The Land Acquisition and Construction Process is Very Slow for the $68 Billion Cal High Speed Rail

The LA Times recently reported that the land acquisition has not even started, yet construction is set to begin in July of this year. If the State doesn’t own any land how can they begin at all? The eminent domain process is very long a convoluted. Most of the land needed for the rail line will be agricultural land, but even then it will be similar to highway right of way acquisition. Hence a farmer would have to give up a portion of their land for the trains right of way, and cutting their own land in half. It is very likely most if not all of the High Speed Rail’s land acquisition will have to go via eminent domain which means court ordered sale of real estate. The state hopes to make purchase offers in the next several weeks, but expect farmers, homeowners, and businesses to ask top dollar for their land. In addition, agricultural land prices have risen the last year. The LA Times notes that Central Valley agricultural land can sell for $28k/acre, but the state land purchase budget is only $8k/acre. Yikes!! Once California hires their land buyers then offers will go out and the property owner has about a month to reply. They need to buy about 400 parcels. The state has rules regarding their eminent domain process which will extend the process by at least 90 days more. The eminent domain process could take another 18 months via the court system. Much of this agricultural land is family owned for generations. I don’t see many farmers giving up the land so easily. According to the LA times article , the initial 130 miles of rail in the Central Valley must be completed by 2018. The budget for this phase is $6 billion which requires spending about $3.6 million every day. This is voter approved as well. Californians sure loves to spend, if the state has the money or not. The major problem will be further delays increase the overall costs. Contractors are lined up, but they might even get paid without working based on their contracts.

Berkshire Hathaway Firm to Buy Antelope Valley Solar Project from SunPower

The Antelope Valley Press and several new agencies report that investor Warren Buffett firm (Berkshire Hathaway), one of the world's richest men, is investing in Antelope Valley solar projects. MidAmerican Energy Holdings, a company owned by the billionaire, will spend as much as $2.5 billion to build twin solar projects, originally proposed by SunPower, west of Rosamond and Lancaster. "We are excited about these projects because they support our core business principle of environmental respect. We are very proud to add SunPower technology to our portfolio of projects," said Bill Fehrman, president of Buffett's MidAmerican Renewables. MidAmerican Energy Holdings announced Wednesday it has acquired San Jose-based SunPower's 579-megawatt Antelope Valley Solar Projects, which would cover more than 3,000 acres straddling the Los Angeles County-Kern County line and which have been approved by Kern County and Los Angeles County officials. Called the world's largest solar-power project that has approval for construction, three-fourths of the project is in Kern County, with the rest in Los Angeles County. The site has irregular borders and runs roughly between Rosamond Boulevard and Avenue B and from roughly 110th to 190th streets west. MidAmerican will pay SunPower $2 billion to $2.5 billion for the projects and a three-year contract to build them. SunPower also will operate and maintain the projects under a multi-year agreement with MidAmerican, the companies announced in a joint statement. The projects will create an estimated 650 jobs during construction. SunPower officials said last month that hiring was expected to begin soon. MidAmerican Renewables, a subsidiary of MidAmerican Energy Holdings Co.,, has a total portfolio of more than 1,830 megawatts of wind, geothermal, solar and hydro assets. The Antelope Valley Solar Projects will provide renewable energy to Southern California Edison under two long-term power purchase contracts approved by the California Public Utilities Commission. "The Antelope Valley Solar Projects mark a historic milestone for the energy industry," said Howard Wenger, SunPower president. "We are delivering highly reliable, low-cost, renewable energy at a very large scale. SunPower is proud to partner with MidAmerican Solar and SCE, recognized leaders in clean energy development, bringing critically needed jobs and economic opportunity to California and helping the state achieve its renewable portfolio requirement." In addition, SunPower will be the engineering, procurement and construction contractor, and will operate and maintain the facility under a multi-year services agreement. Construction of the solar project is scheduled to begin in the first quarter of this year, with the plants expected to be complete by the end of 2015. The project has secured final conditional-use permits and has completed full environmental review pursuant to the California Environmental Quality Act, the statement said. SunPower said the property is privately owned and has been previously distributed. The site is co-located with the existing Antelope Valley Water Bank and is already bisected by an already-approved transmission line project from Southern California Edison. A fact sheet on the project said the solar panels will have a maximum height of eight feet and have anti-reflective panels, not mirrors. According to estimates provided by the U.S. Environmental Protection Agency, the project is expected to offset more than 775,000 tons of carbon dioxide emissions per year, equivalent to removing almost 3 million cars from California's highways over the 20 years of the plant's operation, the statement said. MidAmerican Solar's projects also include the 550-megawatt Topaz Solar Farms in San Luis Obispo County and a 49% ownership interest in the 290-megawatt Agua Caliente solar project in Yuma County, Ariz. "We are pleased to be working with SunPower on this development and look forward to establishing a mutually beneficial relationship with Southern California Edison as our customer for energy generated by this project. As we have done at our other solar project locations, we will work hard to establish positive and productive relationships with community and county neighbors and stakeholders," said Paul Caudill, president of MidAmerican Solar. SunPower has more than 1,000 megawatts of solar power plants operating worldwide, including the first 130 megawatts of the 250-megawatt California Valley Solar Ranch, which is under construction in San Luis Obispo County

