Did Fox Islands Wind comply with federal disclosure requirements in its loan application?

The answer is: probably not. A recent article on the website, Renewable Energy World, recaps the financing arrangements that made the Fox Islands Wind turbine farm profitable for its investor, Horace Hildreth. There are plenty of questions, however, whether the project operators disclosed to the RUS, federal lending entity, likely problems with siting and noise associated with the project. Click, for the financing story:

Fox Islands Wind LLC

A 4.5 MW wind project (consisting of three GE 1.5 MW turbines) has been operating 12 miles off the Maine coast since November 2009. All electricity from the project is sold at cost to the Fox Island Electric Cooperative, a local provider. Installed cost of the project is $14.5 million, or $3,222/kW. A for-profit subsidiary was formed to own the wind project, Fox Islands Wind LLC. This entity raised $350,000 in seed capital by issuing contingent promissory notes. The project also secured a $9 million construction loan from the Cooperative Finance Corp., a non-profit cooperative formed to bolster the RUS’s loan programs. Around $5 million in tax equity investment came from a local business in exchange for a 99 percent interest in Fox Islands Wind LLC.

Permanent financing includes the $5 million equity contribution as well as a $9.5 million, 20-year loan from RUS. This term loan repays both the $9 million construction loan and the $350,000 (plus interest) in promissory notes. The vehicle for the term loan is a Federal Finance Bank loan guaranteed by the Agriculture Department.

Once the project began commercial operations in November 2009, the tax equity investor benefited from the 30 percent ITC as well as accelerated tax depreciation. Structural requirements limited the investor to depreciation deductions for the 2009 tax year. It will maintain its ownership interest, however, for at least five years to avoid ITC recapture. At the end of five years, the electric cooperative hopes to buy out the equity investor’s interest.


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