“I called to inquire as to the status of a release on the permit for a pond on the Laprele Creek Ranch, which the Agency has said might be Preble’s meadow jumping mouse habitat.”
Her voice was icy. “We have a number of pending applications for those types of projects in potential Preble’s meadow jumping mouse habitat areas. They are being processed in order.”
I was annoyed. “What exactly do we need to do to get this done? We have been waiting seven months.”
“We need to come up and inspect the pond location to see if there are any Preble’s meadow jumping mice.”
“When might that be?” I snapped.
“Sometime this year,” she answered, her tone smug and matter of fact.
Now I was exasperated, “This application has been pending for months, it’s now June. Sometime this year could be another six or seven months. Are there any indications that there’s ever been a Preble’s meadow jumping mouse found in this location or anywhere near this location?”
“No, but it’s possible,” she said stubbornly.
“So is the sky falling?” (She didn’t appreciate that comment much.) “Out of curiosity, if you find a Preble’s meadow jumping mouse, what do you do then?”
“We would have to do a necropsy to make sure that it is a Preble’s meadow jumping mouse, of course.” Her tone was condescending. These ranchers—I have to explain everything to them.
I paused as her words sank in and then asked incredulously, “You mean to tell me that you’re delaying the work of hundreds if not thousands of people, on hundreds of properties, on tens of thousands of acres, because the area might ‘potentially’ be habitat for a species that may not exist, and if you find one, you’re going to kill it to do a necropsy?”
“Yes.”
Fueled by that absurd conversation, I climbed the chain of command and we managed to jolt loose the permit for the pond about thirty days later. USFWS never did inspect.
A friend of mine who has a farm in Idaho was slapped and shut down by the EPA because his dry land farming operation of several generations now, suddenly, “raised too much dust.” Based on my experience, running a tractor over dirt with a plow raises dust. He got the situation resolved but not until after he had lost a full planting season.
A More Down to Earth Agency
The U.S. Army Corps of Engineers exercises jurisdiction over certain resource matters too, particularly perennial—year-round—streams and rivers. The Army Corps has many great accomplishments, but they began to overreach in the 2000s. In 2009, a major federal lawsuit determined that they did not have the jurisdiction they claimed to have over spring sources, and non-perennial—intermittent or seasonal—streams. In the Army Corps’ defense I have worked with them on several occasions. They have employed common sense, and permits were processed very quickly in emergency situations, including one on the Big Hole River back in 1997, a historic flood year. The river threatened improvements and a cabin owned by one of our clients. The Army Corps, much to its credit, processed the permit in forty-eight hours, allowing work to begin which in the end actually benefited stream habitat, and saved the structures.
There Are Some Rules That Work Too
Some regulations, if properly written, and employed with common sense by knowledgeable local people, have benefit. A state-level statute known as the 310 Law, existing in many states and with several different variations and nomenclatures, prohibits landowners from disturbing or altering the stream bank or streambed without the proper plans, study, permitting and inspection by local agencies. Given the dire downstream effects to the entire basin if somebody is mucking around in a river or creek, this is a regulation that makes sense. It’s generally applied with common sense, though there are exceptions.
Ever Spreading Federal Tentacles
But the cascade of regulations coming out of Washington D.C. usurp local control, delay, shut down, and scuttle good projects, and in extreme cases can result in litigation, fines, and penalties. The federal government, especially over the last three or four years, has attempted to greatly broaden its reach in a number of areas. Here are some concerns:
Thirsty? Too Bad
Just before this book went to print, the Department of Interior wrote a letter to Tombstone, Arizona forbidding them from reconstructing their damaged water systems except with a pick and shovel. Julie Decker of the Interior Department wrote: “Federal water rights are entitled to a form of protection that is broader than what may be provided to similarly situated state law rights holders.” This flies in the face of state rights and long standing water law across the United States dating back to pre-Constitution in the East and pre-statehood in the West. The Department of Interior, with other agencies are now restricting Tombstone, Arizona’s access to and repair of collection systems of Tombstone’s adjudicated water rights located on Federal lands. It is doing the same to Arizona ranchers, telling them that they may only access the pipelines and collections points of the ranchers’ own water rights if the ranch turns those rights over to the Feds.
Hungry? Tighten Your Belt
A plethora of regulations governing the cultivation of food have tumbled from the computers of Washington bureaucrats who have never held a shovel. Regulations have become political and ideological. Remember the shutdown of a substantial portion of the fertile San Joaquin Valley brought to your attention earlier, or the new farm dust rules. There is a worrisome correlation at all levels of government between new regulations and restrictions, and the overriding theme of Agenda 21, and its spawn of like “policy” documents in the United States.
