Community Benefits Snapshots: SOO Green Transmission Line Community Engagement and Benefits

Highlights

The SOO Green High-Voltage Direct Current (HVDC) Link is a 350-mile interregional underground electricity transmission line built mostly along an existing railroad right of way in Iowa and Illinois. The first of its kind in the United States, the project also aims to create local jobs and construct parallel infrastructure projects identified as priorities by the community; it has already begun giving out good neighbor payments to landowners whose property abuts the railway.

Context

About the Project and Involved Stakeholders

SOO Green HVDC Link is an underground 350-mile, 2,100-megawatt (MW), 525-kilovolt (kV) line running from Mason City, Iowa to Yorkville, Illinois. It will connect wind energy generatedin states under MISO jurisdiction with the PJM market. The project primarily utilizes existing transportation rights of way mostly along the Canadian Pacific (CP) corridor, which means that most of the line will be underground on land controlled by railroads and highway authorities, co-located with the railroad right of way. Once completed, the line will be the longest underground HVDC line in the country. As of this writing, the line has secured a franchise — the equivalent of a Certificate of Public Convenience and Necessity (CPCN) — from the Iowa Utilities Board, as well as municipal franchises from 21 of 24 Iowa municipalities, and is actively engaged in obtaining approval from the final three. In Illinois, SOO Green will build the line without a CPCN as SOO Green is a merchant project that is not seeking eminent domain authority from the state. The project is expected to become operational in the early 2030s.

Engagement

SOO Green’s landowner engagement began in the mid-2000s when it initiated talks with what was then the CP railroad to build an overhead transmission line within the company’s rights of way. Initially, this idea was a non-starter with CP because the proximity of an overhead transmission line could interfere with railroad operations, as well as create safety risks. By 2016, however, SOO Green had planned a buried line and reengaged CP in talks. By 2018, SOO Green and CP reached a power line agreement for an underground HVDC project.

Because the line will be located within CP’s right of way for much of its path, SOO Green has done very little easement negotiation with private landowners. Instead, much of its site control efforts have been devoted to securing municipal franchises from the Iowa cities the line will pass through, a requirement of Iowa state law. As such, SOO Green has held public meetings at both the county and municipal level in Iowa. Though no public meetings were required in Illinois, SOO Green voluntarily hosted county-wide public meetings to discuss the project. Additionally, SOO Green has engaged with the Iowa and Illinois Departments of Transportation to secure permits for segments in Iowa and for short stretches in Illinois where the line will run along highways and local roads.

SOO Green chose to pursue a franchise in Iowa that included eminent domain powers, protecting itself from legal challenges against its right to be in the railroad right of way. Incidentally, five landowners made such a challenge in SOO Green’s franchise proceeding, arguing that the original easements they signed with railroads only grant a railroad authority to construct tracks and do not authorize power transmission development. The Iowa Utilities Board declined to adjudicate this claim and further reasoned the line’s request for “eminent domain renders [their claims] moot.” In Illinois, SOO Green is exempted by Climate and Equitable Jobs Act legislation from applying for a CPCN as a merchant developer who does not plan to use eminent domain.

Finally, while SOO Green was not legally required to acquire private landowner consent along the line because of its co-location with the railroad rights of way, adjacent private landowners were still voluntarily engaged and compensated. SOO Green, like most developers, used a third-party land agent company to personally meet with landowners and work through good neighbor agreements, complaints and concerns.

Legal and Expected Benefits: These are legally required forms of compensation, such as taxes and eminent domain payments.

• Property taxes and payments in lieu of taxes: SOO Green commissioned Strategic Economic Research (SER) to conduct an economic impact study which addressed the question of taxation in Iowa. SER estimates that the line will generate $1.5 million in taxes each year for the state of Iowa (based on taxes of $7,000 per pole-mile in Iowa).
• In contrast, Illinois does not tax transmission lines. However, SOO Green plans to negotiate payments of $14 million over the first 20 years of its operation in lieu of taxes with local taxing entities, according to a report by the Illinois Power Agency.
• Municipal franchises: In at least three cases, municipalities opted to have SOO Green fund and construct infrastructure projects within the railroad rights of way which, absent the transmission line, would have been difficult for the city to negotiate independently with the railroad. A common request, especially for some of the larger cities along the line such as Dubuque, was to place infrastructure necessary for broadband expansion within their easement.
• Eminent domain and land payments: SOO Green might use eminent domain authority with a handful of landowners who have challenged the railroad’s authority to negotiate a power line agreement with SOO Green in Iowa but did not invoke it at all in Illinois. The project is, however, actively engaged in negotiations and hopes to avoid the use of eminent domain. Similarly, SOO Green developers were not legally required to compensate landowners whose land is adjacent to the rail easement. The “Community Grants” section below details their attempt to voluntarily compensate these individuals.
• Job creation: Given the unique underground construction methods and new technology, SOO Green has been working with local community colleges and economic development authorities near the route to build a local workforce. Through its “Competitive Edge” and “Hire360” apprenticeship programs, it has committed to create local jobs for underserved youth during project construction.

