Creating a profitable income stream with utility easement opportunities
By Quint Shambaugh, Principal Pinion Advisory Founding Partner DIGS Associates
Across the U.S. agricultural landscape, new cash crops are emerging: wind, solar and fiber. As the nation strives towards renewable energy and a green grid, we’re seeing an increase of opportunities for farmers and landowners to diversify their income with utility capital improvement projects.
The Inflation Reduction Act, which includes tax credits and funding for energy efficient improvements, will only increase the opportunities for surface and subsurface infrastructure. So, if you haven’t had an easement offer come across your property, there’s a chance you will. It’s important that when considering an offer, you take steps to protect your land and legacy.
How Landowners Can Protect Farmland and Create Advantages
“There is a way to diversify your land value while protecting your property and ag operations for years and generations to come,” encourages Quint Shambaugh, Pinion land advisory lead.
If you do receive an easement opportunity, here are three critical steps Shambaugh recommends you take to assess whether the offer is to your benefit:
- Inspect your current installed infrastructure. Before any improvements or changes are made to your farmland, have a professional inspect and geo-spatially document your current infrastructure. You want to ensure that your land operates better than before the company crossed your property. That starts with clearly understanding your current condition.
- Document depth and slope of installed subsurface infrastructure. Ninety-nine percent of farmland is drained with gravity flow solutions, so you’ll want to know size, depths, and slopes before construction.The wrong size, depth, or slope can greatly affect the quality and effectiveness of the subsurface solution. It’s also critical to document the exact geo-spatial location of the infrastructure, so the landowner can coordinate with the utility. If the utility infrastructure is installed in a conflicting manner with agricultural infrastructure, then remediation may not be possible.
- Incorporate future plans. Consider your future needs and how the installation may impact those investments. Will you need to install subsurface irrigation lines or subsurface drainage infrastructure, dig a ditch, or cut a waterway, remove a tree line or add a farm access road? All of these capital improvements could be affected by utility infrastructure or easements.
Land improvement easements can be a profitable income stream for farmers and ranchers. However, you want the right easement terms that consider your current infrastructure, your depths and slopes and your plans. Shambaugh also recommends landowners connect with an advisor through this process, “Working with a trusted advisor will not only identify a credible opportunity, but it can also help evaluate a financial strategy, negotiate lease terms and profitability, as well as protect land values.”