospective of producers is critical to the
     success of a cooperative.
    ►Role of producers should include contributing their
     knowledge and expertise.
► Lack   of “Member” Commitment:
    ►A  cooperative MUST have broad base support -- not
     just support of “leaders.”
    ►If members are not totally committed to the project,
     it will probably not succeed.
                          Pitfalls
► Failure   to use outside professionals:
     ►Advisors  and/or consultants.
     ►Farmers are experts at producing their products, but
      usually not experts in forming and operating a new
      cooperative.
     ►It is essential for a new cooperative to put together a
      team of outside experts:
            ► Attorney
            ► CPA / Accountant
            ► Financial Institution / Lender
            ► Insurance Agent
            ► Consultant familiar with the industry
                     Pitfalls
► Failure to supply the demand of markets
  being tapped.
► Failure to identify and minimize risk:
     ►Liability
     ►Competitors
     ►Governmental  regulations
     ►Environmental issues
     ►Industry trends
     ►Unproven technology/methods
     ►Employing competent staff
                      Pitfalls
► Inadequate    staff:
    ►Farmers   are usually engaged in the full-time business
     of farming.
    ►Farmers generally do not have the time, interest or
     expertise to manage a cooperative business.
    ►A competent manager MUST be hired to coordinate
     staff functions and direct business activities of the
     cooperative.
    ►Staff persons generally should NOT be active
     members of the cooperative.
                       Pitfalls
► Not   having enough capital:
    ►The  first few months in the life of a cooperative are
     very rough -- too many bills and not enough income.
    ►It takes time to turn a profit, so members should be
     ready to step in and cover the legitimate expenses of
     the cooperative.
    ►Operations will probably not show a profit for at least
     four to seven years (IRS figures an average of five
     years).
    ►A financing plan should be adopted early to be sure
     the cooperative can “weather the storm.”
                      Pitfalls
► Ineffective   or inadequate communication:
     ►Communication   is critical to the success of a
      cooperative venture
     ►Learn these points quickly:
            ► Who should know
            ► What should be communicated
            ► How should the message be communicated
            ► When the message should be communicated

► Overly  Optimistic Assumptions
► Failure to be a COOPERATIVE member of the
  group
Center for Rural Affairs
 Cooperative Marketing Assistance
   Available from the Center for
            Rural Affairs
    Marketing Alliances Project
           Partnership Work

► Center for Rural Affairs
► College of Saint Mary
► Creighton University School of Law
  Community Economic Development Law
  Clinic
► Rural Community Advancement Project
► Nebraska Cooperative Development Center
► University of Nebraska
       Marketing Alliances Project

► Articlesof Incorporation - Draft to be
  reviewed by an attorney
► Cooperative Bylaws
► Labeling assistance
     ►USDA  FSIS Approval assistance
     ►Form preparation assistance
     ►Linkage to personnel at USDA when necessary
     ►Linkage to label expediters when necessary
          Marketing Alliances Project
► Risk   Management Assistance
     ►Limitingliability of individual members
     ►Insurance explanation
            ► Farm Liability
            ► Product Liability

     ►Legal   structure
            ► Limited Liability Company
            ► Limited Liability Partnership
            ► Corporation
            ► S-Corporation

► Communication    assistance
► Facilitation of meetings
      Marketing Alliances Project

► Linkage   to funding sources
    ►USDA   Value-Added Development Grants
    ►USDA RBEG
    ►USDA Renewable Energy Grants
    ►USDA FMPP
    ►North Central Region SARE
     Nebraska Cooperative Development Center
    ►Private foundations
    ►Other USDA Grant programs
    ►Government grant sources
  Marketing Alliances Project
    Linkage to other collaborators
USDA Rural Development
College of Saint Mary
Creighton University School of Law Community
Economic Development Clinic
Rural Community Advancement Project
University of Nebraska Cooperative Extension
Nebraska Cooperative Development Center
Nebraska Department of Agriculture
Nebraska Rural Development Commission
Nebraska Department of Economic Development
RC&D Districts
      Marketing Alliances Project

► Marketing   assistance & training
► Feasibility/Pre-Feasibility Studies
► Market identification
► Business Plan Development
► Market Plan Development
► Linkage to existing professionals:
     ►Attorneys
     ►Insurancecompanies
     ►Accountants / CPA’s
     ►Lenders
           Other Center Projects
► Land   Link Project
    ►Michael   Heavrin and Wyatt Fraas
            ► Beginning farmer assistance
            ► Linkage between retiring farmers and new farmers

