The Los Angeles Times recently reported that a renewable energy venture firm won a bid to purchase a potential wind farm site near Bakersfield, California in Kern County. The land site known as Onyx Ranch is in the Tehachapi Mountains and is a prime location for a Wind Farm. The winning bidder was by Renewable Resources Group who outbid the Los Angeles County Department of Water and Power with a bid of $48 million. They then offered to sell it to the DWP for $65 million to use half of the property, but the DWP decline the offer.
The venture partner group then located another suitor in the City of Vernon which has its own electric utility and is also in Los Angeles County. They purchased about half the property for $42 million. Now the DWP is looking to purchase the land from the city of Vernon, or take them to court. The Mayor of Los Angeles Villaraigosa has pledged to make Los Angeles “the greenest big city in America.”, but he will need places like Onyx Ranch and Antelope Valley to shoulder the Counties Wind and Solar needs.
There seems to be “an inside job” surrounding this deal, since the founder of Renewable Resources Group J. Ari Swiller was Mayor Villaraigosa’s campaign manager and the Deputy Mayor David Freeman helped found Renewable Resources. The Los Angeles Times reports that Mr. Swiller indicated that he didn’t know that the DWP was interested in the property. Looks like if the DWP really wants the property then they will have to pay more now then they offered before, and apply eminent domain on the 30,000 acres to prevent other from developing the site. The end result is a higher cost to the consumer.
Renewable Resource Group is a shrewd investor who bought land that is essentially unusable until the State imposed the mandate last November for 33% of all energy to be from renewable resources. It also shows there are still opportunities in land investment in a slow real estate market. The right type of land that aligns with future specific plans can land an investor in the green.