Solar Farm

[jazz]

Got approached by some Calgary company on behalf of Saskpower wanting a couple hundred acres for a solar farm.

financial terms $500/ac paid for construction. 30yrs lease with option to 50yr. Annual lease $600/ac.

Thats a lot of land out of production. But I think about that solar farm abandoned in Brooks that nobody can afford to clean up.

thoughts?

[AlbertaFarmer5]

Is the $600 indexed to inflation? Or fixed for the duration?

[jazz]

Is the $600 indexed to inflation? Or fixed for the duration?

1.5% annual increase

[LEP]

Things that I would want to address. The plan for property maintenance (weeds) and remediation at the end of the term.

Land use change means you will be taxed commercial by the RM. Income on rental income is something like 52%.

Really quick pv of the cashflow is around $2.6 million before all taxes. Likely closer to half that after tax. Definitely beats anything ag related.

Not sure if this is part of a larger ag business if you can get around the income tax thing somehow.

[Taiga]

Initial thoughts:
-that is less $/ac than a wellsite around here
-I would not lock that rate in for decades (30 years), you would want to negotiate inflation increases every 2-5 years
-yes ugly. If you don’t live on the land not as important but if you have a higher attachment to the land then then it doesn’t pay enough

[fjlip]

You make $$ but SK will never see a return on investment. Pray for no hail for 20 years

[13stripe]

Contact me for a private chat.

[LEP]

The more I think about it you should ask what rate increases they have in their contract with Saskpower and mirror that in your rent payment.

[LEP]

Rule of 72 means 1.5% compounded is a doubling in 48 years.

[shtferbrains]

For reference corn states pay $1200 ac from SM.

Probably influenced by government programs?

[poorboy]

Heard of a solar farm locally that they were selling the top soil off during construction and no weed control at all during the multi year construction.

Overall decent money today, but needs to be indexed to inflation, not a 1.5% annual increase with the government money printing press.

This income will all be passive income and get taxed at the highest rate.

[blackpowder]

Maybe talk to some out here.
I've been told the deals offered here were more money.
But income not guaranteed. Tied to power.
Land could be lost somehow if their creditors called.
Cleanup on you.
I'd be tempted. A living wage for life with no expense. I get it.
But dyod. I've heard some shady "contracts". Some have said when they sought council, were told contract arse wipe.

[AlbertaFarmer5]

And if the company goes bankrupt, you get stuck with the commercial rate property tax bill. Until the last piece of infrastructure is removed at your expense.

[AlbertaFarmer5]

Does Saskatchewan have the equivalent of the farmers advocate which we have in alberta? They are a wealth of information on this topic.

[jazz]

This is a French company Neoen Renewables with Brookfield as a shareholder so probably not a fly by night company.

Accountant said this is rental of a personally held asset so no corporate lease rates apply. Personal lease prices income taxed at marginal personal rates.

parents said just sell the land to them with the 30yr lease pmts added on and be done with it. CG is going to less tax in the long run than rent.