Better Plan, Wisconsin

From Five Questions to Ask Before Signing a Wind-Energy Lease

Source: Corn and Soybean Digest

March 15, 2012

1. How will the lease affect my farming operation?

A commercial wind project needs about 60 acres of land per megawatt (MW). But only 3% of that area — roughly three acres — is occupied by turbines, substations and access roads. The rest is a buffer zone to preserve wind flow. The lease should clearly state your rights to use the land for farming, grazing, development of subsurface minerals, hunting or other uses, Jambor-Delgado says.

Despite a relatively small footprint, a wind project can significantly affect farm operations, efficiency and production, says Dwight Aakre, North Dakota State University Extension farm management specialist.

Turbines and access roads can change field configurations, disrupting row orientation and creating inconvenient end rows or land fragments inaccessible to large equipment.

Field-drainage patterns may be altered. Center-pivot irrigation systems can be blocked. On grazing land, fences, gates and cattle guards may have to be changed.

“Aerial crop spraying is often an issue,” Aakre says. In the north, snow plowing can cause headaches for growers. “Those access roads have to be kept open, and if the snow piles up in the field it can take a long time to melt in the spring, delaying or preventing planting.”

Farmers should raise agricultural-production issues in the initial contract talks, says Dean Retherford of Halderman Farm Management, Lafayette, IN. Retherford has helped negotiate leases for several wind projects in northwest and west-central Indiana, involving 39 wind turbines on farms he manages.

“We learned to request input on the location of roads,” Retherford says. “And the wind companies found that landowners were more of a help than a hindrance” in site decisions, he says.

The lease should clearly state how you will be compensated if land is taken out of production or crops, livestock, soil or other property are damaged during construction or operation. On one of the farms Retherford manages, for instance, a crane crushed half a mile of brand new 12-in. tile.

2. How long will the lease tie up my land?

Wind-power leases often last 50 years. The long lease period is necessary to give the developer time to earn a return on the huge up-front investment needed to build a wind farm.

The initial lease term is usually 25 years — the expected life of a turbine. Wind-power leases also include a renewal provision, extending the contract for another 20 or 25 years. The decision on whether to renew the lease is almost always the tenant’s exclusively, Ferrell says. “Landowners don’t have any say.” However, some leases may allow landowners to renegotiate the commercial terms at renewal time. “This is where collective bargaining is a very helpful tool.”

Wind leases will probably affect your estate plans, too, he adds, so it’s a good idea to include your heirs in the discussions.

3. What are my obligations under the lease?

The lease will prohibit you from doing anything that obstructs the flow of wind over the surface of your property.

This includes restrictions on the height and location of structures such as barns, grain bins, cell towers, even houses and trees. In some cases, Ferrell says, the lease may prevent you from improving your property without permission from the wind company. “If you have improvements planned for the property, get approval for them” before you sign the lease, he says.

That goes for drainage upgrades, too, says Retherford, the Indiana farm manager. Wind farms often include underground power lines. “If you’re thinking of installing pattern tile in the next 10 years or so, do it before the turbines come.” After the project is built, you will need advance permission to maintain or repair tile, he adds.

You must also avoid damaging the wind-power structures. Vehicular accidents, fires or other mishaps can result in big losses, which may not be covered by your personal and farm-liability policies, Aakre says.

You will probably need to buy additional insurance to satisfy your indemnification obligations, Ferrell says. “This is especially important if you lease the property to hunters.” He adds: Increased insurance requirements for the landowner should be factored into compensation negotiations.

 Likewise, the developer should indemnify you from damage claims arising from the tenant’s use of your land, Jambor-Delgado says.

Wind-power leases may also affect your obligations under other land agreements, she says. If the property has a mortgage, for example, you may need your lender’s consent to enter into a wind-company lease.

The lease should address the payment of debts secured by the land as well as placement of new liens on the property, she says.

Be wary of lease provisions that require you to personally obtain subordination agreements from your creditors, or that prevent you from using your land to secure future credit, Ferrell says.

A wind lease may also affect your eligibility for government farm programs, Jambor-Delgado says, so don’t sign a lease before checking with the appropriate agencies.