► Family   Farm Sustainable Agriculture Project
    ►Wyatt Fraas
    ►Martin Kleinschmit
            ► Farming and ranching practices demonstration
            ► Farming and ranching education
            ► Technical assistance for farmers and ranchers
               Other Center Projects
► Rural   Enterprise Assistance Program
         Reynolds
     ►Jeff
     ►Peggy Mahaney
             Eugene Rahn -- NC Nebraska
             Adriana Dungan – NE Nebraska & Hispanic BD
             Dena Beck -- SW and SC Nebraska
             Nancy Flock – SW and SC Nebraska
             Janelle Moran -- SE Nebraska
             Jerry Terwilliger – Panhandle
             Monica Braun – Women's Business Development Center
               ►   Business plan assistance
               ►   Technical assistance on all aspects of small business formation
               ►   Linkage to other small business
               ►   Meeting facilitation
               ►   Loan assistance
            Other Center Projects
►   Executive Director
        ►Chuck    Hassebrook
►   Rural Opportunities and Stewardship Program Director
        ►Kathie   Starkweather
►   Rural Research and Analysis Program Director
        ►Jon    Bailey
►   Rural Policy Program Director
        ►Chuck    Hassebrook (Interim)
►   Rural Enterprise Assistance Program Director
        ►Jeff   Reynolds
           Any Questions?

          Center for Rural Affairs
Rural Opportunities and Stewardship Program

              Michael Heavrin

         (402) 687-2100, Ext 1008
              mikeh@cfra.org
Renewable Energy and Energy
     Efficiency Program
                 Energy Programs
                   USDA RURAL
                  DEVELOPMENT
The Food, Conservation, and Energy Act of 2008

   Renewable Energy for America Program (Section 9007)
   Biorefinery Assistance (Section 9003)
   Repowering Assistance (Section 9004)
   Bioenergy Program for Advanced Fuels (Section 9005)
   Biomass Research and Development (Section 9008)
   Rural Energy Self-Sufficiency Initiative (Section 9009)
What is the Section 9007 Program?
 ► Designed  to assist farmers, ranchers and
   rural small businesses with energy projects
What is the Section 9007 Program?

► Provides   Grants & Loan Guarantees for:
      Renewable Energy Projects

                        and

             Energy Efficiency Projects
What is the Section 9007 Program?

► Plus   NOW provides Grant funding for:

     Energy Audits & Renewable Energy
  Development Assistance

                        and

             Feasibility Study Funding
What is the Section 9007 Program?
  ►   USDA has funded approximately 1,248 loan &
      grant projects worth $93,853,183 since the
      Program began in FY 2003.

  ►   For FY 2008, 1,157 applications nationwide were
      filed, requesting $1,205,714,554

  ►   Nebraska received 207 applications in FY08, 170
      received funding including 4 Combination
      Grant/Guaranteed Loans.
           Who is Eligible?

► Agriculturalproducers and rural small
  businesses can apply
 What Projects are Eligible?

► Any renewable energy and energy
 efficiency project as defined in the law.
      What Projects are Eligible?
► Renewable   Energy – Energy derived from:
     wind
     solar
     renewable biomass
     ocean (including tidal, wave, current & thermal)
     geothermal
     hydroelectric source
     hydrogen derived from renewable biomass or water
      using one of the above energy sources
      What Projects are Eligible?
►   Renewable Biomass – any organic material that is available on a
    renewable or recurring basis. Includes:

      Renewable plant material, including
         ►   Feed grains
         ►   Other agricultural commodities
         ►   Other plants and trees
         ►   Algae

      Waste material, including
         ►   Crop residue
         ►   Other vegetative waste material (including wood waste & wood residues)
         ►   Animal waste and byproducts (including fats, oils, greases, & manure)
         ►   Food waste and yard waste

      Materials, pre-commercial thinnings, or invasive species from National
       Forest System land & public lands (See Section 9001 for further definition)
What Projects are Eligible?

             ►Energy   efficiency
               projects typically involve
               installing or upgrading
               equipment to significantly
               reduce energy (BTU) use.
 What Projects are Eligible?

• Pre-commercial or commercially
  available and replicable technology
      Grant requests $200,000 or less,
        commercially available technology only

• Projects must be technically feasible

• Must have sufficient revenues to
  provide for O&M
    What Projects are Eligible?

