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Iowa Energy Center Board Minutes - May 2020

State of Iowa
Iowa Energy Center Board
Meeting Minutes of May 21, 2020
Virtual Meeting Only

Call to order 1:01 p.m.

Board Members Present Timothy Whipple, Board Chairperson* Stuart Anderson* Robert Berntsen* Jennifer Johnson* Valerie Newhouse* Dan Nickey* Joel Schmidt* Geri Huser* Gul Kremer* Rick Olesen* Nathan Young*

Board Members Absent
Jenae Jenison Debi Durham

Iowa Economic Development Authority Staff Present
Brian Selinger* Amber Buckingham* Stephanie Weisenbach* Ryan Young* MK Anderson* Kanan Kappelman* Terry Roberson* Lisa Connell* Alaina Santizo* Emily Hockins* Derek Folden* Betty Hessing* Vicky Clinkscales*

Others Present
Brenda Biddle, Iowa Utilities Board Staff* Brad Vander Linden, Broadway Storage, LC and Hickman Storage, LLC*
*Participated virtually

Welcome & Introductions by Board Chairperson Timothy Whipple

Roll Call by Betty Hessing, Administrative Assistant
A quorum was established. All Board Members were present except Jenae Jenison, Debi Durham and Valerie Newhouse**.

Consideration of February 20, 2020, Meeting Minutes
Motion by Motion Second Voice Vote Rick Olesen I move approval of the February 20, 2020, minutes. Dan Nickey All ayes in favor. Motion approved.

Public Comment Period – No comments.

Fiscal Update (Attachment A)
Presentation provided by Terry Roberson. At the February meeting, we had already received the FY 2020 IUB rate transfer. One item of note is there is going to be one rescission on the loans that were awarded previously and that is the loan for Johnson in the amount of just over $25,500. That will be updated on the August report. Total loans awarded is $25K out of $1.5M so it is a small amount. Terry Roberson asked if anyone had questions.

Chairperson Whipple asked why we are rescinding that loan. Terry Roberson replied that he did not think he had returned the agreement yet and there is some question on whether he is going to proceed with the project.

Waiver Request (Attachment B)

Broadway Storage, LC
Lisa Connell explained this is an applicant for the loan program that does not meet the requirement of Iowa Administrative Code rules 261-405.3(1)(a) and 261-405.3(1)(b) that all members of the LLC be Iowa residents. (Brad Vander Linden joined meeting.) For this applicant, there are two of three members who are Iowa residents. Certain criteria must be met for us to waive an Administrative Rule. Lisa Connell laid those out in her report. The most relevant is the requester needs to show a hardship and they also need to show that granting the waiver is in the public interest. This Board had decided when it created that rule that the greater public interest was ensuring complete Iowa ownership for any applicants. Lisa Connell also pointed out that this body considered a substantially similar request about a year ago and this Board said “no” so that also factored into Lisa’s recommendation. We want to treat similar requests similarly.

Lisa Connell asked if there were any questions. Chairperson Whipple asked Lisa Connell to talk about the recommendation of the Loan Committee. Lisa Connell stated that in addition to her recommendation to deny the waiver request, the Loan Committee also made that same recommendation.

Brad Vander Linden had a question on the Loan Committee’s decision. On the merits of the proposal itself and the expansion of the solar rays at that facility, did the Loan Committee have an opinion on that? Chairperson Whipple replied the recommendation of the Loan Committee was that it be denied for reasons that Lisa explained. Lisa Connell included all documentation to Board that was provided by Brad Vander Linden regarding “information known to the petitioner regarding the Authority’s treatment of similar cases” and “petitioner’s response to Counsel’s Recommendation to Deny”. Mr. Vander Linden stated that is the 3 purpose of the waiver process—to set aside a rule and that is something the Board could do at its discretion. Mr. Vander Linden stated the major objection point is they have a family member who lives in Texas who is not a managing member and is a silent partner. Otherwise, two-thirds of the control of the business is here and those members are primary Iowa residents. Chairperson Whipple replied the Loan Committee did review the application material Mr. Vander Linden provided and the Board is uncomfortable with waiving the rule requirement and is concerned that the public interest cuts against it as much as it does for it. The Board is concerned about the precedent set from waiving it and treating applicants equally. The recommendation of the Loan Committee was not to approve the waiver. Mr. Vander Linden stated the larger Board does have the discretion if they feel the public interest is well served by the amount of carbon emissions they are going to reduce. That should be a very important factor in the Board’s deliberations and the benefit the public interest will receive from that.

