# Presentation: 774988

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**Notes:**
Solicitation due to the Farm Security and Rural Investment Act of 2002, Title 9, Section 9006.  Designed to help ag producers and rural small businesses reduce energy costs and consumption.  

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**Notes:**
Ag producers will identify the gross market value of their ag products for the preceding year of submission of their grant application.  FY2004 grant application filed by 6/28/04 deadline, would identify 2003 gross sales from Schedule F.    Small ag producers with gross market value of less than $1MM in preceding year earn an additional 10 points in scoring criteria.

Total Gross Income = Gross profit plus cost of goods sold as reported on IRS Federal tax return forms.  Excludes net capital gains or losses and means the receipts of the concern over its last 3 years divided by 3 (the average) and includes the receipts of all affiliates.  Form 1120 Corps., 1120S Subchapter S Corp., 40 and Schedule F=farm, Schedule C = sole proprietor.  

NAICS:  North American Industry Classification System by Industry found in 13 CFR 121 or at www.sba.gov/size/sizetable2002.html.  Crop production = 750K annual receipts, logging = 500 EE, Electric Utilities = 4MM MW output annually (may be revised this year)

Rurality:  Anywhere in VT is eligible.  Parts of NH may be ineligible.

Cooperatives are eligible.  

## Slide 5

**Notes:**
If the applicant, borrower, or owner has an outstanding judgement obtained by the US in a Federal Court, is delinquent in the payment of Federal income taxes, or is delinquent on a Federal debt, the applicant is not eligible to receive a grant until the judgement is paid in full or otherwise satisfied or the delinquency is resolved.
SO will review the applicant’s financial position to determine need:  applicant’s explanation of need, cash position, other capital improvements planned in the short-term, operating history, proposal projections of 3 years pro forma financial statements.

Small business headquarters and the project to be funded must be located in a rural area.  If headquarters is outside VT, call me to determine eligibility.

## Who is Not Eligible?

-  Municipalities
-  School Districts
-  Nonprofit Corporations or entities formed solely for   charitable purposes

## Slide 7

**Notes:**
Commercial:  off the shelf technology, wind turbines, systems that have a proven operating history, anaerobic digesters, solar.  
Pre-commercial:  through R&D, but not yet commercially available, hydrogen.  

RE:  if grant request is over $100K ($400K project), requires project specific feasibility study and certification of technical requirements by licensed engineer.  F/S by a qualified independent consultant to assess the market, financial, economic, technical, and management feasibility of the proposed project.

EE:  if total project costs are over $100K ($25K grant request), requires an energy audit and certification of technical requirements by licensed engineer.  All EE applications must conserve energy equal to atleast the last 12 months usage and pay for itself with 11 years or less through energy cost savings.  

## Examples of Eligible Projects

- Post-application purchase and installation of equipment, except agricultural tillage and equipment and vehicles
-  Post-application construction or project improvements, except residential
-  Energy audits or assessments
-  Permit fees, Power Purchase Agreements
- Professional service fees, except for application preparation
-  Feasibility studies and business plans
-  Retrofitting
-  Construction of a new facility only when used for the same purpose, is same size, and will provide more energy savings than improving the existing facility
-  Only costs identified in the audit / assessment will be allowed

**Notes:**
Will need a Letter of Intent to Purchase Power, Purchase Power Agreement, or an Interconnection Agreement from the utility company where applicable.

## Examples of Ineligible Projects

-  Land acquisition
-  Capital leases
-  Working capital
-  Residential improvements
-  Agricultural tillage equipment
-  Vehicles
-  Preparation of the grant application
-  Waste Collection (includes parts of anaerobic digester)
-  Funding of political or lobbying activities
-  Operating, maintaining, routine repairs, or fuel costs for biogas or biomass RE projects

**Notes:**
No manure trucking or transportation of corn to ethanol plants.

Costs for energy audits, feasibility studies, business plans, permit fees, or architectural and engineering fees can be counted towards the 75% leveraged funds required from the applicant, after the 25% grant amount is deducted from these total costs the balance can be applied to the 75% leveraged funds requirement.

No start-ups for EE projects.  Program will not pay for last year’s wind turbine.

