Some Important Suggestions for Farmers About Wind Power
Leases
Thinking about having some turbines on your land? Don't make a move
before considering these suggestions!
Meet with your neighbors. The wind company will be
approaching your neighbors. Meet with them and work together to gain
consensus about industrial wind installations in your area.
Paying for a lawyer.
Ask the wind power company to pay to have any agreement reviewed by a
lawyer who will work for everyone in the area. Find out what risks
you're taking before the fact - before it's too late.
Ask about transferability.
Add a clause that stipulates that the agreement cannot be transferred by
the wind company to any person or company without your approval. If the
company is truly in the wind business, they will be willing to pay you a
fee if the lease is transferred.
Be very concerned about
appearance. None of the leases we've seen address the
appearance of the turbines, but you might have to look at these things for
50 years.
- Add a clause that prohibits advertising on the tower
- Add a clause that stipulates that the paint color be
agreed upon
- Add a clause that requires the tower be painted
within 6 months of the appearance of rust or discoloration
- Add a clause that covers full and effective
reclamation of the site when all is done
Be mindful of building
restrictions. Attach a map of the property to the agreement
that outlines areas where new buildings over 6 stories tall can and
cannot be built.
Ask where the developer will
obtain his fill material. Under no circumstances should a
developer use fill taken from your land. They skim off good topsoil,
scarring your land and reducing crop capabilities.
Be sure you're aware of any toxic
gear oil storage on your land. Many wind towers have a
reservoir of toxic lubricating oil (PCPs) in the generator compartment.
You can (and should) prohibit the use of such oil in the lease.
Be sure your contact has an option
to terminate. Add a clause in your contract that stipulates
the contract is ended if construction has not started on a wind tower
within five years from the date of signing. Do not sign a contract
without a clear beginning and a clear end.
Payment Option. Set the
option payment at a minimum and escalating according to the value of
your land. The minimum should be at least $ 5,000, and the option should
cover annual payments while a test tower is in place, as well as crop
losses and any other related expenses. You should become an owner of the
wind data collected if no tower is built within five years.
Rent. Change the clause
with respect to rent so the percentage of gross income paid to the
farmer starts at 3% or more. Rent should apply to all income from the
project including green house gas credits, etc. Once the tower has paid
for itself the rent should increase. Change the rent clause so the
percentage of gross income paid to the farmer increases with the cost of
power or at set intervals of 2 to 5 years, so rent rates rise to about
10% over the term of the lease.
Insurance. Add a
clause stipulating that the wind power company must produce a
certificate of valid insurance covering liability to the farm and others
each year and that in any event it assumes full liability for all damage
caused by the wind tower.
Protect your capital value.
Add a clause requiring the wind power company to make whole any losses
in resale value that might occur as a result of the lease or a wind
tower being in place. If the wind tower effects your land value, losses
might not be covered by rent.
Your Other Rights. Some
leases have clauses that appropriate your development rights for
aggregates, ground water, top soil, sale outside of the family and even
your right to speak in public on wind power questions. Any such clause
should be stricken from the agreement.
Insist on a cooling off period.
Have a clause that states that either party may cancel the agreement
within 30 days without reason or penalty.
0ther Development. If
the property might be valuable for other development in the next 50
years, think. At most, sign a lease
that commits you for no more than 20 years if, for example, you feel
your land might be valuable for urban or other development. Such
development is simply not compatible with industrial wind farms, and
you're shutting yourself out of far more lucrative use of your land.
Power Sales. Stipulate
that you get to approve any contract for power sales. Without this
approval option in place, the power can be sold to a third party firm
held by the wind power company and the 3% rent you were hoping for will
3% of very little.
Insure reasonable times of access.
Stipulate that access to any wind turbine on your land is during
ordinary business hours and requires permission on weekends, at any time
or hour in an emergency and that the wind power company agrees to defer
any activity except emergency repairs that interfere with seeding,
harvest, calving, lambing, or other farm or family activities that are
time restricted
Area of Lease. Limit
the area covered by lease to a suitably small area – lease no more land
to the wind company than absolutely necessary. Remember, leasing means
control.
Insure that the agreement applies
to one lot only. Limit the agreement so it only applies to
the actual lot leased and that there is no reference to any other land
owned by the farmer.
Insure you are leasing wind rights
only. Do not allow any clause that gives the wind power
company a right of first refusal or an option for any purpose other than
the use of the wind. Such clauses encumber sales, wills, development of
other businesses, etc.
Term of the lease.
Suggest a 3-year option, 20 years for the first term of lease and 5 year
renewals to follow. These time frames provide company with enough time
to do tests and make profits and they bring the replacement date for the
generator and the lease renewal dates closer together, which improves
your negotiating position.
Assessment and property taxes.
The land owner is ultimately responsible for taxes – a clause to
require the wind power company to pay taxes associated with the wind
turbines is essential and it requires an enforcement clause.
You cannot afford their taxes unless you have
their income. In case of default, you should get the licenses
to produce and sell power.