Environmental Engineering Reference
In-Depth Information
In the minds of Hardke and Monkhouse, the benefits of offering above-
market lease terms were at least twofold. First, this approach was undeniably
helpful at the lease acquisition stage, persuading some landowners to sign
wind energy leases with Cannon rather than with competitors. However,
this strategy also paid some less-obvious dividends as project development
progressed. Hardke and Monkhouse knew that the 20-year relationship
forged between Cannon and its project landowners under these leases would
inevitably encounter some rocky moments: construction delays, last-second
document signings for financing closings, or other occasional challenges
were bound to arise. Generously compensating project landowners made
these lease relationships feel more like partnerships, promoting greater
landowner cooperation and patience when Cannon needed it most.
One other obstacle that Cannon faced in its leasing efforts was the
potential challenge of negotiating separate wind energy lease agreements
with more than 20 different landowners. The sheer number of lease agree-
ments was itself daunting: if variations were allowed in each one, how
would Cannon or its lawyers keep track of all of them? And how could
Cannon provide adequate assurance to each landowner that the specific
terms in its own lease were just as favorable as those in the several other
leases involved in the project?
The complexity of Cannon's wind energy lease agreement itself threatened
to make the leasing process difficult. To pass muster with Cannon's
large institutional lenders, the form agreement was quite lengthy and
contained several pages of “legalese” that was barely decipherable for many
landowners. Because most of the small-town lawyers who were likely to
represent landowners in these lease negotiations had minimal experience in
wind energy leasing, even they were likely to be intimidated or confused by
some provisions in the document. In the face of these difficulties, how could
Cannon persuade each of its several project landowners and their attorneys
that its lease agreements were reasonable and fair?
Cannon stumbled upon an ingenious solution to this predicament
while negotiating its lease with Goldendale Aluminum—another owner
of some of the windiest developable land in Klickitat County. Goldendale
Aluminum had operated an aluminum smelting plant on land near the
Gorge for decades. The plant had fallen onto hard times and shut down a
few years earlier. When Cannon approached Goldendale Aluminum about
the possibility of leasing its land for a wind farm, the company asked Brett
Wilcox to negotiate a wind energy lease on its behalf.
Wilcox was a sophisticated, experienced attorney and businessman
who had studied law at Stanford and had a strong reputation in Klickitat
County. Aware that county residents greatly respected the judgment of
Wilcox and Goldendale Aluminum, Cannon devised a plan to help ease
its leasing process for landowners. First, Cannon negotiated long and hard
with Wilcox on Goldendale Aluminum's wind energy lease, ultimately
agreeing to a reasonable lease document that was satisfactory to both
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