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9/15/2010 2:45:00 PM
Wind power contract dos, don'ts spelled out for Fulton County landowners

Christina M. Seiler, Rochester Sentinel Managing Editor

Wind energy companies are looking at the Fulton County area and if they come knocking at the door, there is much for the landowner to consider.

Four such companies have indicated an interest in Fulton County. One has approval for a test tower near Indiana 110 and U.S. 31 on land owned by Dale Overmyer.

County planning and zoning officials are rewriting the Fulton County wind ordinance so they're ready when - and if - development begins.

Curt Emanuel, a Clinton County extension educator who's seen 17 wind development companies approach land owners in his county in recent years, spoke to 60 people at a Grass Creek wind energy seminar Monday. The seminar was hosted by Purdue University Cooperative Extension Service.

In Clinton County, three developers enticed enough landowners to sign contracts for large-scale wind energy projects.

The first one to gain county approval has 33,000 acres under contract but hasn't started construction yet, Emanuel said.

He stressed that landowners approached by wind development companies should remember they are tying their land up for 30 to 60 years. Talking to an attorney and to other landowners is critical in the landowner's research process, he said.

He suggests landowners form an association and keep each other informed. Doing so can have big financial advantages, he said.

"He's going to show up with a 40- to 50-page document and a honkin' big amount of details in there," Emanuel said of the development company's representative.

Leases with wind energy developers usually are in three phases.

The first is an option, when the developer casts a wide net for a big block of ground. Options can be one to 10 years and the landowner could be dropped by the company at any time. A meteorological tower could be involved. That gauges the wind to see if it's worth it to develop there. Options usually result in a per-acre payment, with $10 an acre being a good price.

Emanuel stressed the option lease can give the developer the right to install towers or transmission lines and the owner must be careful about the provisions.

An extended, or operating lease, is often included with the option lease. It sets out the long-term lease detail and payments.

Payments can come in many forms, Emanuel said. The lease will likely include a per-acre property payment; a turbine payment if one is installed there; a provision for payment for wind rights, per acre; easements provisions for underground lines, aboveground lines or access roads; any property use restrictions on the landowner; provisions for construction damage and compaction.

An extended lease is often included and gives the developer the right for a one-time automatic renewal. "If you sign a contract with a wind developer you typically sign for 40 to 50 years. They won't install that huge $2 million turbine without a guarantee," Emanuel said.

Some contracts include the payment of royalty fees, or a percentage of the gross energy revenues, to landowners.

Emanuel said all contracts should contain an escalator clause, so the landowner profits as the developer does when circumstances change.

Some landowners will be approached as the site of a staging area. Emanuel noted that's temporary, but does a lot of damage to farm ground.

Some may be approached for land for the maintenance yard. That's permanent, for the life of the wind farm.

Emanuel urged the landowners to think like a farmer and consider such things as at-grade access roads, tile repair and replacement, a turn-off period to accommodate aerial spraying and weed control at the base of turbines and access roads. He also suggested contracts should include what will happen when the wind farm is shut down or outdated.

Contracts should include a provision for the developer to pay increases in property taxes if the wind farm land is rezoned and a provision for the developer to cover liability insurance.

He said some landowners groups have instituted most favored nation status. The entire group gets the best payment negotiated by an individual landowner.

He also suggested landowner groups can insist on a balanced lease. That calls for all turbine payments to be pooled and divided equally at the end of the year so no single landowner is penalized if the turbine on their property breaks down or is turned off when demand is low.

Emanuel told Fulton County landowners not to be in a hurry when approached by developers.

"Do your research. Talk to other landowners. Take a road trip. Investigate the companies," he said. "Participate in the county processes."

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Editor, John C. DePrez Jr.; Executive Editor, Carol Rogers; Publishers: IBRC and IAR


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