What’s Mine Is Mine and What’s Yours Is Mine
Virtually everyone has heard tales or read news accounts of eminent domain run amok. Eminent Domain is the so-called right of a governmental jurisdiction to take or seize private property, if the seizure is deemed to be in the immediate public interest. Owners are many times paid only pennies on the dollar after an arduous and convoluted valuation process. A landmark Supreme Court case that arose from an eminent domain taking in New Haven, Connecticut was unfortunately decided against the landowner by the Supreme Court several years ago. Now, local governments, and a number of states, desperate for money and in ploys to increase their real estate and sales tax base, have seized or attempted to seize entire neighborhoods and blocks only to turn around and give them to a private party planning to build a shopping center or other commercial enterprise.
In the West, eminent domain battles have flared in a number of states as alternative energy projects, both wind and solar, (all of them fueled by 60 to 80% federal subsidies), most of them ill-conceived, premature, and far from any metropolitan area needing the power source, condemned lands for the construction of massive transmission lines through pristine wild lands, some with vertical towers rising one hundred eighty feet (eighteen stories) and placed every thirteen hundred feet, with a road to every tower. It is difficult to comprehend how the earth can be saved by ruining the land.
Some states provide for a payment to a landowner in such cases, not only on the property being taken (the one hundred to three hundred foot easement, times its length across the property,) but also for the diminution of value to the rest the property. Monstrous power lines across your property will detract from value.
Other states have somewhat antiquated laws. Provision for payment of diminution does not exist in the statutes. If a swath across your property is condemned, you will be paid the miniscule amount for the taking, but not the hundreds of thousands, or millions of dollars in value that you will lose. Tough luck.
This is a continually evolving and critical area of law—the sharp edge of property rights, versus government power. I will be updating you in Volume Two and Three on these rapidly developing circumstances. Suffice it to say, when you purchase your land, one of your due diligence checklist items should be the possibility of all, or portion of the land, being subject to some type of eminent domain action—for a power line, a roadway, rapid transit
, (a huge problem in Maryland), or other use that some government bureaucrat will subjectively determine to be immediately critical to public welfare. In Volume Two we will discuss how to shut down these types of attempted takings. It is difficult, but it is possible. And in fact, we have done it.
A Maze of Restrictions Flow from Many Levels
Cumbersome and outrageous restrictions unfortunately do not flow just from Washington. Some states, most notably New York, California, Oregon, and Washington, have gone overboard on environmental and land-use restrictions. There are also cities and towns taking steps to exercise greater, and increasingly unrealistic subjective control over your property—New York, San Francisco, Boulder County, CO, Amherst, MA and many other locations. It is important to check state and local laws, while you are putting together your long-term property plan prior to purchasing your property. Understand what you’re allowed to do—or more frequently, not allowed to do.
Some states like Colorado will allow you to create a subdivision by merely filing a survey so long as the tracts surveyed are thirty five acres or more. The same used to be true in Montana, but that minimum was increased in the early 1990s to one hundred sixty acres. Wyoming just raised its minimum to one hundred forty acres. Some states don’t allow such “survey plats.” In those locations, no matter what you want to do with your land, even if it’s shave off two hundred acres of your six-hundred-acre parcel, or give an acre to your kids to build their home on the edge of your five-acre parcel, all the planning, zoning and approval steps must be followed to create the tract and allow for its legal transfer. Still other states, notably most of the agricultural states, have some type of provision, (with limitations) whereby you can transfer one, five, or ten acres to a family member (if your operation is agricultural) with minimal paperwork, for the construction of their residence.
We previously discussed mortgage exemptions. A mortgage exemption is a survey done just for financing purposes and is a critical tool in the current regulatory environment because there are limitations on how many acres you can have in your house mortgage. A mortgage exemption survey will create a non-transferable chunk of land that corresponds to the maximum acreage limitation in the new regulatory guidelines, and avoids a costly planning process.
And Then There’s the Private
There is a growing trend toward rural acreage Homeowner, Neighborhood or Recreational Ranch Associations. Gated acreage and equestrian communities, and large properties with expansive ranch, farm or wild common areas, surrounded by acreage tracts have become more popular. The covenants for these types of land micro-manage, sometimes down to the color and shapes of mail boxes. Read the Covenants, Architectural Control, By Laws, and other Association documents carefully! Some restrictions are good neighbor common sense and safeguard everyone’s values. Others not so much. An effective rule of thumb is, “which restriction that I don’t care for, would I be willing to remove from my neighbor’s property?” That exercise quickly inserts realistic perspective.
1For official United Nations and other links to all forty chapters (four sections) please see Resources section in the back of this volume.
2This matter transcends presidents and parties, though implementation at various levels of American government has accelerated over the past four years.
3The full text of Agenda 21 can be found on the website of the United Nations itself, UN.org. Links are provided in the Resources section in the back of this volume.
4The full text of Agenda 21 can be found on the website of the United Nations itself, UN.org. Links are provided in the Resources section in the back of this volume.
Yes, conventional financing for land is currently problematic. Regulations of every type and nature are ever constricting. But the essence of land, its soothing balm to your heart, protection for your wallet, and the wide range of goals and objectives land ownership can achieve for you and your family, have not changed. In fact, in my opinion, the current macroeconomic brouhaha has merely heightened the importance and benefits of owning your chunk of earth.