Edison Mission Energy Files for Bankruptcy

Edison Mission Energy, an unregulated power-generating unit of Rosemead-based Edison International, indicated in December 2012 that it had filed for bankruptcy and had agreed on a reorganization plan with its parent company and holders of its $3.7 billion in debt. First Solar Inc., a solar power module manufacturer acquired a number of solar power projects in development by Edison Mission Energy, the power generation division of Edison International. This includes photovoltaic projects proposed for the Gray Butte area near Lake Los Angeles and near Mojave. “They purchased the entire development pipeline," said Bob Stiens, public affairs manager for Edison International. The 150-megawatt Gray Butte plant, in the permitting process with Los Angeles County, is proposed for 1,100 acres of agricultural land east of 240th Street East, near Avenue S. Press releases quoted Edison Mission Energy in a statement. “This is an important first step in the process to reduce our debt, enhance our liquidity profile and position EME for continued operation and future success." As part of the deal, Edison Mission Energy will be deconsolidated from Edison International “as of the filing date” and, in the future, will be referred to by the parent company as discontinued operations. Edison International’s stake in the bankrupt generating unit will be transferred to unsecured creditors. Santa Ana-based Edison Mission Energy said it had slightly more than $5.1 billion in assets and just under that amount in liabilities in Chapter 11 papers filed Monday in the U.S. Bankruptcy Court in the Northern District of Illinois. Edison Mission Energy has been struggling on several fronts: depressed energy prices because of the nation’s boom in natural gas production; higher fuel costs affecting its older coal-fired facilities; and pending debt maturities. Despite the challenges, Pizarro sought to strike a positive tone on Edison Mission Energy’s future.

Getting a Land Loan, The Positive and Negatives of a Land Contract for Buyers and Sellers

A Land Contract which is also known as “contract for deed”, or “land installment sale”. The buyer makes payments in order to pay down the purchase price. Under this type of arrangement, the seller keeps title to the property and the buyers make monthly payments. When they were able to pay off the balance owed then the seller would then give them the deed to the property, which would then be recorded in their name In can be interpreted like a rent to own agreement. In one example a seller lost out when the buyer stopped making payments and gave the property back to the seller. Properties values had dropped so the buyers decided to move on. The seller finds out later that the buyers applied for a mortgage loan to buy a home. In this case the buyer would lose out on all of their prior payments, but the seller has no recourse, since he held title and keeps the buyers payments. The seller has to find a new buyer. The seller was complaining because the property values decreased, but he would not be complaining if the property values increased. In this case the seller should have taken a mortgage An example where a buyer loses would be when they make monthly payments for years, and If they can’t make any further payments then they are essentially “out of contract” and will lose all their payments and have no claim on the property. Land contacts are similar to an owner will carry (OWC) as the seller is acting as the mortgage holder instead of a bank. The essential difference with a land contract and an owner will carry type loan is the seller keeps title in a land contract but the buyer has title in an OWC. If the buyer fails to pay on an OWC then the seller can foreclose on the buyer for lack of payments. Land Contacts “land installment sale” are not used as much these day, but can be a viable option as banks are less likely to loan for vacant land. It is also a good option in a decreasing real estate market as our example above shows. Also for home buyers who don’t have the down payment a land contract helps them buy a home over time directly from the seller avoiding banks and mortgage companies.

