Gold and precious metals have been and still are the best hedge against inflation. But you have to look at precious metals as a paper asset versus silver coins and gold bars. Initially, what is a hedge against inflation? An inflation hedge is an asset that loses little value in periods of rising prices. It therefore holds its value and purchasing power during an inflationary period. Investors expecting inflation will typically buy this asset type to hedge against rising prices. Precious metals will actually increase in value since they are such an ideal inflation hedge.
The best way to address this question is to look at real assets versus financial assets. Real assets have intrinsic value, which is value of their own. They have direct or indirect usefulness like cars, wheat, corn, gold, real estate, land, and even appliances etc. Financial assets are a claim of profit of a firm, family or government. They would be stocks, bonds, mortgages, trust funds and the likes. Generally, real assets like gold, vacant land, and other commodities are a better hedge against inflation. These real assets have a value of their own, and are not devalued when everything else is inflating in price. Ideal hedges should hold their value over time and not lose their value. Produce and cars lose value over time, while precious metals (gold, silver, palladium), and vacant land and even wine will hold its value.
Another key element of an inflation hedge is its marketability. Is there a market for the commodity at virtually any given time? There is a market for soybeans, heating oil, gold and land, but things like shoes, furniture, and stocks have a limited market, and re-sale market. Another feature of a good hedge is its divisibility. Essentially can the asset be broken down into smaller portions? A house, car and land can not be broken down, but gold, gas, and agricultural products can be.
The best hedge against inflation has been and will continue to be gold, but we are referring to the hard asset of coins, bars, and even a mine that you own. Holding gold in stocks, ETF’s, or shares in a gold or silver mine is a financial asset and not a good hedge. Real Estate like a rental house, apartment, or vacant land is a good hedge but not the best, since it is not as marketable and not divisible like gold and other commodities.
The problem is the availability of gold coins and bars and nobody but a farmer will hold perishable commodities like wheat, or corn in their back yard. We think vacant land is a good alternative as an inflation hedge for investors since it is inexpensive, available and it will hold its value until inflation ebbs. It also doesn’t need to be maintained, will not deteriorate, and it can’t be rustled or stolen.
Sunday, November 15, 2009
Wednesday, November 4, 2009
The General Eminent Domain process by a Government Agency on your Property
Typically, when the government wishes to take your property by eminent domain, you can expect them to engage in the following steps in about the following order. This is a straight forward process, but untypical cases do occur. The government may also be forced to pay moving or lease expenses as part of the process, but certainly not required in vacant land eminent domain. There has been and will be a number of eminent domain actions by Los Angeles County in Antelope Valley in the recent past and many proposals for the future.
The government agency will contact you usually by mail to express interest in your property and scheduling an appraisal or environmental assessment of the property.
They will then appraise the property, and any improvements. The appraiser will be by their approval though. You can engage your own appraiser at the government expense also. Once appraised the government agency will make an offer to purchase the property. They will include a summary of the appraisal which they use to make their offer. A subsequent notice of public hearing to adopt "resolution of necessity" to acquire your property by eminent domain will begin. A Public hearing is announced and held to adopt the "resolution of necessity" to acquire your property by eminent domain. The Eminent domain case is filed in the court with jurisdiction and a notice is served to you the property owner. A deposit by agency of the probable amount of just compensation is paid into court and motion by agency for early possession of the property. This would be the appraiser’s figure, which they likely offered you before they took you to court. Then discovery procedure proceeds where any depositions and documents are gathered. This is where you the property owner provide your appraiser documentation. At this point both sides are attempting to get the fair market value. The government attempts to get an agreed settlement on the fair market value before going to trial. You should have a good case for more money before the last step which is the trial date. If settlement cannot be reached, then a trial of the eminent domain takes place before a jury who will determine for both parties the expected fair market value. The jury returns verdict and judgment is disclosed. The government agency then will compensate the property owner the jury’s judgment of the fair market value.
