How can rental rates for a sugarbush reflect recent investments in a tubing collection system that will benefit the next tenants for the many years remaining on the lifespan?
If the landowner is still significantly invested in the assets included in the enterprise lease agreement, a rental rate or potential partnership agreement should specify how the landowner will receive satisfactory compensation for their prior investments.
Market rates for access to trees is the first aspect of a rental rate for this situation. These rates are likely ~$0.50 - $1.25 per tap depending on the region. The second aspect of this rental rate will be factoring an additional rate for the included assets that are part of the agreement (tubing system, tanks, vacuum pumps, etc.). Property owners should use the DIRTI-5 method to calculate the annual Depreciation, Insurance, Repairs, Taxes and Interest related to these additional pieces of property. Annual depreciation can be calculated using current market valuation or prior purchase price divided by estimated lifespan. The total of additional annual costs from the DIRTI-5 calculation can then be added to the original “tree-access” tap rate.