Inside a Windmill Lease

With the recent launch of Michigan’s first large-scale wind farm, in the Thumb region, and other wind farms in planning stages around the state, Michigan State University Extension has published a detailed worksheet for landowners who are evaluating whether or not to lease their land to a wind power developer.

While the document is undoubtedly helpful to landowners, it also provides fascinating insight into behind-the-scenes financial issues that will be playing out in rural Michigan in coming years because each lease point is annotated with advice and valuable context.

Staff at MSUE who have been working with farmers and other landowners developed the worksheet based on the most common and central issues they see families dealing with in their negotiations.

Download Landowner Guidelines for Evaluating Wind Energy Production Leases.

Here’s a sample question and answer:

Q. Does the lease specify who will pay the property taxes associated with turbine(s), other equipment, or any other improvements on the property?

A. The turbine(s) and any other associated improvements are likely to be considered improvements in the property and therefore subject to property tax. In some cases, contracts specify that the developer is liable for the property taxes associated with the wind project. If the landowner is to be liable for such tax increases, the compensation received by the landowner should reflect such an expense.

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