In most cases a settlement is agreed to and completed before a trial. Eminent domain can be desirable and undesirable for the property owner. If you look at real estate as a commodity then getting fair market value for the benefit of public use is a very good exchange. But if you are losing a home that has been a anchor for your family, or a business which you grew from the ground up then eminent domain can be a bitter pill, and anything but fair.
The government agency will contact you usually by mail to express interest in your property and scheduling an appraisal or environmental assessment of the property.
They will then appraise the property, and any improvements. The appraiser will be by their approval though. You can engage your own appraiser at the government expense also. Once appraised the government agency will make an offer to purchase the property. They will include a summary of the appraisal which they use to make their offer. A subsequent notice of public hearing to adopt "resolution of necessity" to acquire your property by eminent domain will begin. A Public hearing is announced and held to adopt the "resolution of necessity" to acquire your property by eminent domain. The Eminent domain case is filed in the court with jurisdiction and a notice is served to you the property owner. A deposit by agency of the probable amount of just compensation is paid into court and motion by agency for early possession of the property. This would be the appraiser’s figure, which they likely offered you before they took you to court. Then discovery procedure proceeds where any depositions and documents are gathered. This is where you the property owner provide your appraiser documentation. At this point both sides are attempting to get the fair market value. The government attempts to get an agreed settlement on the fair market value before going to trial. You should have a good case for more money before the last step which is the trial date. If settlement cannot be reached, then a trial of the eminent domain takes place before a jury who will determine for both parties the expected fair market value. The jury returns verdict and judgment is disclosed. The government agency then will compensate the property owner the jury’s judgment of the fair market value.
In most cases a settlement is agreed to and completed before a trial. Eminent domain can be desirable and undesirable for the property owner. If you look at real estate as a commodity then getting fair market value for the benefit of public use is a very good exchange. But if you are losing a home that has been a anchor for your family, or a business which you grew from the ground up then eminent domain can be a bitter pill, and anything but fair.
Sunday, October 18, 2009
City Of Lancaster to Annex 7000 Acres of Los Angeles County Land
Currently L A County owned land is the target area for the City of Lancaster. The seven thousand acres of land is situated north of the city limits of Lancaster. The new area would border from West to East Hwy 14 to 20th Street East and from South to North from Avenues G and H to Avenue E. Mayor Rex Parris indicated that the land within the current city limits are becoming more developed, so now is the opportunity to continue the city’s growth by incorporating new land into the city.
According to city staff at the city council meeting this past summer the annexation is a twofold benefit. Firstly, it will allow the city to better manage their Waste Management. Currently the landfill lies outside the city limits so this will enable the city to better manage their waste resources. The area will also allow space for current and future solar energy plants. This unincorporated area is mainly flat topography which creates uncontained rain water to be wasted. The proposal enables the city to improve drainage, prevent flooding, and collect the water for recyclable usage. It in turn creates solar energy production interests to work together within the city limits and offer solar and alternative energy solutions for Lancaster.
E-solar could be a main benefactor of the plan, since they require water resources to be heated by their panels, which then produces the electric power. It is a green win win solution since the city will be able to trap the currently uncontained water and provide alternative energy for residents. The city of Lancaster is currently planning a similar project called the Recycle Recharge Project at 60th Street at F in cooperation with E-Solar.
This project will recycle rainwater throughout the city and provide recycled water for E-Solar and residents while the remainder will be recharged through natural aquifers in the area.
The annexation process will need to get environmental impact approval, and then if the city council approves the project then the proposal goes to the County’s Local Agency Formation Commission (LAFCO). LAFCO will evaluate the proposal, review it with residents and decide if it is within the best interest of the area concerned. This process may take six to nine month’s.
The annexation is a major boost for land investors, since you can buy land now at lower prices and benefit with new zoning changes from county agriculture land to industrial and commercial zoning and development of the area. The opportunity provides inside information to get involved in a lower risk speculative land investment. We are taking advantage of the opportunity this annexation projects, and we urge savvy investors to do likewise.