Procedural Benefits: Procedural benefits are a class of non-monetary and not required benefits that developers often undertake to maintain goodwill with host communities.  

• Honoring Siting Requests: SOO Green honored the requests of cities to change the line route in at least one instance in Iowa. After a request by Bellevue for a line route to avoid the rail corridor because it would have impacted two adjacent roads, SOO Green compromised by diverting the line within the city.

Community Grants:

• Good neighbor payments: SOO Green has opted to give landowners whose property abuts the railroad right of way good neighbor payments. Given the narrow width of land being impacted, the payments themselves are usually a few hundred dollars, being proportional to the length of the adjacent landowner’s segments; a “cooperation agreement and mutual release” contract must be signed in order to obtain the benefit. While many along the line signed the contracts, some were hesitant. The landowners we interviewed viewed signing a contract as implicit acceptance and approval of the project — symbolic consent that some were not willing to give.
• Community development grants: SOO Green has pledged to fund community development grants in the line’s host communities. Some of these funds have already been committed to cities for co-located projects that arose in municipal franchise negotiations. The rest will be disbursed as grants either through existing apprenticeship and job programs that SOO Green has implemented or on an ad-hoc basis.

Co-location Benefits:

• Undergrounding the line: Undergrounding can provide community benefits; for example, it avoids visual and noise pollution. According to interviews with members of the host communities, some residents had environmental and safety concerns. However, every interviewee noted that they preferred an underground line along an existing transportation right of way to an overhead transmission line.
• Undergrounding can also enable high-priority community construction projects that would be otherwise hard to execute. For example, in Dubuque and Mason City, SOO Green will lay fiber optic cable conduit bundles and junction boxes in the trenches it digs for the HVDC line during construction. Other benefits include additional and adjacent surface improvements. As the developer explained, these projects would otherwise be hard to execute because of the time it takes for private and public entities to negotiate rail rights of way co-located infrastructure projects.

Strengths

Undergrounding the transmission line along an existing right of way reduced local and community opposition to the project while making its siting easier. Given that grassroots resistance is often the norm with large transmission projects, the conspicuous lack of opposition to SOO Green — one of the few undergrounded long-distance lines in the U.S. — shows the potential value of undergrounding as a tool for quelling resistance in host communities. For example, the Iowa Farm Bureau was unable to oppose the project in public hearings because none of its farmer members were directly impacted by the project, and therefore none of the members opposed it. Additionally, in its approval of SOO Green’s CPCN, the Iowa Utilities Board used the line’s burial to dismiss safety concerns and its co-location with an existing right of way in its reasoning for why the project satisfied its franchise criteria, noting the preference for co-location of transmission assets in Iowa state code. (§478.18(2)).

Investment in locally determined community construction projects and programs helped build community support for the project. While it is common for transmission projects to provide local community grants, SOO Green is unique in its willingness to make substantial, community-identified and often contractual investments in projects and programs for host communities. SOO Green directly solicited projects from cities impacted by the line or its construction. Critically, these projects are actually obligated by the municipal franchises the company has signed with cities.

Challenges and Gaps

Local tax authorities and communities were largely unsure of the project’s tax impacts, though it is unclear if this was a barrier to project acceptance. While the taxation of the project at the county level is fairly straightforward — $7,000 in tax per pole-mile — according to interviews with county officials, many county assessors and local tax districts did not think they could estimate the tax revenues they would receive for the project. This sentiment was widespread even though tax district revenue estimates were prepared by SER for SOO Green and SOO Green communicated these estimates in public meetings and press releases. According to a tax expert who reviewed the project, this disconnect may be attributable to two factors:

1. Property taxes from transmission lines in Iowa are “replacement” taxes in that they are not determined by the value of the line itself. This differs from normal property taxation where a percentage of a property’s assessed value is paid in taxes annually. It appears that in some cases, tax districts didn’t understand this nuance and believed they would have to know the taxable value of the line itself to predict their revenue, hence their belief that they could not estimate their revenue at all.
2. The allocation of county tax revenues from the line to local tax districts (e.g., towns, school districts, etc.) is not well defined. SER modelled allocation by looking at how many miles of the line went through each tax district and then weighting by millage rate. However, this is only one possible way by which taxes may be allocated.

While this confusion over taxes is notable given that tax revenue is such a substantial community benefit, it is unclear to what extent it affects perceptions of the project’s benefits at the local level.

Financing remains a broader concern for underground lines and contributed to skepticism of SOO Green at both the community and policy level. Recent studies show that while buried HVDC transmission is cost-competitive with traditional overhead AC transmission projects, it is two to four times the cost of overhead HVDC transmission. As such, utilities who rely on public rate recovery and on private investments have historically avoided undergrounding. Some community members interviewed were aware of these cost challenges and expressed skepticism of the line because of them. It is unclear how SOO Green is handling the possibility of cost overruns, a possibility that policy analysts voiced concern over in interviews, given that such overruns will affect the prices of RECs the project generates and subsequently what Illinois consumers will pay for them. However, when asked about financial concerns, SOO Green developers noted that the lifecycle costs of underground transmission are competitive with overhead costs, especially as extreme weather events become more commonplace.

Further Resources