Sunday, July 18, 2010

The 1031 Exchange Process Taken Step by Step

1. You will need to set up an exchange account with an authorized 1031 exchange firm. The 1031 account has to be opened before the close of escrow on the property being sold. It can be done in a rush, but it is best to have this process planned in advance with the escrow company.

2. Write up the 1031 Exchange terminology in the sales contract or escrow instructions. The appropriate 1031 language should be added to the sales contract or escrow instructions for the property being sold. The exchange company can draw up the proper language.

3. Execute the exchange agreement with the escrow company and exchange firm with the necessary signatures and documents.

4. A like kind replacement property must be located within forty five days. A like kind property essentially means real estate for real estate. This like kind property must be located within forty five days per the IRS requirement. Once the replacement property has been identified then the sale and escrow must be completed within six months.

5. Forward the 45 day identification letter. This identification letter has to be submitted within forty five days, and the replacement property must be located and identified. This is typically the most difficult part since you need to secure the acquisition of a second property within this six week period.

6. Forward funds for deposits, this can be done from a 1031 exchange account. There is typically a form from the 1031 exchange company. It is also possible for the deposit to come from your personal account with a reimbursement later.

7. Then you must complete the execution of the escrow documents from both parties on your replacement property, and fund the purchase with your prior closed escrow funds. If the replacement property requires a loan, or it is an income property then other steps maybe needed. Thus identifying an experienced 1031 firm will assist in more complicated exchanges. Also additional funds may be needed if the replacement property has higher value then the prior sold property. Again the 1031 exchange firm can assist with these additional steps.

Saturday, July 10, 2010

Solar Power Company Gets Approval to Implement Its Development Plan on Rural Residential Los Angeles County Land

A rectangular shaped parcel of just over 200 acres at 100th Street West and Ave H has won preliminary approval for solar development by the City of Lancaster planning commission. TA High Desert LLC (Tuusso Energy) plans to construct of a 20 megawatt solar photovoltaic electric generation facility on rural residential zoned land in Los Angeles County. This land has been typically vacant land or farm land, but the green energy economy has changed the future for rural Los Angeles land.
The location is designated NU (Non-Urban Residential) by the General Plan and is zoned RR 2.5 (Rural Residential 2.5 one dwelling unit per 2.5 acres), and this site is currently unused. This proposed project would operate year round with a production of up to 20 megawatts of renewable electric power during daytime hours. Tuusso Energy has a 20 year agreement with Southern California Edison to supply electricity generated by the proposed project. The project needs to clear a few environmental, biological, and mitigation steps.
The environmental review documents have disclosed no significant adverse impacts resulting from the proposed project after mitigation measures have been applied.
The photovoltaic panels and trackers are silent and low profile of six feet to eight feet depending on the position of the sun, so visual impact would be minimal. In order to further reduce any impacts, Tuusso Energy would install a line of trees along Avenue I and H, 100th Street West, and 97th Street West that would provide additional screening of the site. Additionally, two biological resource surveys were conducted for the location which found approximately 160 acres of potential foraging habitat within 10 miles of a hawk’s nest, thus the removal of the 200 acres of potential foraging habitat would be minimal. Also, mitigation measures are required to ensure that impacts to biological resources remain less than significant. Once these mitigation measures are taken the board found that the potential impacts to any special status species would be reduced. They also indicated that the projects construction and materials will not pose any environmental hazard to the local community.
This project appears to have met all the necessary requirements for implementation, and it was done in under a year. The landscape of Antelope Valley has been rapidly changing, and this exercise shows the potential for profits outside of typically residential building can be found in the valley as the State moves to green energy.