Sunday, September 20, 2009

Buy Land and Sell Half of it Immediately for Your Purchase Price, that’s the California Way

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.

Sunday, September 6, 2009

Rural Land as an Alternative Investment in the New Green Energy Economy

There has been a number of development proposals for the vacant land near the Antelope Valley Poppy Reserve. In 2005 there was a proposal from Scottish Power to develop Wind Energy, but the neighborhood disliked the idea of large Wind Towers on the horizon. That enterprise appears to be long dead. In addition, there has been a proposal working its way through LA County Planning Commission for a NASCAR Style Race Track at 150th Street West and Ave D. The neighbors have been fighting that proposal as well due to noise and other issues, but it has been the hottest ticket on the west side until now.

A new plan is shedding light on the poppy reserve. Nextlight Renewable Power of San Francisco is planning a solar sight called AV Solar Ranch One. This proposed development is targeted for 170th West at Ave D. The company uses photovoltaic panels which turn sunlight into electricity. They operate on a track so the panels move with the sun, and the energy produced will connect to Southern California Edison. This consigns with California law which mandates up to 33% of the States Energy to be from alternative sources. Edison is already expanding their power-lines that run through the region, and the proposal appears to be on track with residents as the Antelope Acres Town Council unanimously approved the plan. Nextlight’s news release targets the environment impact studies to be approved by April of next year. They hope for construction to begin by October of 2010 and energy production by 2011. This project will certainly change the landscape of the area, which has been primarily vacant unused land. It shouldn’t affect the poppy reserve though, since the site is north of Fairmount Butte. Also, it is not part of the counties ecological reserve where Joshua Trees and other plant and animal life is protected.

At least two solar energy companies are now taking advantage of the suns consistent output in the Antelope Valley, and the availability of low priced land.We have been telling our clients and prospective investors that they need to buy land near a large metropolitan area in the path of growth,Northern Los Angeles County certainly fits that model. The proposed solar development and the continued focus of the State and Federal governments to support alternative energy sources will create a new economy. Historically, new economies have taken us out of recessions, like the recent Dotcom and Real Estate booms which both eventually went bust. The new “Green Energy Economy” looks like it will be the next boom but with lasting implications. It will change the way we use energy and resources, and the Obama Administration is intent on its implementation with Cap and Trade regulation. The green boom ground zero is in the Antelope Valley, so stay tuned for future developments.