► Energy   Efficiency Projects
   Energy Audit Required showing BTU Savings

► Renewable    Energy Projects
   Business Level Feasibility Study Required
     If TPC $200,000+
Business Level Feasibility
         Study
An acceptable feasibility study, completed by an
independent third party, should include, but not
be limited to, a discussion of the project’s:


         1.   Economic feasibility
         2.   Market feasibility
         3.   Technical feasibility
         4.   Financial feasibility
         5.   Management feasibility
        Grant Program

 Grant Request cannot exceed 25% of project
  costs

 Maximum grant request
   $500,000 for Renewable Energy
   $250,000 for Energy Efficiency


 Minimum grant request:
  $2,500 for Renewable Energy
   $1,500 for Energy Efficiency
      Grant Program


Applicant must demonstrate
 financial need

Competitive funding process-
 awarded only once a year!
 Guaranteed Loan Program

Guaranteed Loan cannot exceed 75% of
 total eligible project costs.

Minimum Guaranteed Loan = $5,000
Maximum Guaranteed Loan = $25MM

 Simplified Application process for loans $600,000 or less
   Guaranteed Loan Program

Maximum Percentage of Guarantee
         $600,000 or less = 85%
         $600,001 to $5 million = 80%
         $5 million to $10 million = 70%
         $10 million to $25 million = 60%

 Interest Rate set by Lender

 Guarantee fee = 1% of guaranteed portion,
   with annual renewal fee of ¼ of 1% of the
    guaranteed portion.

 No Prepayment Penalty
     Combination
Grant/Guaranteed Loan
Combination requests cannot exceed 75% of total eligible
  project cost

 Combo requests funded bi-weekly

 100% of eligible combo’s funded to date
   (One state has rec’d 88 combo awards for $6.8MM to date in FY2008)




By making an application for a guaranteed loan
 you help ensure yourself funding from
                          a grant!
    Guaranteed Loan Program
►   Guaranteed Loan Terms
     Real Estate
       ►30 years maximum


     Machinery and Equipment
       ►20 years or the useful life


     Working Capital
       ►7 years maximum
       ►Term W.C. Only, No Lines of Credit
    Guaranteed Loan Program
► Equity
     $600,000 or less = 15% Cash equity injection
     $600,000 - $25MM = 25% Cash equity injection

   Grant funds can be used as equity for Combo’s

   Real Property can be substituted for equity if pledged
    as collateral
     Guaranteed Loan Program
► Collateral

    Documented collateral value must be sufficient to
     protect the interest of the lender & the Agency.

    Discounted collateral value normally equal to loan
     amount.

    Collateral should be discounted with sound loan-
     to-value policies.

    Loans must have at least a parity position with any
     unguaranteed loans.
       Guaranteed Loan Program
► Appraisals

   $600,000 or less = Summary Appraisal in
    accordance with USPAP


   $600,000 + = Self-Contained appraisal
      BENEFITS OF COMBO’S
   Reduce competition among grant only funding!

   Quicker notification of award!

   Lenders can assist existing customers or attract
    new via combination application!

   Assist with Increasing Energy Independence!
               Contact Information


Grants assurance for local businesses & farmers
                       via Combination applications…..

       Quicker notification of funding…..

               Economic develop partnering with a local lender….

                                  Partner with
                       USDA RURAL DEVELOPMENT
                     Deb Yocum-Renewable Energy Coordinator
                                Ph. 402-437-5554
                            debra.yocum@ne.usda.gov
Energy & Community Food Systems

As the cost of energy continues to rise, it will
  become more and more important to reduce
  the amount of energy needed to grow,
  raise, process, package, label, store, ship
  and sell food products. Community Food
  Systems would dramatically reduce the
  amount of energy required to feed people in
  this country.
Energy & Community Food Systems

Nebraska, being a rural state with many miles
 of roads between food producers and food
 consumers, is blessed with an amazing
 resource that can be used for economic
 development and the production of an
 incredible amount of renewable energy that
 can assist the nation in providing enough
 clean, affordable energy from within our
 own borders – that resource is WIND.
Energy & Community Food Systems

