LAND OWNER OPTIONS: there are three basic methods for entering the wind industry. Each has a different profit potential, level of risk and amount of work required.

1. Lease your land to a wind farm developer (i.e. to GPP): This is the most common method.

   For most Land Owners, this path seems the easiest, yet delays in obtaining Financing, delays obtaining transmission rights and the entire due diligence process can kill a project and the Land Owner's dreams. While many wind farms are being built, the AWEA announced that wind farm funding in the Second Quarter, 2009 was half of funding in the First Quarter, 2009. T. Boone Pickens attempted this method and nearly went bankrupt when his funding sources pulled out. Land Owners who want to follow this path or who sign a lease with any wind farm developer should be aware that more often than not, nothing moves forward and five years from now, you still have no revenue.

   Advantages:

   1. Lowest amount of work.

   2. 5% of gross lease royalty

   Disadvantages:
   1. Requires 5,000 - 20,000 acres to attract investors.

   2. Many projects are ahead of you and investment capital is thin.

   3. Can take 3 - 5 years before you achieve revenue.

   4. Most of the time nothing happens. Until the global current economic crisis and recovery process is complete, investment in new projects is very thin and highly competitive.

   Result: A 2,500 acre spread with one turbine per 25 acres (flat land), or 100 turbines will cost $300M - $500M to build. Using the higher figure of $500M, and an anticipated gross revenue of 10% or $50M per year, the Land Owner(s) would receive 5% per year or about $2.5M per year.

   Note: Gold Pact Power (GPP) doubles this to 10% after turbine debt service is complete, so long-term revenue would be $5M per year.

   Note: GPP also donates 20% of our net profit back to local schools, youth and family agencies.

   

2. Form a corporation with your neighbors and other Land Owners: This is the most common question we get and our answer: "Its not as profitable as you might think!"

   Advantages:

   1. More control: Land Owners are part of the Wind Farm Board of Directors.

   2. Project Stock: You own 100% of your wind farm - we build and operate for you.

   3. Slightly higher profits, depending on facility performance: instead of 5% (above), if a wind farm owner (we are the designer/operator) expects 5% - 10% net profit, or $2.5M - $5M in our $500M example above.

   Disadvantages:
   1. Higher risk: Land Owners contribute their land to the corporation. This is can be 100% or only 2% - 10% of the actual project job cost - depending on who you listen to and learn from.

   2. Additional funding is required: the other Investors will also want stock in the company and will likely have controlling interest in the Board of Directors.

   3. If the project fails, the Land Owners could lose their land and end up with stock that is worthless.

   4. Can take 3 - 5 years before you achieve revenue.

   Result: A 2,500 acre spread with one turbine per 25 acres (flat land), or 100 turbines will cost $300M - $500M to build. Using the higher figure of $500M, and an anticipated gross revenue of 10% or $50M per year, the Land Owner(s) earning 5% (typical wind farm) of $50M or $2.5M per year, or 25% (reasonable average of a GPP designed wind farm) of $50M or $12.5M per year.

   Note: since the land was contributed to the corporation, the Land Owners would receive no rent royalty.

   

3. Form the bank with your neighbors and other Land Owners the funds the project: This is the most profitable method.

   Many people don't realize this, but the real winners in the wind farm industry are the Financiers (banks) that fund the wind farm project. This process is easier to complete than you might think.

   Advantages:

   1. No negative cash flow: If you use the GPP MTN method (developed with BTUBank), there is no out of pocket cost to the Land Owners that form the bank, except for the initial loan against their land to create the initial capital to start the bank charter process.

   2. Return of invested capita: If you use the GPP MTN method, your initial capital is returned in one year and all loans against your property are paid off.

   3. Lowest Risk: Projects are backed by the "Full Faith and Credit of the United States Government" through both DOE loan guarantees and the FDIC.

   4. Insured, bonded and collateralized: The "Bank" (you) is holding the title to the Fixed Assets (wind turbines) and other equipment for the loan. The loan is also backed by insurance, a construction performance completion bond and loan guarantees.

   5. Fastest time to Revenue: revenue typically begins in the 7th - 9th month.

   6. Much higher profits: instead of $2.5M (example above), the bank earns about $25M per year net profit, or ten times what land owners or the developer/owner earns.

      Complete control: your investment in your bank is in an account/vault you and your Board of Directors controls.

   7. Family run business: you don't have to know how to run a wind farm to run a bank. Your family (or Team of Land Owners) hires an experienced Bank Operations Manager, a CPA and an Attorney, forms a Board of Directors made up of people you trust, and funds a GPP project: its a straight-forward process that guarantees revenue vs. waiting for some other Financier to fund a project and hoping for revenue.

   8. You collect revenue from both your Bank Profits ($25M in this $500M project example), and from Leasing your windy land.

   9. Low entry investment required: Can be accomplished starting with as little as one section (640 acres) or 5,000 acres or more: the size of the Team you form is up to you.

   Disadvantages:
   1. More work than simply leasing your land: your Bank Operations Manager, CPA and Lawyer handle most of this for you, but you are paying them a salary/retainer/hourly rate. For this reason, it is suggested you pool at least 2,500 acres together to make it cost effective.

   2. Instead of giving your land to a corporation that builds the project, you are going to use a loan based on your land to fund a bank you own and thereafter, your bank will fund a project you do not own. You can't own stock in your bank and the project: that is illegal.

      You can own the entity (the bank) that earns the highest net profit in the wind farm business.

      The GPP method insures that loan is paid off in the first year, but during that period your land is acting as collateral to form your bank.

   Result: A 2,500 acre spread with one turbine per 25 acres (flat land), or 100 turbines will cost $300M - $500M to build and will require $6M - $10M in Land Owner Capital. This capital is returned in the first year.

   We suggest you develop the project in 3 - 5 phases. In this example, this can be broken down to $2M - $4M per phase. This is the capital the Land Owners will need to raise to open the bank they own and generally requires a Team of Land Owners to raise this much capital.

   Thereafter, your new bank will attract depositors. If you use the BTUBank method your Depositor Base (reserves) will build quickly by simply following a basic marketing plan.

   Within 6 - 9 months you have the capital to fund phase one of a $500M project. Revenue begins, the project you select is moving forward and any loans against your land that were required to charter your bank are paid off.

   Using the $500M example, based on a 5% net profit (spread between the interest rate of what the bank borrows the money for and the interest rate of what the borrower - GPP - pays for the loan), a $500M loan at 5% net profit yields $25M per year, net profit.

   In this example, a land owner with 500 acres (1/5th of the 2,500 acres) would earn approximately $5M per year.

   Note: since the land was not contributed to the corporation, the Land Owners can also receive the 5% rent royalty payments in addition to the stock they own in their bank.

   To learn more about the GPP MTN method
   that helps Land Owners form their own bank
   and earn TEN TIMES what a wind farm lease pays,
   please tell us about your windy land and community.