Developers looking to site their next project often seek out opportunities offered by private parties and may be overlooking those available from state and local entities. Leasing from a public entity is not without its own complexities, but with proper planning and strategy including understanding their unique approval procedures, timelines and politics, a partnership with a municipal landlord is certainly worth considering.
Here are 5 key considerations:
1. Public-owned land can be an unexplored and fruitful opportunity for siting
Hundreds of millions of acres of land in the United States (nearly 40% of the country) is owned by federal, state and local governments. In some states, like Alaska and Nevada, the figure is over 80% which can mean significant opportunities for entrepreneurial energy developers to encounter lesser explored opportunities. While it is true that significant public land is set aside for preservation in national and state parks, recent efforts demonstrate the push toward having public lands opened for clean energy development, especially solar.
2. Understand typical RFP processes and procedures
Negotiating a lease with a private party is familiar; approaching a municipality or understanding how governments invite developers to propose uses for municipal land is unique. Cities, states and local governments all operate differently and have different layers of personnel that might be involved in crafting a lease agreement. Even determining the right person to contact for an initial inquiry into the municipality’s interest in leasing land for energy development can be difficult. Luckily, government bodies are by definition public; there is really no substitute for face time at town hall, where you will find the clerks, managers and administrators that work behind the scenes and make things happen.
Making it happen usually starts with a public announcement from a municipality that there is a piece of unused land that is available for development. Even though it might not immediately seem like it is “procurement,” the act of leasing land from a municipality is often done through a Request for Proposal (RFP) process which is simply a structured method for a city or town to solicit and evaluate proposals from vendors for goods or services. The process will vary from entity to entity, but more than likely the state has developed some basic guidelines for how an RFP must be done and what must be done to avoid ethics or conflict of interest issues.
3. Factor in the timetables that public entities tend to run on
A developer could come across a parcel of land they think is suitable for development, determine the owner, approach them with certain lease terms, and in theory execute a lease agreement within days or weeks. Don’t have that same expectation with a municipality — build into any development timeline additional time for the municipality to approve and execute the contract. Most cities and towns operate on a fiscal year basis. Depending on the size of the municipality, you could expect significant delays waiting for internal approvals, passing public meeting requirements to discuss the lease or obtaining a vote by local residents. Understanding local politics and political processes is crucial.
4. When municipalities act as landlords, most (but not all) rules apply to them
If all works out and you ink a deal with a city or town, keep in mind that they are viewed differently in the eyes of the law. As a baseline rule, governments operate on the principle known as sovereign immunity — an immunity from being sued based on the idea that the government cannot be brought before its own courts. That said, every state and the federal government has adopted statutes known as Tort Claims Acts and has developed bodies of law for when, how and for what the government can be sued. Especially in the contracting context, municipalities are generally not immune from suit; but certain causes of action like intentional misrepresentation might not be available because of the municipality’s immunity. Developers can benefit from doing extra diligence before executing a lease as well as engaging an attorney who practices in the jurisdiction where the land will be leased.
5. Local politics can be a recurring theme from inception to wind down
As the saying goes, all politics is local. Negotiating with a private party certainly has its nuances and challenges, but when dealing with a town, you are also dealing with the townsfolk and the people that they elect. Public opinion on renewable energy changes over time and the geographic area in which you are looking to site a project can play an important role. Elections have consequences; what was once a popular lease agreement on the verge of being executed can change overnight after an election of a new mayor or city council. While a good public relations operation is important generally for renewable energy developers, if you engage in leasing with municipalities, the importance of maintaining cordial and cooperative town relations cannot be overstated.
Overall, public lands represent an incredible opportunity that often goes untapped because of a lack of awareness about its availability or hesitation about a public-private partnership. However, with proper planning and understanding of local politics, developers can make use of a largely underutilized resource in their own backyards.
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