## More Ineligible Uses

-  Production, collection and transportation of energy inputs
-  Construction of a new facility except when used for same purpose, is same size, and will provide more energy savings than improving existing facility
-  Costs paid prior to an application being received by RBS, except for predevelopment expenses, i.e. F/S, audit
-  Grant recipients may not construct the facility, project, or improvement in total or in part, or utilize their own personnel and/or equipment

## What is Match Funding?

-  **Applicant must provide minimum 75% of eligible project costs to complete the project**
** ****Applicant in-kind and other Federal grant awards cannot be used as match**
**Third-party in-kind contributions up to 10% of the 75% match requirement will be allowed per Agency determination**

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## How Do I Apply?

-  **Applications currently being accepted for FY2004**
**	****- Deadline for applications is June 28, 2004**
** ****Full details available in the FY2004 NOFA at **_[www.rurdev.usda.gov/rbs/farmbill](http://www.rurdev.usda.gov/rbs/farmbill)_
** ****More information and assistance available from your State Rural Energy Coordinator**
**	****- Contact the state office where your project is located, or in the case of a rural small business, where you are headquartered**
** ****In VT and NH contact:**
**	****Lyn Millhiser, USDA Rural Development**
**	****Third Floor City Center, 89 Main Street**
**	****Montpelier, VT 05602**
**	****802-828-6069****	****	**_[lyn.millhiser@vt.usda.gov](mailto:lyn.millhiser@vt.usda.gov)_

**Notes:**
Application window is 75 days from date of NOFA announcement in Federal Register (4/14/04)

## Slide 14

**Notes:**
Intergovernmental Review:
NH – Yes:  Office of Energy & Planning, 57 Regional Drive, Concord, NH 03301, 603-271-1759 Ben Frost 
VT – Not applicable, although Franklin, Grand Isle and Windham Regional Planning Commissions must be notified of projects in their area.  Federal law requires USDA/applicant to notify RPC.

NOFA will be on website.
Forms, sample application, technical requirements on website.
SBA size standards online at www.sba.gov/size/sizetable2002.html
NAICS code for SBA size standards (North American Industry Classification Standard) by number of employees or by gross revenue.

## Filling out the Application

-  **NAICS Code for Rural Small Businesses to determine eligibility for program**
** ****SBA’s Small Business Size Standards by NAICS Code available online at **_[www.sba.gov/size/sizetable2002.html](http://www.sba.gov/size/sizetable2002.html)_
** ****Two complete copies of the Application submitted to**
**	****USDA Rural Development**
**	****Third Floor City Center**
**	****89 Main Street**
**	****Montpelier, VT 05602**
**	****Attn:  Lyn Millhiser, Rural Energy Coordinator**

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**Notes:**
Replicability:  Commercial and pre-commercial technology
TR’s conducted by staff at the National Renewable Energy Laboratory (NREL) in Colorado

Three main project reviews:  Financial (SO), Technical (NREL), Environmental (State Environmental Coordinator)

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**Notes:**
RE grant requests of $100K or more require a project-specific feasibility study

Total project costs over $100K require the services of a Professional Engineer

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## Energy Assessments for EE Projects

** ****Small Scope**
**     ****- Explain system boundary and describe system**
**     ****-Provide Utility bills and use/cost of energy information**
**     ****-Activity profile**
**     ****-Identify how EE measures will result in energy conservation**
**Large Scope**
**     ****-Formal energy audit**
**     ****-Detailed evaluation**
**     ****-Simple payback and life cycle costs**
**     ****-Indirect effects**
**     ****-Non-energy effects**
**     ****-Improvement metrics**

**Notes:**
Design and Engineering:  Consider complete system and identify secondary effects, identify component matching, provide statements and/or evidence that the system will work as stated

Development Schedule:  General schedule implementation, explain testing and shakedown schedule of energy efficiency improvements

Financial Feasibility:  All costs taken into account including audit/assessment, design and engineering, installation, operations and maintenance, decommissioning.  Identify historical and expected energy usage and associated costs.  List applicable local and state incentives.  Account for replacement and ongoing costs and potential change of energy costs.  Identify indirect costs such as extra construction.

O&M:  Training, manuals, preventative maintenance, replacement schedule, contingency, safety.
Decommissioning:  Identify disposal issues for equipment needing replacement.

