Gary Schneider - BxM pres_Oct2011EEINRECAwkshp

							Bruce to Milton Transmission Reinforcement Project
Hydro One’s Approach to Property Rights Acquisition

Gary Schneider
Director, Real Estate

EEI/NRECA 2011 Utility Siting Workshop
Vancouver, British Columbia
October 2‟5, 2011
    Project Need
„    Today: Bruce area generation and
     transmission are balanced
„    Future: significant increase in Bruce area
     generation resources
      „   Govt. Directive driven renewable wind generation
          and refurbished nuclear units are expected to
          increase total resources by more than 50% over
          the next few years

„    Need for new transmission line from Bruce
     area to GTA (Milton) was determined by
     the Ontario Power Authority (OPA)
      „   Support Province’s goal to shutdown of coal fire
          generation
      „   Support increased renewables


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The Project

„ New double-circuit 500 kV line on a widened existing transmission
   corridor
„ Largest expansion to Ontario’s transmission system in 20 years ‟
   180 km in length
„ Major Approvals: Environmental Assessment and
   Ontario Energy Board Leave to Construct; other approvals
„ Planned In-Service: December 2012
„ Estimated Project Cost: $755M




                                                                      3
Bruce to Milton Route
                        Widen Existing Corridor
                         by 175 ft to 200 ft




                                                  4
Property Fabric
„ 355 properties affected by the Project

„ ~85% agricultural properties

„ ~15% rural residential properties

„ Small number of other property types

„ Most properties already encumbered by 1 or 2 transmission lines

„ Approximately 30 properties where residence or major farm building
   situated on widened corridor ‟ full property buyout required


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Voluntary Buyouts




 Mandatory Buyout
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     Hydro One’s
   Land Acquisition
Compensation Principles



                          7
Bruce to Milton Land Acquisition Compensation Principles
„   Provide a fair balance between the needs of property owners, Hydro
    One and the ratepayers of Ontario
„   Objective: Secure voluntary property settlements in a
          timely manner at a reasonable cost

„   General Principles:
          „ Property owner choice (e.g. easement or fee simple interest; voluntary buy-outs)
          „ Property valuation prepared by independent accredited appraisers commissioned by
            Hydro One and based on fair market value
          „ Incentives above fair market value intended to encourage early resolution of property
            acquisition interests
          „ Use of improved land rates applicable to agricultural properties



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    Bruce to Milton Land Acquisition Compensation
    Principles
„   Land Acquisition Compensation Principles for
    Project issued to property owners on April
    28/08

„   Hydro One property agents immediately began
    meeting with affected property owners to
    discuss the LACP and the process
„   Reduced opposition at the Ontario Energy
    Board hearing (Leave to Construct) on the
    basis of the LACP
     ‟   “Hydro One has demonstrated a genuine interest in putting
         landowner concerns at the fore and addressing those
         concerns in a comprehensive manner.”




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Injurious Affection

„   Sec. 1(1) of the Expropriations Act:
(a)(i) The reduction in market value thereby caused to the remaining
   land of the owner by the acquisition or by the construction of the
   works thereon or by the use of the works thereon or any combination
   of them….


„   Hydro One recognized from the outset that injurious affection
    would be a contentious issue for landowners


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Injurious Affection ‟ Collaborative Effort
„ Hydro One and a major landowner group worked collaboratively in
   2008 to assess injurious affection (“IA”)
„ 5 “sample” properties affected by the Project were jointly selected
   ‟ representing typical properties and line crossings along the route
„ Each party selected an independent accredited (AACI) appraiser

„ The two appraisers conducted joint inspections of the sample
   properties, and then went off and conducted their own IA research
   and analyses



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Injurious Affection ‟ Collaborative Effort (cont’d)

„ Appraisers presented their results to Hydro One, the landowner
   group leadership, and respective legal counsels in October 2008
„ IA results presented as percentage ranges for each of the five
   sample properties
„ The percentage ranges of the two appraisers overlapped for each
   of the sample properties
„ These results informed Hydro One’s voluntary settlement offers
   under the LACP


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      LACP vs Expropriation

Feature                                       LACP                                        Expropriation
Property Valuation Date   October 1, 2008                                 Generally, as of date of expropriation plan
                          (plus interest at 6%/anum)                      registration
                                                                          (April 2011)

