Wind Contracts

A Farmer's Perspective
Colette McLean Essex County

Please seek the advice of a lawyer before signing a contract

Wind Contracts
Ontario Federation of Agriculture www.ofa.on.ca/policyissues 2 ½ Dozen suggestions for Wind Power leases for Farmers Other sources www.windaction.org www.wind-watch.org

Wind Contracts
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2 components: Option agreement
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Usually for 5 years Payment usually of min. $1000 per year Once signed, grower is bound to the contract Developer can pull out at any time

Land Lease agreement
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Usually for 20 years, automatically renewed for additional 20. (some are up to 50 years) Revenues are based on % of sales, avg over all turbines in project area

Wind Contracts

Option agreement
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5 years can be considered a long time

inhibits other developments

Does not guarantee a turbine
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But can subject you to no setbacks to lot lines (transmission lines, roadways, switching stations and transformer stations)

Can subject you to other developments

Once expired, not in any way obliged to continue (Port Burwell)

Wind Contracts

Land Lease agreement − Lease not an Easement
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Easements are difficult to discharge only on land the turbine will be located Term of 20 yrs is due to Planning Act  may want more time & notice when renewal is due Revenues depend on SOA or PPA  (usually 2-3% or a straight outright payment/yr  $5,000 to $12,000/yr  Revenues during construction

Wind Contracts
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OTHER PITFALLS First Rights of Refusal on sale of land or on development or granting future rights

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Postponement of mortgage Construction Liens Maintenance & Location of Roadways Renegotiations of terms Arbitration for damages Indemnification for damages to turbine, worker safety, neighbours rights

(eg. gas, gravel, your own renewables)

Wind Contracts
PITFALLS (Continued)
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Property values – landowner & neighbour Effect on Financing?? Effect on landowners insurance?? Does developer have licenses(OEB), contracts(OPA), or rights of connection (Ont. Hydro) etc? − Wind Development has dominated all transmission capability in Ontario, no more room Is developer selling to a subsidiary? Is developer getting carbon credits? Will developer use your property for other activities (storage, fuelling (spills))?

Wind Contracts
PITFALLS (continued)  Removal costs - responsibility?
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Include all wiring, all of the foundation scrap value is limited, $30/tonne est.cost in Europe $1.3 million

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Bankruptcy – right to terminate Legal fees – developers cost Equipment removal

time should be stipulated

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Appearance of turbine Stipulate times for maintenance work How will disrupted lands be refurbished

(tiles, imported soil, loss of crops)

Wind Contracts
PITFALLS (continued)  May limit future construction (new barns etc)  Non Disclosure Agreements (Ripley)  Contracts are with off-shore developers  Change over of lease – notification
MAKE SURE EVERYTHING IS IN THE CONTRACT, developers tend to flip these projects for a profit, no guarantees that next developer will honour any agreements unless in writing.

Other Concerns for Landowners
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Stray voltage (Ripley, Goderich) Noise levels could be noted in contract − Manitoba, 65 db's Noise assessments do not include transformer noise & weather effects (Shears) Flicker (30 mins/day to max. 30 hrs/yr)-not regulated Potential Ground water issues Roadway accessibility, responsibility, maintenance Interference with Satellite, internet Lighting issues Spills Tree or obstruction removal

Other Concerns for Landowners SETBACKS

Setbacks are often reduced for landowners (250 metres)

Other Concerns for Landowners

Setbacks from lot lines - 50 metres.
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Vesta manual suggests a 400 m radius safety zone when turbine is in operation. GE recommends a 1.5 x turbine hgt + radius for ice throw Need to maintain farmer's normal activity Lightning strikes, Fires, collapses

Other Concerns for Landowners

Land must be rezoned to Light Industrial Developer needs to pay the tax difference
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Tax needs to go through landowner's invoicing - company than reimburses Taxes are capped @ $40,000/MW

Rated as business income (avg. income tax rate 30%)

Other Concerns for Landowners
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DO NOT GIVE UP YOUR RIGHTS Wind developers can often times appropriate your development rights for a long time as well as extend their rights as tenants. (eg. sell excavated soil, use your water sources) Who will control the land in the next 10, 20, 30 years – foreign corporations?? What will be the long term affect on rural Ontario? Many development are on prime agricultural lands with specialty crop capabilities.

Planning for Wind

Provincial Policy Statement stipulates that Ontario's long-term prosperity, environmental health and social well-being depend on wisely managing change and promoting efficient land use and development patterns. Efficient land use and development patterns support strong, liveable and healthy communities, protect the environment and public health and safety, and facilitate economic growth.