1. Community LLC Driven Solar Electricity Development

2. Why Develop Solar Electricity via Community LLCs? Allows entire community to meaningfully participate and materially benefit in the renewable energy economy Minimizes risk; many hands make for lighter work Provides a deeper understanding of where electricity comes from and its full cost to “We, the Ratepayers”. Allows Americans a greater and more democratic voice in energy policy creation and electricity generation Provides tax benefits to all community members, not just most the affluent Communities can proactively and significantly reduce environmental/creation degradation

3. How does it work? Community members form a Limited Liability Corporation to purchase and develop the solar electric system Affluent community members and/or businesses join the LLC and invest the money to purchase and install the system The money provided by affluent community members and/or businesses is returned via tax credits (65%), MACRS depreciation deductions (28% - 35%), and the sale of electricity generated by the system (10% - 18%) over the the LLC's first 6 years. After 6 years, all tax benefits have been realized and the system is sold (“flipped”) to the remaining community members at a significant discount - around 65%. Any oustanding expenses and monies provided by the initial investors are returned via this sale. The system continues to generate green, renewable energy for another 20 – 30 years.

4. LLC Formation Recruit community members to form the LLC and pay for the project The LLC will need enough affluent members to pay for the system and its installation. Affluent members must also be able optimally utilize the tax credits; possess a larger “tax appetite” The LLC will need enough community members to purchase the system at the 6 year sale/”flip” Community members will likely need to engage a lawyer to assist in the formal papers required for the LLC's formation There will be other fees associated with the LLC's formation

5. System Purchase, Installation, and Tax Benefit Collection/Realization: the LLCs First Six Years. Ideally the system will be purchased, installed, and operational with in the year the LLC is formed The solar electric system will need to be sized large enough to provide sustainable income to the LLC over its lifetime; likely 10 kW or larger Just before the solar electric system is operational, a Power Purchase Agreement (PPA) will need to be reached; i.e. how will the LLC sell the electricity generated by its solar electric system. Possibilities include: NC Green Power, Blueridge Electric Membership Corporation, New River Light and Power Accountants will likely need to be engaged to handle the tax work necessitated by the LLC's tax benefits and their alotment to its early stage members/investors. Accountants will likely be required to determine the tax benefit “fitness” of the LLC's early stage members/ investors.

6. System Purchase, Installation, and Tax Benefit Collection/Realization: the LLCs First Six Years – Continued...  To utilize MACRS depreciation deductions, LLC members/investors will need to be “materially participating”, North Carolina businesses, or possess passive income  LLC members may need to have personal accounting expertise to determine whether their tax situation is appropriate for investing during the LLC's first 6 years  LLC members believing they are a good candidate for early stage investment in the LLC will want to make sure that their participation in the LLC will not trigger the Alternative Minimum Tax (AMT) as this could severly limit or reduce the tax benefits they receive  The LLC will need to pay taxes on the electrictiy generated by the solar electric system, insure the system, pay property taxes on equipment, etc.

7. The Sale/”Flip” of the Solar Electric System Later stage community members will have 6 years to gather funds for the discounted purchase of the solar electric system The sale/”flip” price of the solar electric system will need to be large enough to cover all remaining expenses incurred by the LLC, a return on investment (ROI) to the early stage investors, but not so large as to eliminate a ROI to the later stage community members/investors The ROI for the later stage investors may need to be larger as they will assume the operations and maintenance for lion's share of the solar electric system, approximately 20 – 30 years

8. Further Reading, Helpful Resources AIRE's Solar Electric System Pro forma Estimator: http://aire-nc.org/pv-pro-forma/ Windustry's Community Wind Toolbox: http://www.windustry.org/CommunityWindToolbox Davenport, Marvin, and Joyce – a North Carolina accounting firm with expertise in renewable energy tax benefits - http://dmj.comhttp://dmj.com TS Designs Solar Electric System Tax Example - http://tsdesigns.com/solar-payback/