AV Solar Ranch One’s Progess and Delays

In July of this year the Antelope Valley Solar Ranch One was vandalized by an unknown source. The incident was reported in their monthly meetings to the local community. The damage costs are estimated to be $100,000. The vandal actually cut a transmission line and a water pipe about 2.5 miles from the solar project site. A report was filed with the local Los Angeles County Sheriff’s Department, and a reward of $25000 has been posted by First Solar for information that leads to the prosecution of the vandal. They now have 24 hour security at the site. AV Solar Ranch One (AVSR1) is owned by embattled First Solar, whose stock was over $200 and dropped below $12 but has recovered a little. The project will move on for this 230-Megawatt photovoltaic solar power plant. There were also rumors of a verbal dispute involving the Los Angeles County Inspector and First Solar employees which led to a shutdown for two months. There are 3.7 million cadmium telluride thin film panels that First Solar was preparing to install at the Exelon facility but they are not Underwriters Laboratory-approved. State of California building and safety codes require UL approval of electrical connectors, but it is not the case in other States where First Solar Inc. operates. The issue has since been resolved. There have also been disputes with the local community over debris left by workers, 18 hour work shifts. There are also several individual communities in the area. At one of the community meetings, it was reported that Antelope Acres, some twelve miles from the Solar Ranch One location, was granted $100,000 for its town council, $10,000 for its 4H Club and $10,000 for a community center, among other considerations. First Solar also donated mitigation lands to Antelope Acres’ chosen desert conservancy, yet Fairmont Town Council whose residents live within 500 feet of the site, has been granted nothing. The company indicated that they considered Fairmount to be within the Antelope Acres Community. Well the Fairmont council members didn’t like that either. Also, many local residents complain that the solar panels are an “eye soar” to the landscape among the poppy fields and the distance mountains. The project is approved and it is moving forward despite the small issues for a project of this size. Californians say they want alternative power and jobs and progress yet they do not want them in their own back yard. If the State wants Solar and Wind projects then they have to be built somewhere, and Antelope Valley is a prime location for these projects.

Invest in California Land as a College Fund for your Child or Grandchild

College costs have been increasing dramatically over the past few years with no long term change in site. California has proposition 30 which is a tax hike for California Schools. The proposition is losing in recent polls, so if it fails then the State will have to make further cuts to the education budget. The cuts will be in the billions and will affect all levels of education. An alternative is to invest wisely in real estate like California land. The Antelope Valley is an area of an abundance of available raw land. It is approximately 60 miles or one hour from downtown Los Angeles. Land prices fluctuate over time, but they are at their lows currently. You can buy land in this area for as low as $5000 to $10,000 or more, but with an 8 to 10 year horizon land banking is a low risk investment. If you invested in a parcel of land for say $30,000 at the current low end of the market this should create a viable return in 8 to 10 years. Land and real estate fluctuates in price over a 5 to 10 years timeframe. A parcel bought wisely today should show a 25 to 100% increase in 5 to 10 years as development and the area economy grows. This is what Antelope Valley has done consistently over the past several decades. Fortunes have been made buying low and selling higher in Antelope Valley. We can help you buy an ideal parcel of land based on your budget that has a positive outlook for the future based on it’s current location to city services, such as a paved road, power and proximity to development. So a $30,000 investment with a potential 100% return will more then pay for several years of college for your child. Land is also an inflation hedge as it is increases in value with inflation. It has been recommended by hedge fund managers and the bond king Bill Gross of Pimco that real assets like real estate is a great hedge against a possible future recession or economic slow down. Land is a secure way to plan for the future either as a hedge against economic times or an ideal investment for your child’s future education. Contact us and we can show you how it is done.

Lancaster is Planning Around the Metro-link Station for the Cal High Speed Rail

The City of Lancaster is currently creating a plan to revitalize of the area surrounding the Lancaster Metrolink Station. The funds were provided by a grant from the Southern California Association of Governments (SCAG). The target area to be revitalized is between Sierra Hwy and Division and Lancaster Blvd to Ave J. The regional planning meetings have outlined what they hope to achieve. They look to extend the success of Lancaster Boulevard (The BLVD) to the east side of the railroad tracks, transforming the STVPA into a mixed-use urban neighborhood, well connected to the Downtown area. Use the Metrolink station more as a pedestrian-oriented, multi-modal, urban transit facility at the hub of the Downtown area and the STVPA. They plan to create better pedestrian, bicycle, and bus connections to the Metrolink Station from both sides of the railroad tracks, in addition to convenient access by car. They also plan to make us of the station area for mixed-use zoning that provides transit-convenient housing, employment, and retail uses that complement those on Lancaster Blvd. Mixed Use allows multiple level building of retail at ground level and residential. They also eventually plan to accommodate the California Highs Speed Rail Alignment when and if it passes through Downtown. Does this mean planning knows the direct route of the High Speed Rail through the area? The plans that we have seen are more general and don’t show an exact route. In either case the area around the Metro should see some upgrades and revitalization.