Questions:  John Brown at NREL, 303-275-3615, John Brown@nrel.gov

## Technical Reviews

-  **Web page will provide sample Technical Reports for selected technologies**
** ****Small wind will be the first developed**
** **_[http://www.rurdev.usda.gov/rbs/farmbill/index.html](http://www.rurdev.usda.gov/rbs/farmbill/index.html)_

**Notes:**
The total input from a nonrenewable energy source for necessary and incidental requirements of the energy system will be determined by the technical reviewers.  Last year it was limited to 25% of the total energy input.

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**Notes:**
A good RE project will depend on the Applicant getting the support of the local community (consider public information meetings, level of controversy/NIMBY) and having a good site selected (consider accessibility constraints, providing mitigation of environmental impacts).

For anaerobic digestion consider air pollutants (carbon monoxide, nitrogen oxides and particulates), water quality (runoff, erosion, sedimentation), traffic/transportation (manure trucking paths), land use (archeological resources and zoning.

For wind consider endangered and threatened species and their critical habitat, wildlife habitat fragmentation, migratory birds, historic and archeological resources, aesthetics and noise, land use conflicts (property values, zoning), site access, transmission capacity and access, lighting and obstructions to aviation safety.

Also, need for visual assesments or simulation studies, prior ground disturbance on site, any Natie American Tribes affected, wetlands?

Class II actions have potential to significantly impact quality of human environment, produce a large amount of environmental controversy, negatively impact more than one resource area.

NEED to get detailed project and site description early and consult with other agencies early.

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**Notes:**
Applicants provide as much environmental detail as possible regarding potential impacts of project.  Think about the “big picture” and “spill-over effects” on human and non-human neighbors.

Environmental review must be completed prior to obligation with possible rare exceptions:
Cultural resource (section 106) studies conducted under a signed Programmatic Agreement or MOA.
ESA consultations with FWS for time sensitive studies.

NOTE:  PSS Director must be signatory for all environmental agreements for RHS and RBS.
Contact PSS for assistance:  Donna Meyer 202-720-1827
www.doe.gov or www.fws.gov

## Environmental Review Heads Up!

-  Buildings over 50 years old (historical)
-  Construction with digging in the ground
-  Exterior alterations
-  Wetlands, flood plains, or farmlands involved with new construction
-  Presence of hazardous materials
-  Large scale projects

**Notes:**
CatEx:  minimum change in use, size, capacity, weatherization, upgrade existing power lines

Class I:  Small scale, construction/expansion under 5 acres, on-farm non-ag projects under 10 acres with limited impacts, methane digesters for on-site use only, small wind turbines, solar panel installation

Class II:  Over 10 acres, affecting wetlands, large scale wind turbines, all commercial scale energy production (selling more than using), storage/production of hazardous materials.

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**Notes:**
Payback:  use inflation rate for payback calculations
Small Ag:  gross market value of ag products in preceding year of $1MM or less = 10 points

## Slide 25

**Notes:**
Payback:  have auditor use inflation rate for payback calculations

## Other Compliance Requirements

-  **Procurement Regulations (7 CFR 3015 Subpart S)**
**     ****-Open and free competition in all transactions regardless of dollar value and regardless if sealed bids or negotiation**
**     ****-Access to contractor records (and subcontractor records) and retention of records for three years after final payment is made and all pending matters are closed.  If audit, litigation or other action relating to the records is started before the end of the three year period, the records must be retained beyond the three year period until all issues are resolved.***
**     ****-Equal Employment Opportunity clause required in contracts in excess of $10K provision**

**Notes:**
*The contractor to place the same provision in any subcontract which would have to have the provision were it awarded by the recipient ($10K contract).  

$10K contracted amount requires formal written contract (includes grant amount and in-kind contributions from contractor) and includes compliance with Equal Employment Opportunity.  Construction contracts require Agency concurrence prior to awarding the contract and certain contract provisions are spelled out in the regulation.

$25K contract amount requires Open and Free competition for both vendors/procurement and consultants if consultant has significant impact to the project.

Applicant will need to explain and demonstrate how they selected vendors and consultants if application identifies who they will be using.  Investigate atleast 3 open and competitively.