4. How will I be compensated?

Lease payments can be structured in many ways, including:

            •fixed payments based on acreage, towers or megawatt capacity;

            •royalty payments based on a percent of gross revenue;

            •or some combination.

All the wind-lease payments that Dean Retherfordhas negotiated are based on gross revenue per turbine. Each 1.5- or 3-MW turbine earns an annual royalty payment of $5,000 and $8,000, he says. The wind companies pay property taxes on the commercial facility, but not on the leased land.

Most wind-power leases today provide for similar royalties based on revenue, Ferrell says — typically 3-5% of gross earnings. The contract should clearly spell out how your payment will be calculated.

For example, if your royalty is 4% of gross revenue, how will gross revenue be defined? Does it include only the sale of electricity, or does it also include revenue from the sale of tax credits or renewable energy credits? Will your payment be based on revenue from the turbines on your land alone, or on average revenue for the entire wind farm? What can be subtracted from gross revenue? Can the wind-power company deduct for power lost during transmission or for periodic curtailments?

Leases that include a royalty should also set a minimum rent that will be paid whether or not the turbines are generating power for sale, Ferrell says. In addition, many royalty leases now include an “escalator” provision raising the royalty percentage at specified intervals. This arrangement can be a good deal for both the developer and the landowner, he says. During the early years of the project, the company can recover its initial costs faster. In later years, the landowner shares in a greater percentage of profits.

Royalty leases should always include an audit provision, Aakre says, which allows access to the company’s financial records “to verify the revenues produced by the wind farm.”

5. What happens when the project ends?

“A frequent fear of landowners is that the developer will default or dissolve, and the landowner will be left with huge, inoperable machines” littering the property, Ferrell says.

Such fears are not unfounded, Aakre says. “It’s a real risk.” North Dakota’s relatively weak reclamation law, for example, “permits turbines to stand idle so long that the company could be long gone.”

Your lease should provide for the removal of the wind farm structures and roads when the project is finished and restoration of the soils, Aakre says. The lease should outline your rights if the wind company doesn’t fulfill its obligation. Some agreements require a performance bond from the developer to ensure that money is available to pay for decommissioning.

Land reclamation is one of the most difficult parts of a wind-power lease negotiation, Retherford says. Although the towers have significant metal salvage value, they require specialized cranes to dismantle. And the massive foundations are expensive to remove.

“Each turbine has 40 yards of concrete in the foundation. One company wanted to grind the concrete down to 6 ft., but we negotiated removal down to 8 ft. so you could tile over it.” Benton County, IN, where the project is located, requires wind companies to deposit money in an escrow fund to pay for the reclamation, he adds.

Types of wind-power property agreements

There are several types of legal agreements that give developers access to your land and wind, says Jennifer Jambor-Delgado, a staff attorney at Farmers’ Legal Action Group, which has published a book on wind-power leases (www.flaginc.org). Farmers should keep in mind that “once you have a written agreement with a developer, that agreement controls” the rights and obligations of both parties, she says. “Any verbal agreements can’t be relied on if they are not written into the contract.”

Property agreements used to develop a wind farm include:

• Option: Gives the developer the right to lease the land at an agreed-upon price, subject to agreed-upon terms.
• Access Easement:Allows the developer to travel across your property and construct roads to reach turbine areas.
• Construction Easement: Gives access for construction of turbines and support equipment, as well as temporary “lay-down” areas for equipment and machinery storage.
• Transmission Easement: Allows developer to construct and operate underground and above-ground transmission lines and substations.
• Wind Non-obstruction Easement: You agree not to construct any improvements that could interfere with wind speed or direction.
• Overhang or Encroachment Easement: You agree to allow turbine blades to overhang your property, even if the turbine is not on your land.
• Noise Easement: You agree to allow a certain level of noise from the turbine.
• Covenant:Binds later purchasers of the land to abide by certain restrictions.
• Lease:Creates a landlord-tenant relationship for a set period of time allowing tenant the exclusive right to use the property. If the landowner wants to retain rights to use the land, such rights must be specifically stated.

Sources: Shannon Ferrell, Oklahoma State University; Windustry; Farmers’ Legal Action Group, Inc.