Property Valuation        Easement interest: 75% of Fair Market Value     Easement interest: 75% of FMV + IA
(widened corridor)        (FMV) + Injurious Affection (IA)

                          Fee simple option available
                                                                          No fee simple option

Property Valuation        “Improved” land rates for widened corridor on   “Vacant” land rates for widened corridor on
Approach                  agricultural properties                         agricultural properties

Incentives ‟ Partial      Up to $9000 paid when agreement signed          None
Takings                                          +
                          Incentives ranging from 15-40% of FMV of the
                          partial taking acreage                          None


                                                                                                                        13
     LACP vs Expropriation (cont’d)
Feature                                    LACP                                         Expropriation
Incentives ‟          Up to $9000 paid when agreement signed             None
Mandatory Buyouts                             +
                      10% of value of residence and one acre of land
                      at time option exercised + section 18(c) Act       5% of residence value (“disturbance
                      entitlements                                       payment”) at end of OMB process + section
                                                                         18(c) Act entitlements
Voluntary Buyouts     Available to qualified landowners, based on FMV    No voluntary buyout contemplated by the Act.
                      + incentives
Injurious Affection   Up to $7500 available for landowner-               Option to participate in OMB hearing and
Valuation             commissioned appraisal                             landowner pays upfront costs to participate.
                                              +                          Reasonable costs of the process paid by Hydro
                      Option to engage in private arbitration at Hydro   One if costs are awarded under sec. 32 of the
                      One’s expense                                      Act.


Timing of             Upfront payment when option agreement signed;      Partial payment as required by sec. 25 of the
Compensation          balance paid in short time frame after option      Act (in 2011); final payment at end of OMB
Payments              exercised (post EA approval).                      process (2012 and beyond).
                                                                                                                         14
Voluntary Property Rights Acquisition Timeline
Hydro One property agents assigned to affected owners             Spring 2007

Consultation with landowner group re: compensation policy        Spring 2007 ‟
                                                                  Spring 2008
Release of Project “Land Acquisition Compensation Principles”      April 2008

Roll-out of Land Acquisition Compensation Principles              Summer 2008

Property-specific appraisals                                    Late 2007 ‟ Fall
                                                                      2008
Injurious Affection ‟ “Collaborative Effort”                    Summer/Fall 2008

Property rights compensation offers presented to landowners     Late 2008 ‟ Early
                                                                      2009
Ongoing negotiations                                             2009 ‟ present


                                                                                    15
Status of Hydro One’s Voluntary Property Rights Acquisition
Program


„ As of September 30, 2011:


   ‟ Voluntary settlements achieved with owners of approximately 95% of all
     affected properties

   ‟ We are continuing to work with remaining interested owners in an
     effort to reach voluntary agreements




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  Expropriation Process
„ Step 1: Ontario Energy Board Approval
           ‟ Application filed on February 26, 2010
           ‟ Approval received on March 15, 2011

„ Step 2: Register Plans of Expropriation
           ‟ Expropriation Plans registered on title in April 2011

„ Step 3: Statutory Compensation Offers
           ‟ Statutory Offers served on property owners in July 2011
           ‟ Disputes could go to Ontario Municipal Board for resolution

„ Step 4: Access to Lands
           ‟ Hydro One has rights to enter expropriated properties to construct Project 90
             days after plan registration (July 2011)


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Benefits of Bruce to Milton LACP


„   Timely and cost-effective property rights acquisition

„   Savings ($ and time) through avoidance of expropriation process

„   Opportunities to outsource key activities (appraisal, legal, owner
    contact/negotiation)

„   Improved relationships with landowners, municipal representatives,
    regulator



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    Acquiring Property Rights on a Voluntary Basis ‟
    Lessons Learned
„    Consult early with affected owners ‟ especially those most profoundly affected (i.e.,
     owners of mandatory buyout properties)

„    Seek out community leaders and landowner groups to identify issues and work
     cooperatively on solutions

„    One-to-one contact works best ‟ assigning property agents at the outset builds
     relationships

„    Be open to new ideas and transparent in communications

„    When (not if) you “stumble”……react quickly!

„    Quality appraisal work is critical to success (IA not the only issue)

„    Consider “caps” on reimbursement of owner fees (e.g., legal, appraisal, etc.)

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THANK YOU




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