## Other Compliance Requirements

-  **Planning and Performing Construction / Development (7 CFR 1924A)**
**     ****-Projects less than $100K use 1924.1 – 1924.12**
**	*****Low cost / simple design (small wind and small solar)**
**     ****-Projects greater than $750K use 1924.13**
**	*****High cost / complex design (large anaerobic digesters)**
**     ****-Projects with Higher Cost / Simple Design (large wind) will work with SO to determine procedures**
**     ****-Projects with Lower Cost / Complex Design (small anaerobic digesters) will lean towards 1924.13.**
** ****Grant recipients are not authorized to construct the facility, project, or improvement in total or in part, or utilize their own personnel and/or equipment.**

**Notes:**
Small wind and small solar are simpler because they are usually pre-engineered by the vendor, including installation, design, specifications and instructions.  These are mature technologies.

Energy Efficiency is a mature technology, i.e. simpler.

Simple projects breaking the $100K threshold may still use 1924.1 – 1924.12, although some judgement as to the complexity and what sections are applicable will be required by SO until project cost reaches $750K.

7CFR 1924A  regulation is a bear:  13 sections, Exhibits A-M, Guides 1-4, Total of 300 pages, 21 references to manuals, 15 references to handbooks, 6 references to circulars.

Additional compliance requirements:  American with Disabilities Act (ADA), Civil Rights Compliance, Insurance requirements

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## Lessons Learned from 2003

-  **Developing Your Project**
**     ****-Build a strong project team**
**     ****-Contact your SO Rural Energy Coordinator early for environmental review and assessment**
**     ****-Contact your Utility Company early if you wish to interconnect to the grid**
**     ****-Recognize this is a long-term project that requires a long-term commitment including reports during and post-construction, financial management, Civil Rights Compliance Review(s), disposition requirements, possible liens or other Notices of Record to indicate USDA’s interest in the property**
**     ****-Evaluation criteria are important in getting an award.  Think about tailoring your application to the NOFA.**

**Notes:**
Disposition Real Property:  expire 20 years from date of final grant disbursement
Disposition of Equipment:  expire at the end of each item’s useful life

Reports during construction:  quarterly financial status and project performance (progress, how $ used to date, schedule, etc.)
Reports after construction:  Periodic reports to Grantor and inspections by Grantor for both RE and EE for first three years and two years respectively.  (Quantity of energy produced, environmental benefits, costs to O&M, problems, etc.)

## Lessons Learned from 2003

-  **Tap other VT Financial Resources**
**     ****- Vermont Solar and Small Wind Incentive Program**
**	****1.  VT Energy Investment Corporation, 877-888-7372**
**	****Average 40% total installed system costs not exceed $12,500 for partner installers and $7,500 for non-partner installers**
**	****2.  VEIC Energy Efficiency Grants, 802-860-4095**
**	****Average 25% of eligible project costs and energy audits**
**	****3.  USDA NRCS EQIP, 802-951-6795 x227**
**	****Farm methane digester projects related to Ag Waste Structural Management.  Maximum FY2004 grants $250,000.  Program would consider FY2005 funding at this time.**
** ****Tap other VT Technical Resources – see handout**

**Notes:**
FY2004 Ag Waste Structural Management:  $4.5MM available

## Lessons Learned from 2003

-  **Tap Other NH Financial Resources**
**     ****-NH Public Utilities Commission code provides for net metering, which permits homeowners to receive credit for excess electricity generated from solar cells or wind turbines**
**     ****-State law grants municipalities the option to exempt certain RE installations from property taxation.  As of 2002, 57 municipalities have elected to exempt at  least one type of RE installation.  Check with your local tax collector or assessor.**
** ****Tap Other NH Technical Resources**
**     ****-NH Office of B&I Development, Roy Duddy, 603-271-2591**
**     ****-NH Energy & Planning, Jim Taylor, 603-271-8009**

## Slide 32

**Notes:**
75 day application window from NOFA publishing in Federal Register:  4/14/04 solicitation = 6/28/04 deadline

FY2003 = 2 months to select the awardees

All must be obligated by 9/30/04

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## Submit Proposals in VT and NH

**Lyn Millhiser, Rural Energy Coordinator**
**USDA Rural Development**
**Third Floor City Center**
**89 Main Street**
**Montpelier, VT 05602**
**802-828-6069**
- _[Lyn.millhiser@vt.usda.gov](mailto:Lyn.millhiser@vt.usda.gov)_