Wind – clean, renewable, inexhaustible,
safe, and low cost energy. According to the
American Wind Energy Association, the
United States now generates 28,206 mega-
watts (MW) of electricity (March, 2009) –
that makes the USA Number 1 in the
amount of electricity generated from wind.
             Wind Energy
► The  potential wind energy generation
 capacity, however, is estimated at 10,777
 billion kilowatts (kWh) – more than twice
 the electricity generated in the United
 States today. Wind can generate electricity
 without consuming any natural resources or
 emitting any pollution or greenhouse gases.
               Wind Energy
► Nebraska    has the potential of generating
  868,000,000,000 kWh of electricity – 8.05% of the
  nation’s wind generation capacity and
  approximately 16.1% of the current total
  electricity generated in the United States.
► Nebraska ranks 6th among the states when it
  comes to wind generation potential.
► The state, however, now produces only 153 MW
  or 150,000,000 kWh of electricity from wind power
                 Wind Energy
Currently, the installed wind power state “gigawatt”
  club includes the following nine states (in order):
     Texas 7,907 MW
     Iowa 2,883 MW
     California 2,653 MW
     Minnesota 1,804 MW
     Washington 1,479 MW
     Oregon 1,363 MW
     New York 1,261 MW
     Colorado 1,068 MW
     Kansas 1,014 MW
Wind Energy
                  Wind Energy
Indiana keeps its title as fastest growing state with
  the large 400.3-MW project that was brought
  online. States tallying the most rapid growth in
  wind capacity in the first quarter include:
      Indiana 75%
      Maine 55%
      Nebraska 53%
      Idaho 49%
      New York 34%
   Wind Energy and
Economic Development
     In Nebraska
              Nebraska Wind
              Energy
              Conference

              Eric Lantz
              Energy Analyst
              NREL

              October 5, 2012
               A few prefacing points
►Economic Development Theory
►Economic development is driven by spending
and investment

►Economic  impacts cascade through the
economy providing direct, indirect, and
induced impacts

►The    rural nature of wind projects can
increase the benefit to rural regions but
project ownership and business involvement is
critical to ensuring benefits remain local.

►Analysis Themes
►Building wind power provides economic
development to Nebraska and the country

►Local  manufacturing is the single largest
factor that can influence the outcome of
economic development impacts, but project
ownership also matters.
  Projects currently under development are
 expected to have direct impacts in Nebraska
 Elkhorn Ridge Wind Energy Project – 82 MW
            Bloomfield, Nebraska
►15%   of the total $140 million investment is
expected to go to Nebraska goods and services
►Lifetime property tax payments: $5.7 million
►Land lease payments in excess of $325,000 per
year
►Work for more than 100 construction workers over
the 9-month construction period
►Project revenue payments to Nebraska individuals
and businesses that are at least 33% of gross power
production revenues
  Projects currently under development are
 expected to have direct impacts in Nebraska
  Crofton Hills Wind Farm – 42 MW
         Crofton, Nebraska
►Lifetime property tax payments: $3.2   million
►Work for 50 construction workers
►4 permanent jobs
►Landowner    lease and project revenue
payments in excess of $300,000 per year
►Project revenue payments to Nebraska
individuals and businesses that are at least 33%
of gross power production revenues
Building 1,000 MW supports thousands of
            FTEs in Nebraska
                                       Total Full Time Equivalents Supported by
                                   Construction, Manufacturing, and Related Activities

                           4,500
                                                                                 Induced Impacts
                           4,000
                                                                                 Indirect Impacts
   Full Time Equivalents




                           3,500                                                 Direct Impacts

                           3,000
                           2,500
                           2,000
                           1,500
                           1,000
                            500
                              0
                                      CBED High      Trad High      CBED Low        Trad Low


                                   Total GDP Contribution: $260 million to $514 million
Operating 1,000 MW supports hundreds of
       long-term jobs in Nebraska
                              Wind and Related Industry Jobs Supported
                                     by Wind Plant Operations

                     600
                                                                    Induced Impacts
                     500                                            Indirect Impacts
    Long-term Jobs




                     400                                            Direct Impacts


                     300

                     200

                     100

                      0
                           CBED High     CBED Low       Trad High         Trad Low




                           Annual GDP Contribution: $30 million to $55 million
      Lifetime* Results Summary
                                            Lowest       Highest
                                           Scenario      Scenario
           Total FTE Jobs                   64,000          117,000
           Total Economic Output
           (millions)                       $7,800          $14,100
7,800 MW   Total Land Lease Payment
           (millions)                        $547            $641
           Total property tax
           payments (millions)                       $570
           Total FTE Jobs                    7,600          14,500
           Total Economic Output
           (millions)                        $870           $1,640
1,000 MW   Total Land Lease Payment
           (millions)                         $70               $82
           Total property tax
           payments (millions)                        $73
     *Based on construction period and 20 years of operations
                   Conclusions
►Across all scenarios, the economic
development impact of utility-scale
wind power is large.

►Present trends suggest that the C-
BED development trajectory will
remain popular and may dominate
wind development in Nebraska.

►The   greatest economic
development benefits to Nebraskans
are derived under conditions where
local ownership is high and
manufacturers are located in
Nebraska

				
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