According to city staff at the city council meeting this past summer the annexation is a twofold benefit. Firstly, it will allow the city to better manage their Waste Management. Currently the landfill lies outside the city limits so this will enable the city to better manage their waste resources. The area will also allow space for current and future solar energy plants. This unincorporated area is mainly flat topography which creates uncontained rain water to be wasted. The proposal enables the city to improve drainage, prevent flooding, and collect the water for recyclable usage. It in turn creates solar energy production interests to work together within the city limits and offer solar and alternative energy solutions for Lancaster.
E-solar could be a main benefactor of the plan, since they require water resources to be heated by their panels, which then produces the electric power. It is a green win win solution since the city will be able to trap the currently uncontained water and provide alternative energy for residents. The city of Lancaster is currently planning a similar project called the Recycle Recharge Project at 60th Street at F in cooperation with E-Solar.
This project will recycle rainwater throughout the city and provide recycled water for E-Solar and residents while the remainder will be recharged through natural aquifers in the area.
The annexation process will need to get environmental impact approval, and then if the city council approves the project then the proposal goes to the County’s Local Agency Formation Commission (LAFCO). LAFCO will evaluate the proposal, review it with residents and decide if it is within the best interest of the area concerned. This process may take six to nine month’s.
The annexation is a major boost for land investors, since you can buy land now at lower prices and benefit with new zoning changes from county agriculture land to industrial and commercial zoning and development of the area. The opportunity provides inside information to get involved in a lower risk speculative land investment. We are taking advantage of the opportunity this annexation projects, and we urge savvy investors to do likewise.
Saturday, October 3, 2009
Green Acres is Centennial Developments High Desert Plan
Centennial Development is a planned self sustained new development on Tejon Ranch, which is situated at 300th West at Hwy 138 Ave D in western Antelope Valley. Tejon Ranch will preserve 240,000 acres of their ranch in an agreement with environmental groups this past May. In exchange these environmentalists will not stand in the way of Centennials planned development of up to 20,000 homes in the designated area.
The development is planned with a green theme. Centennials news release indicates there will be 8600 acres set aside just for open space, and their compact village centers will accommodate mix use development of commercial, single family residential, apartments with a green homogeneous environment. Residents will be within a half mile of neighborhood parks, and town centers. They will be designed to accommodate bicycles and cars, with a transit system to enable access to LA County mass transit. It is sort of the anti LA. Los Angeles County present design since 1950 has been no design and no mass transit at all. If you don’t have a car you simply can’t live. The result is traffic congestion smog, and very few parks.
Centennial anticipates better energy conservation in their homes with lower water consumption and watershed management. The homes and buildings will be designed with better lighting features for efficient energy consumption. They plan to use recycled water for landscaping and designated recycling areas for residential and commercial disposable materials. This will also reduce home and building monthly expenses. It will be built over 20 years to take advantage of new technologies over time. The overall plan includes its own police and fire departments, schools, markets, with a specific plan for the essentially green gated community.
This is a far better and different plan then current developer’s who buy the land, create a tentative tract map, build and sell the homes and move onto the next target. This new green designed Centennial community could be an example for the future developers as a conscientious plan and a self sustained environment with less impact on the current and future terrain. It should also highlight and increase the value of property in the surrounding area on Antelope Valley’s far west side.
We have and can locate vacant land opportunities in Lancaster and Palmdale California in the pre-development phases as a low cost investment. Investors can take advantage now and buy land and wait to receive increased property value in the post-development phase.
The development is planned with a green theme. Centennials news release indicates there will be 8600 acres set aside just for open space, and their compact village centers will accommodate mix use development of commercial, single family residential, apartments with a green homogeneous environment. Residents will be within a half mile of neighborhood parks, and town centers. They will be designed to accommodate bicycles and cars, with a transit system to enable access to LA County mass transit. It is sort of the anti LA. Los Angeles County present design since 1950 has been no design and no mass transit at all. If you don’t have a car you simply can’t live. The result is traffic congestion smog, and very few parks.
Centennial anticipates better energy conservation in their homes with lower water consumption and watershed management. The homes and buildings will be designed with better lighting features for efficient energy consumption. They plan to use recycled water for landscaping and designated recycling areas for residential and commercial disposable materials. This will also reduce home and building monthly expenses. It will be built over 20 years to take advantage of new technologies over time. The overall plan includes its own police and fire departments, schools, markets, with a specific plan for the essentially green gated community.
