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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 - 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

Jim Jones

Power Generation Business Lead

April 12, 2013

payments
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
Disbursements
  • Single lump sum
  • Fixed annual sum
  • Fixed bi-annual sum
  • Share of the revenue from project operation
payment rates
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
Additional Factors
  • Level of potential wind production
  • Price of energy
  • Geographic location
  • Land Characteristics
key terms
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
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
personal considerations
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
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 cont1
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?
negotiation tips
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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