The photos below were taken by Jim Bembinster. They show how farmfields have been fragmented by wind turbines and access roads in WeEnergie's Columbia County wind project. What they don't show is the compaction of the soil from heavy machinery. Compacted soil affects crop production. Contracts signed by farmers in this project gives WeEnergies the right to site the turbines as they see fit.

CLICK HERE To read about a farmer whose land was leased to WeEnergies for this project and what has happened to his life and his farm since then.

From Minnesota:

SEVERAL LOCAL LANDOWNERS WANT OUT OF WIND CONTRACT

By Regan Carstensen,

SOURCE The Republican Eagle, www.republican-eagle.com

November 21, 2011 

“Those landowners a lot of times are making decisions based on what the wind folks are saying,” said Jaime Edwards of the Minnesota Department of Natural Resources. “If they had both sides of the story, they may not have signed the contracts.”

AWA Goodhue Wind has faced many battles in its journey toward getting a permit for a wind farm in Goodhue County, and another one is about to ensue.

A handful of participating landowners who agreed to be part of the 78-megawatt wind farm are now anxious to get out of their contracts and have sent what they call a letter of termination to AWA Goodhue.

AWA Goodhue officials declined to comment.

In addition to a long list of other reasons, the landowners — who asked not to be identified — said realizations about possible effects on the area’s wildlife caused them to want out of the project.

“Those landowners a lot of times are making decisions based on what the wind folks are saying,” said Jaime Edwards of the Minnesota Department of Natural Resources. “If they had both sides of the story, they may not have signed the contracts.”

Mary Hartman, a Rochester resident, has been monitoring the project footprint because she’s concerned about the area’s ecosystem and how it will be affected by more than 45 wind turbines.

Hartman has been in contact with some of the landowners who are looking to void their contracts, and she said she has been helping them see how she thinks a wind farm could be putting migratory birds — especially eagles — in harm’s way.

“The people who signed didn’t necessarily know that they had to be concerned about this,” Hartman said.

She said that the topography of land — including the rolling terrain and proximity to water — within the project footprint is ideal for eagles and allows them to soar on warm wind currents in the valleys. But Hartman is worried the construction of a wind farm might disrupt their usual flight paths.

“When they want to come out of the ridge, if they’re surrounded by wind turbines they’re going to get hit,” she explained.

DNR officials share Hartman’s concerns.

“It’s nice to try to use alternative energy, but we are right on the Mississippi Flyway,” Edwards said. “You really have to look hard at whether something like this should be placed on a flyway.”

Edwards also said that although the project has fewer than 50 turbines planned, once one moves in, she expects more are likely to follow.

“It’s the American way — if one wind turbine is good, then 200 must be better,” she explained. “But is it really?”

Edwards traveled out to and studied the project footprint in order to provide assessments of any potential impacts to the non-game wildlife there.

Hartman also has had her fair share of bird watching in Belle Creek Township, including a time she pointed out eagles’ nests to officials at Westwood Professional Services, a company that AWA Goodhue hired to assess the project’s impacts on the environment.

Westwood’s technical director of environmental services, Ron Peterson, compiled a report in June about observations he made with Hartman in May, and concluded there were many fewer eagles and nests in the area than she had seen.

He reported that of the 12 nests Hartman said she had previously observed, six did not exist, one was abandoned, one was new but in an uncharacteristic location, three had been previously recognized by Westwood and one was a duplicate reference to an already known nest.

During her most recent trip to Belle Creek Township on Wednesday, Hartman said she saw more than 15 bald eagles in the project footprint. And although the likelihood of seeing them is higher now that it is migration season, Edwards of the DNR said the eagles would be hard to miss at other times of the year as well.

“There’s no way that you cannot see eagles in that area. They were all over the place,” Edwards said of the numerous times she’s studied the area.

In addition to the research done by the DNR, U.S. Fish and Wildlife Service has done studies of the project footprint and made recommendations to AWA Goodhue on how to best avoid negative impacts to the birds.

USFWS can’t do much beyond those suggestions.

“We can’t bring enforcement against anybody until there’s a documented take of a migratory bird or an eagle,” Rich Davis of USFWS explained.

