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CALCULATING WIND RIGHTS

CALCULATING WIND RIGHTS. ASSIGNMENT. Conservation Easement on 380-Ac. Dairy Farm Restricted Rights – Wind Energy Development & Some Development Rights Retained Rights – Development, Recreational, Agricultural. Property Description. Building Site: 2 Acres Tillage: 15 Acres

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CALCULATING WIND RIGHTS

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  1. CALCULATING WIND RIGHTS

  2. ASSIGNMENT • Conservation Easement on 380-Ac. Dairy Farm • Restricted Rights – Wind Energy Development & Some Development Rights • Retained Rights – Development, Recreational, Agricultural

  3. Property Description Building Site: 2 Acres Tillage: 15 Acres Pasture: 122 Acres Wetlands: 180 Acres Wasteland: 61 Acres Buildings: House, 5 Barns, Silos

  4. Highest & Best Use – Before • 9 Economic Units • All have existing road frontage • All have developable sites • Sizes range from 11 to 85 Acres • Sizes meet minimum zoning requirements • Sizes match market study results • Mix of sizes minimizes marketing time • 7 include wetlands (25% to 91%) • 1 includes building site and all buildings

  5. Before Valuation • Value estimated for each EU • Gross value of EU’s discounted for subdivision costs and marketing time to calculate net “Before Value” • Before Land Value includes potential for development, wind energy, agriculture, recreation and other “typical” ownership rights in neighborhood

  6. Acquisition • Extinguish Development Rights on 180 acres of wetlands • Extinguish Comm. / Indust. Wind Power Rights • Retained Rights • Agricultural • Rural Enterprises • Recreational • Rural Residential Development on non-wetland acres • Comments on Extinguished & Retained Rights

  7. Development Rights on Wetlands? What Development Rights Exist on Wetlands?

  8. Effects of Acquisition • Market Study revealed low demand for rural residential lots • Public utilities of only E & T • Town may extend water to subject’s frontage • Comm. / Ind. Wind Development Rights • What? • Potential? • Support for Value?

  9. Does Value for Wind DevelopmentExist? • Research found Value for Wind Development is Speculative • Average wind speed • Proximity of established transmission network • Local ordinances • Established demand

  10. Evidence of Wind Potential • Wolfe Island – 197.8-MW wind farm • St. Lawrence River, Canada (across from Cape Vincent) • 86 2.3-MW wind turbines • St. Lawrence Wind Farm (Acciona - proposed) • 53 1.5-MW wind turbines extending NE from subject • Cape Vincent Wind Power Project (BP - proposed) • 84 1.6-MW wind turbines extending E from subject • Horse Creek Wind Farm (Iberdrola – proposed) • 62 2.1-MW wind turbines to E/NE • Galloo Island Wind Farm (approved) • 84 3-MW wind turbines to SW in Lake Ontario

  11. How to Measure Wind Development Value?

  12. How to Measure Wind Value • Research in areas of established Wind Farms found no “Before” and “After” land sales • Leased sites • $3,000/site and up • $55/acre and up • $3,000 to $4,000 per MW of production • For local wind farms: $4,500 - $12,000 per site

  13. How Big is a Turbine Site? • Turbine site area ranges from 1 to 2 acres • What distance is required between sites? • Need to know tower height to tip of blade • Fall zone = tower height x 1.1 • 3-MW heights = ±600 feet • Fall zone = 660 feet • Circle or square fall zones

  14. How Big is a Turbine Site? • 660 ft. + 660 ft. = 1,320 feet diameter of circle or side of square • 1,320 ft. x 1,320 ft. = 1,742,400; ÷ 43,560 sf = 40 acres • 660 ft. x 660 ft. x π (3.14159) = 1,368,477 sf; ÷ 43,560 sf = 31.4 acres • Site lease actually commits an additional 30 to 39 acres • Allow for non-developable areas

  15. Other Density Requirements • Developers may require minimum distance between turbine sites (e.g. 1,250 feet) • Alignment of towers to minimize impact on wind patterns • Upwind wind patterns to be minimized • Topographic features

  16. Unit Site Rental • $4,500/site for 40 acres = $113/acre • $12,000/site for 40 acres = $300/acre • One source reported $55/acre minimum

  17. Valuation • Per acre unit rent • Deductions • Vacancy/Collection Loss • Landlord expenses • Land taxes • Management • Extra crop / pasture / access road costs • Net Income • Capitalization • Value per Acre

  18. Wind Energy Value for Subject • Available Subject Acreage for Wind Turbines • 380 Acres Total Subject Area • Less 180 Acres Wetlands • Less Wetlands Buffer of 15 Acres • Less 5 Acres Farmsite • Less 10 Acres Around Out-Parcels • Net Acreage of 170 Acres

  19. Wind Energy Value for Subject • 170 Acres x Net Rent Per Acre • Lease Term = 25 Years + Renewal • Discounted Cash Flow Analysis? • Direct Capitalization?

  20. Questions?

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