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Port authority weighs long-term lease to Ottertail Power for proposed solar farm
Summary
Fergus Falls City Port Authority members reviewed a proposal from Ottertail Power to option roughly 20 acres for a solar farm, including a $1,000 option payment, multi‑stage development schedule and a proposed $300-per-acre annual rent (starting after a five-year option period). Members directed staff to research market rents and ask the company to pay property taxes.
Members of the Fergus Falls City Port Authority spent the bulk of their meeting discussing a proposal from Ottertail Power to develop a solar field on roughly 20 acres of port-owned land.
Ralph, who presented the proposal, said Ottertail is seeking a five-year option period with a one-time $1,000 option payment, a five-year development term, a three-year construction window and then a 35-year operations term with two optional 10‑year renewals. "They are requesting an option period for five years," Ralph said, and if the company "pulls the trigger" the annual rent would begin after year five at the proposed $300 per acre with a 2% annual escalator.
The proposal, as described by Ralph, would let the port continue to receive current farm rent during the option period. He added that Ottertail has also expressed interest in purchasing the parcel outright instead of leasing it.
Members asked detailed follow-up questions. Mr. Nickel asked when the $300-per-acre obligation would begin; staff answered that payments would start after the option period (year six) and that Ottertail could exercise the option at any time during the initial five years. Clara said the port has had "none" interest in the property since 2019 and noted infrastructure limitations that make development elsewhere on the parcel difficult.
Several members raised concerns about how a long lease would affect the port's flexibility and tax exposure. One member cited a whole-parcel valuation of about $269,600 for roughly 53.6 acres and said it was important to ensure taxpayers received a fair return. Council member Mortonson urged a balanced approach, saying he wanted to keep Ottertail connected to the community while making sure "taxpayers are getting back a fair rate." He also recommended asking Ottertail to assume property-tax obligations on the leased acreage.
On procedural direction, the board asked staff to do two things before further negotiation: compile average per-acre lease rates for solar fields in Minnesota (and, if needed, nearby North/South Dakota) and report back to members; and request that Ottertail Power agree to pay property taxes on whatever acreage is leased. Clara agreed to email members with the market-rate research.
No final lease or sale was approved at the meeting. Members discussed non-assignability of the option and possible modifications to the 2% escalator over multi‑decade terms. The board moved on to other business after giving staff the requested direction.