Chairperson Whipple asked for discussion among Board members. Dan Nickey asked what the documented hardship was. Lisa Connell replied she did not see that there was one. The claimed hardship is ineligibility for the Loan Program and that would not meet the legal criteria. Dan Nickey stated the award would benefit one-third of the LLC, which is out-of-state. Chairperson Whipple and Lisa Connell agreed. Rick Olesen stated that they have talked about the Loan Program in the past and there is ample capacity for financing for these projects so Mr. Olesen wasn’t sure if a hardship could be demonstrated that way—that you couldn’t access capital from another source. Chairperson Whipple replied that a year ago we discussed trying to pair eligibility with tax credit programs and keep similar projects eligible. The State has struggled with use of tax credit programs in the past by out-of-state residents and there has been substantial concern expressed about that. Those are some of the underlying policy reasons in the rule which we would have to set-aside if we waived that rule.

Brad Vander Linden explained their business would be putting in 50% of the capital so they would have a lot of skin in the game compared to Windstrom Hybrid, LLC. Mr. Vander Linden stated it also makes their business more sustainable. They will be able to achieve true net metering at this facility if they can obtain the loan. It would be very beneficial to their business and their bottom line. We will be the off user so we will be the one using the power. Chairperson Whipple asked if that was the last point he wanted to make from his perspective on the application. Mr. Vander Linden said it was.

Chairperson Whipple asked for a motion unless there was further discussion from Board. Motion by Motion Second Roll Call Geri Huser I move to deny the Waiver. Rick Olesen Yes: 9 No: 0 Abstain: 1 (Robert Berntsen) Motion approved.

Alternate Energy Revolving Loan Projects
**Valerie Newhouse joined via teleconference at this point of meeting.

Stephanie Weisenbach stated in this cycle the applications were due on April 9th and five applications were received. One of them was the application that was 4 previously discussed related to the waiver. Two of those applications also withdrew from consideration. One was due to other financing that the applicant preferred to use and the other one was due to their inability to secure eligible collateral. There are two applications on the agenda for your consideration. The first company is Hickman Storage, LLC and the second one is Loree and David Miles. Stephanie Weisenbach gave an overview of each project. There were no questions or comments from Board.

Hickman Storage, LLC – 43.6 kW Solar Project (Attachment C)
Motion by Dan Nickey Motion Motion to accept the Loan Committee’s recommendation. Second Gul Kremer Roll Call Yes: 10 No: 0 Abstain: 1 (Robert Berntsen) Motion approved.

Loree and David Miles – 51.5 kW Solar Project (Attachment D)
Motion by Rick Olesen Motion Motion to accept the Loan Committee’s recommendation. Second Stuart Anderson Roll Call Yes: 10 No: 0 Abstain: 1 (Robert Berntsen) Motion approved.

Geri Huser had a question about the application process. Her question was, “If an applicant applies and we find out that one-third of the ownership is from out-of-state, can they amend their LLC and still obtain eligibility for this application process or do they have to re-apply?”

Stephanie Weisenbach replied that we have not encountered that situation before, but technically, the application process—IowaGrants—is capable of being modified. We do let applicants know if a component of their application is ineligible while we are in the review stage, so in theory they would be able to offer a correction. We do let people know it is ineligible as our initial determination, but we have not seen any interest or question on that front. Chairperson Whipple stated he has always assumed that people could take a look at the rules and restructure their LLC if they need to and want to proceed that way.

Geri Huser stated that if she heard correctly, we do inform them that they can amend it so the applicant would have had that opportunity. Is that correct? Stephanie Weisenbach stated that what we do in IowaGrants is if we see something that we believe could be changed, we open it up for correcting status so that is a part of the procedure. I would not have assumed that changing the LLC structure in this situation would occur. Geri Huser thanked Stephanie Weisenbach.