Davis said AWA Goodhue has not applied for an incidental take permit. Without the permit, the company could face a significant fine upon the death of an eagle from a wind turbine collision.

“If they are actually prosecuted for that and found guilty of the take from their project, they would not be eligible to pursue (an incidental take) permit in the future,” he said.

Any additional eagle deaths from wind turbines would result in more substantial fines, Davis said.

Wind farms and wildlife: The heartbreak of the Horicon

Wind farms and Bats:

How are bats being killed in wind farms?

WIND FARM CONSTRUCTION VIDEOS

Video of what kind of changes a wind turbine brings to a farmer's fields.

Trenching and electrical cables

Access roads and soil disturbance

Torn up roads and compacted soil

Heavy equipment and cranes compact soil

How big are the shadows cast by industrial scale turbines? What do they look like? Why are they a problem?

What is shadow flicker like on houses in Wisconsin wind projects?

 SECOND FEATURE

RESIDENTS SAY STATE RULES FOR WIND FARMS LACKING

SOURCE: Sun Journal, www.sunjournal.com

August 19 2010

By Eileen M. Adams

DIXFIELD — Panelists and townspeople at a public hearing Wednesday night blasted what they believe are insufficient state regulations to govern the half-dozen or so wind farms proposed for western Maine.

The hearing was sponsored by the River Valley Alliance and the Friends of Maine’s Mountains, groups that oppose such developments. Other groups, such as the Friends of Spruce Mountain in Woodstock, were also at the hearing.

Among the panelists was Robert Rand, an acoustical engineer from Brunswick, who described the potential effects on people of the sounds made by the blades and generators of turbines.

During much of his talk, he played a recording of a turbine operation he said was made at a small operation in Freedom.

Such noise, he said, has the potential to adversely affect people living as close as 2 miles from an operating turbine. He said the frequency and decibel levels could result in the inability to sleep, high blood pressure and other maladies.

Paul Druan, chairman of the Weld Windpower Committee that is charged with developing a wind farm ordinance, said that when he attended a similar forum with the sound of turbines turning, one man became nauseated.

Sean DuBois, whose residence was not immediately available, said he believed more studies should be conducted on the possible adverse health effects.

“Don’t you think it’s too early to judge health effects?” he said.

Rand said he didn’t think so.

“There are people in Mars Hill, Freedom and an island on the coast who definitely have problems,” he said. “I’m concerned about the lack of peer-reviewed studies by the companies.”

He said that sounds from turning turbines do not decrease as quickly over water as they do over land.

A home should not be located less than 2 miles from a turbine, and even then, the sounds could affect people, he said.

Also speaking was Karen Pease, a resident of Lexington Township which is next to the state’s largest proposed wind turbine project in Highland Plantation. Independence Wind LLC, whose principals are former Gov. Angus King and Rob Gardiner, have proposed construction of 48 turbines.

She spoke of the effect the siting of wind turbines could have on real estate. She said Maine doesn’t have a sufficient number of houses on the market to do comparable studies, but one done in Illinois showed at least a 25 to 40 percent drop in value for homes about 2 miles from a wind project.

“Some are a total loss,” she said.

Also, she said, wind developers are not being required to provide a bond for decommissioning turbines so that they could be taken down and the land reclaimed.

Dan McKay, a major player in the organization of the hearing, said that with the number of people who live in the River Valley area, building what he estimated to be about 100 turbines made little sense.

“Turbines are a chance to shut down the recreational opportunities in the area,” he said.

Nearly 200 proposed turbines are in various stages of development from the Rumford area to Highland Plantation. First Wind LLC of Newton, Mass., has proposed siting up to 19 turbines in Rumford and Roxbury; Independent Wind LLC is proposing the Highland Plantation project and 22 turbines in Roxbury; and Patriot Renewables LLC of Quincy, Mass., has proposed a total of about 50 turbines in Carthage, Dixfield, Canton and Woodstock.

McKay said signatures were being gathered on a petition asking the Maine Department of Environmental Protection to change the acceptable decibel level produced by turbines to 5 decibels above the ambient level in an area currently without turbines.

He said the signatures collected in several River Valley towns and Woodstock would be sent to the Citizens Task Force, which is circulating a petition statewide calling for more regulations on wind development.