An Alternative Approach to Powering a Community

December 16, 2015

In September of 2013, Duncan-Williams, Inc. was the bookrunning, Co-Senior manager with Friedman Luzzatto of a $9,000,000 bond issue for this alternative energy project in San Antonio, Texas. The project was for the construction and operation of a landfill gas- to -electricity facility at a landfill (Nelson Gardens Landfill) owned by the City of San Antonio. The issuer, Mission Economic Development Corporation (“MEDC”), is a non-profit corporation, and is a public instrumentality of the City of Mission, Texas. MEDC is authorized to act on behalf of the city for the public purpose of promoting and developing commercial, industrial and manufacturing enterprises to promote the city. MEDC is authorized to issue bonds and loan the proceeds, which in this case, were loaned to Nelson Gardens Energy, LLC.

The City selected our client, Greenfield Energy, as developer through a RFP process in January 2010. At that time methane produced from the landfill was being burned through a system of flares. The alternative energy project proposed to capture the methane and use it to produce electricity that would in turn run electric engines. By eliminating the bi -products of the flare burning that previously went into the atmosphere, the project would produce a cleaner, “greener” environment for the community. It will also turn what was a waste product into a much needed income producing center for the City.

During the three year period between the RFP award and the issuance of the bonds, Greenfield proceeded to negotiate a Landfill Lease, Power Purchase Agreement, Interconnect Agreement, and purchase of the engines with the related maintenance and warranty agreements. Significant to the process was the engagement of a nationally recognized consulting engineering firm to do a gas study and feasibility study to support the economics of the project.

With the successful completion of the development activities, Duncan-Williams was able to introduce investors to a complete and thorough due diligence activity. This combined with a significant equity contribution by the principles of Greenfield, provided for successful credit analysis by institutional investors. The result was a successful sale of revenue bonds to a Qualified Institutional Buyer.

The merits of this bond issue for selection rise from two aspects. First it clearly demonstrates how our industry can intermediate between a Project and an Investor. The success was built upon delivery of a comprehensive compilation of diligence materials covering all aspects of the project. These were supported by executed contracts involving all of the ongoing participants. Second is the support provided to the renewable / green energy undertaking. Prior to the project, methane from the landfill was being burned into the atmosphere. The project turned this waste material into an energy asset. It supported the announced green energy priorities of the City of San Antonio.