This is a far better and different plan then current developer’s who buy the land, create a tentative tract map, build and sell the homes and move onto the next target. This new green designed Centennial community could be an example for the future developers as a conscientious plan and a self sustained environment with less impact on the current and future terrain. It should also highlight and increase the value of property in the surrounding area on Antelope Valley’s far west side.
We have and can locate vacant land opportunities in Lancaster and Palmdale California in the pre-development phases as a low cost investment. Investors can take advantage now and buy land and wait to receive increased property value in the post-development phase.
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.
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.
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.
Saturday, August 15, 2009
Land Zoning Targets for Solar Companies in Los Angeles County
There are at least two solar companies (Nextlight and E-Solar) planning operations of large solar plants in Antelope Valley in Northern Los Angeles County. NextLight is planning a large project at 170th West at Ave D (AV Solar Ranch One).
Most of the area outside of the city limits of Lancaster and Palmdale is zoned rural residential and agricultural land. This allows a single family residence within a parcel of 2 acres or more. It also allows for agricultural uses such as livestock, and crop farming. Agricultural zoning is further broken down into A1 and A2. A1 allows for light agricultural and A2 is heavy agriculture. Heavy agriculture zoning requires at least 5 acres minimum.
So how are these Solar Enterprises rapidly and economically getting around constructing an energy facility on rural agricultural land? Typically there would be an environment impact report needed with permits, community forums and the list goes on. These solar companies have targeted previously disturbed land, or land that has been farmed. Farmers have already tilled the land for years, so any endangered wildlife have found new homes and the land has been partially developed. In Nextlights case they use photovoltaic technology, so they use very little water, and the panels are only a few feet above the ground. In E-Solar’s case they use mirrors to reflect the suns raze on a water tower. E-Solar is attempting to solve their water needs by working an agreement with the City of Lancaster to use recycled water.
Both companies have solved a portion of their environment impact by buying A2 zoned land on the western portion of the valley. There are also two solar projects currently in the city of Lancaster at Division and G and an upcoming one at Sierra Hwy and avenue M.
This scenario is a great example of what we have been saying about landbanking. Rural residential land owned by farmers or investors overtime turns into needed space for a growing metropolis. Landbanking is a long term and sometimes short term investment for wealth. Land if purchased near growth and at a reasonable price can be a low risk investment as a retirement vehicle and diversified investment.
Most of the area outside of the city limits of Lancaster and Palmdale is zoned rural residential and agricultural land. This allows a single family residence within a parcel of 2 acres or more. It also allows for agricultural uses such as livestock, and crop farming. Agricultural zoning is further broken down into A1 and A2. A1 allows for light agricultural and A2 is heavy agriculture. Heavy agriculture zoning requires at least 5 acres minimum.
So how are these Solar Enterprises rapidly and economically getting around constructing an energy facility on rural agricultural land? Typically there would be an environment impact report needed with permits, community forums and the list goes on. These solar companies have targeted previously disturbed land, or land that has been farmed. Farmers have already tilled the land for years, so any endangered wildlife have found new homes and the land has been partially developed. In Nextlights case they use photovoltaic technology, so they use very little water, and the panels are only a few feet above the ground. In E-Solar’s case they use mirrors to reflect the suns raze on a water tower. E-Solar is attempting to solve their water needs by working an agreement with the City of Lancaster to use recycled water.
Both companies have solved a portion of their environment impact by buying A2 zoned land on the western portion of the valley. There are also two solar projects currently in the city of Lancaster at Division and G and an upcoming one at Sierra Hwy and avenue M.
This scenario is a great example of what we have been saying about landbanking. Rural residential land owned by farmers or investors overtime turns into needed space for a growing metropolis. Landbanking is a long term and sometimes short term investment for wealth. Land if purchased near growth and at a reasonable price can be a low risk investment as a retirement vehicle and diversified investment.
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