Chairperson Whipple thanked Stephanie Weisenbach and Loan Committee team for how smooth this quarter’s applications were handled and he liked the financial analysis that is now being provided. Good job.

Grant Program Grant Program Update — Presentation provided (Attachment E)
Amber Buckingham gave an update on the Grant Program and an overview of the pre-application process thus far. On February 6th we sent a pre-application press release to inform people that the pre-application would open on February 20th. This press release was sent to all applicants last round; anyone who had contacted us to express interest in participating in this round; stakeholders; and to the IEDA Communications press release list. We also updated the website with a Pre-application Guide and Handbook after they were approved at our February 20th Board meeting. The original submission deadline was March 19th and at that point, we had received 63 pre-applications. On March 23rd we made the decision to temporarily halt the review process due to the impact of COVID19. During that time, we put a note on the website if COVID-19 had impacted an applicant’s ability to apply for the Grant Program. We did have four applicants reach out during the halt indicating that COVID-19 had prevented them from completing their pre-application by that March 19th deadline. On April 20th we reopened pre-applications in IowaGrants to allow people impacted by COVID-19 to apply again with a deadline of May 1st. Only two of the applicants who contacted us submitted pre-applications during the additional two weeks provided. Despite the additional time we allotted, we did have the other two applicants reach out to say that they were still unable to submit their pre-applications so we told them they would have to apply during the next round of grant funding if they were interested in participating in the program.

With this round, we have a total of 65 pre-applications and $18,662,529 in funding requests. We have $4,000,000 available so we will obviously have to make some drastic cuts. The applicant type this round consists of 16 private businesses; 7 nonprofit organizations; and 42 University/College applications. The business and nonprofit sector do make-up 35% of the pre-application pool. While academic institutions do remain the highest applicant type, we do have all three regent institutions represented this round and one private college.

Amber Buckingham gave an update on the timeline of the Iowa Energy Center Grant Program. On June 10th, the Grant Committee will meet to discuss the preapplications. IEDA has completed their initial review and forwarded recommendations on to the Committee. On June 11th we will send out full application invitations to selected applicants and denial E-mails to those who will not move forward. The full application submission window closes on July 24th; on July 27th IEDA staff and the Grant Committee will begin the review process of the full applications. On September 2020, we will have a special telephonic Board meeting to approve the Grant Committee’s recommendations for awards.

There were no questions for Amber Buckingham. Dan Nickey thanked Amber and her team for putting together such great documentation and summary of all the applications for our Committee to review. Great job. Other Committee members agreed.

Other Business - Director’s Updates
Brian Selinger reported on a project that we are excited about, which we supported and funded out of other Energy Office funding resources. It is the development of an assessment of the “Economic Potential for Energy Storage 6 in Iowa”. Our contract and consulting firm, Synapse Energy Economics and SlipStream Consulting, L.L.C., are making progress. On May 22nd we have a call scheduled with those two consulting firms and with the members of the Iowa Energy Storage Committee—those are employees of your companies and organizations, so you’re well represented there and we really value their inputs in the process. We are excited to have that call tomorrow; we are going to talk through some methodology and answer some questions those Committee members have. The goal is for this final assessment to be completed and made publicly available in the Fall timeframe. We see value in them presenting their findings to both the Energy Storage Committee and to the Energy Center Board at one of those future Fall Board meetings.

Chairperson Whipple stated that was great news and he looked forward to that.

Dan Nickey asked if future meetings will be in-person or virtual. Brian Selinger said we will keep you posted on how the August 6th Board meeting will be held.

Chairperson Whipple asked if we could combine the August 6th and September meetings. Brian Selinger replied we will talk off-line. It depends on Stephanie’s cycle on the loan side versus the revised grant cycle.

Chairperson Whipple stated we do have to meet quarterly so we may not be able to let that slide into the next quarter.

Next Quarterly Board Meeting August 6, 2020, at 1:00 p.m. at IEDA/IFA, 1963 Bell Ave., Suite 200, Helmick Conference Room, Des Moines, Iowa OR Virtual

Chairperson Whipple asked for a motion to adjourn. Motion by Geri Huser Motion I move to adjourn. Second Timothy Whipple Adjourn 1:42 p.m.

Respectfully Submitted, Betty Hessing, Administrative Assistant

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