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TIPS FOR LANDOWNERS CONSIDERING LEASING LANDS FOR WIND OR SOLAR DEVELOPMENT PowerPoint PPT Presentation


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TIPS FOR LANDOWNERS CONSIDERING LEASING LANDS FOR WIND OR SOLAR DEVELOPMENT. Jim Jones Power Generation Business Lead April 12, 2013. COMPENSATION. Payments. Generally two payment schemes within a single lease agreement One for the Development Term and one for the Operational Phase

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TIPS FOR LANDOWNERS CONSIDERING LEASING LANDS FOR WIND OR SOLAR DEVELOPMENT

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TIPS FOR LANDOWNERS CONSIDERING LEASING LANDS FOR WIND OR SOLAR DEVELOPMENT

Jim Jones

Power Generation Business Lead

April 12, 2013


COMPENSATION


Payments

  • Generally two payment schemes within a single lease agreement

  • One for the Development Term and one for the Operational Phase

  • Development Term payment is typically a smaller retainer


Disbursements

  • Single lump sum

  • Fixed annual sum

  • Fixed bi-annual sum

  • Share of the revenue from project operation


Payment Rates

  • Based on when you receive payment; up front vs. deferred

  • Number of acres on the leased parcels and/or

  • Number of turbines, feet of transmission/collection lines, and/or length of road placed on your property


Additional Factors

  • Level of potential wind production

  • Price of energy

  • Geographic location

  • Land Characteristics


THINGS TO LOOK FOR IN A LEASE AGREEMENT


Key Terms

  • Landowners should not have to pay anything to be in a lease unless they have equity in the project

  • Landowners may be locked into exclusivity for an agreed period of time; can’t enter into another potentially competing lease

  • Default, cure, & termination rights for both parties should be clear in the contract

  • Transition of ownership


Key Terms (cont.)

  • Landowner should assume no financial responsibility for the project itself

  • Landowner input into the development plan

  • Contract will generally have a limited term of viability

  • Access and land use terms


THINGS TO CONSIDER BEFORE ENTERING INTO A LEASE AGREEMENT


Personal Considerations

  • Understand the fine print!!!

  • Contract should be viewed as a long-term relationship that will last for decades.

  • Each payment scheme has its pros and cons.

  • Are your stipulations clearly documented.

  • Do you feel you are part of the development process.

  • Understand how and where the facility will be sited.


Personal Considerations (cont.)

  • Understand the payments and how they stack up to payments in the region.

  • How does the rate of return compare to the risk you are assuming?

  • Understand your insurance and tax liabilities associated with the increased value and potential land use change.

  • Does the Developer have adequate liability insurance and are you liable for anything associated with the facility?


Personal Considerations (cont.)

  • Understand tax payments associated with lease payments.

  • Understand that the public may scrutinize the proposed project.

  • Contract terms may require confidentiality.

  • Under the timeframe of the proposed project.

  • Is this a real project or is the Developer just trying to tie up the property?


TIPS FOR NEGOTIATION


Negotiation Tips

  • Your agreement is an integral part of the potential success of the proposed project.

  • Don’t make unreasonable requests; conversely, there are plenty of reasonable requests.

  • Ensure that progress is being made.

  • Understand how the proposed project will fit in with your current and anticipated land use.

  • Make timely decisions.

  • Get help.


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