Fortunately, in adversity there is always opportunity. The last time I saw land prices this low on a relative basis was 1979 through 1982, Jimmy Carter’s last year, and the first several years of the Reagan presidency. The situation then has many similarities to today’s environment—although there are some differences that have evolved with the passage of time.
There are always sellers who want or need to sell. This chapter offers some helpful insights for those of you who fall into in that category. For purchasers, or would-be purchasers of land, my opinion is that there’s never been a better time to buy than in the last three decades. Most types of land (other than residential, standard subdivision building lots) have held price levels far better than housing, and certain types of land with production potential are actually increasing in value. Land prices—other than production ground—remain depressed from their 2005–2007 highs in most areas. Over the last few years though I have not personally purchased, I have assisted others inthe buying process, so my opinion is based on sitting in both seats. Some of the outfits with which I’m associated have land for sale. I have the unique insight that flows from talking to many potential buyers and realtors. Over the last six months the number of inquiries has increased, the quality (financial wherewithal of those inquiring) has strengthened, and on a market wide basis there are more contracts and deals in most locations than at any time in the last three years. While housing has not yet bottomed out in most markets based on facts, figures, statistics and languishing prices, I believe—barring unforeseen macroeconomic cataclysm (which might be exactly the time to already own a piece of land and be self-sufficient), the land market appears to be moving upwards from its bottom.
In my mind, there are two basic types of real estate. I call them duplicable real estate, and one-of-a-kind real estate. Here is the way I view this foundational reality:
Anything that can be built—an office building, shopping center, residence—can be duplicated. Someone can always build another. But man cannot create a hill, a view, a river, a vista. Land is one-of-a-kind. There is less and less of it available.
More and more over the past ten years, I’ve seen folks buying for the long-term—not just their lifetime, but for their family legacy. That land is probably off the market for decades, if not longer. Increasing regulations has removed certain parcels from the mainstream market. Who wants to buy a problem? The ten thousand people a day joining the ranks of retired baby boomers have added additional pressure on the finite supply of land. This group is increasingly active in their search for land. They are looking for investment, retirement, retreat, a safety net, recreation, an inflation hedge, or to return to their roots, which in the case of many baby boomers is a rural or agrarian childhood.
I consider all of these silver linings. These are the foundations of a strengthening market with pent-up and increasing demand. The greatest silver lining, however—besides great prices on a relative basis—is that this is the perfect opportunity for creative financing between a buyer and seller. Referred to as “seller financing,” it comes in many forms. It can be via a note and mortgage, a note and deed of trust, or what is known as a contract for deed, which has several variations. There are also options or leases with a right to purchase, along with other mechanisms for specialized situations. Those will be discussed in Volume Two.
Be Imaginative—Be Creative—Be Smart
The truly great thing about a buyer and seller negotiating their own financial structure is that it usually cuts out the time, angst, cost, and potential disappointment of the myriad of hoops thatone must jump through for conventional bank or lender financing. While a buyer is certainly free to get an appraisal prior to purchase, an appraisal is no longer necessary to the deal. The three inch thick pile of documents attendant to a closing with a financial institution is decreased to a fraction of that. Buyers and sellers can negotiate terms and conditions that really suit each of their individual nee
ds, time frames, and cash flows, rather than being restricted to a fairlyfinite box of “what can and can’t be done” in conventional finance. There are no LTV guidelines other than what the seller feels comfortable with taking as a down payment. In a mutually satisfactory seller-financed transaction, it is important that each understand the needs and wants—at least on a general basis—of the other.
Get Assistance
I strongly recommend, in a transaction involving seller financing, regardless of what form of the basic types or iterations referenced above, that each side have a competent local attorney familiar with this aspect of real estate business. A discussion with your CPA regarding the tax impact is certainly warranted. There are some details that need to be thought out and agreed upon that can affect gain, ownership, success, and tax of each of the parties. See the discussion on those matters in Chapter 14.
Sellers!—The Sale Price Doesn’t Matter
Do I have your attention? Sellers, remember the “pig is fat and happy rule.” In truth, the sale price does not matter. Think about the examples I gave you to ponder in Chapter 11. In both cases, our imaginary seller selling the small piece of property, and our true story seller selling the enormous ranch, less fixation on the sale price, and more time spent noodling the numbers—all the numbers—would lead our imaginary seller in that example to take the deal, and our real-life seller, who’s been sitting on his ranch for more than three years, to also sign on the dotted line—at least in my opinion. If I had been a seller in that situation, all things being equal, my response would have been, “Hand me the pen.” The only thing that should matter to a seller is what’s in my pocket at the end of the transaction. As those examples indicate, computations include inflation rate, carry, operating expense, realistic market trends, personal considerations, and the opportunity cost of money. Factor in the math, and you might accept a deal which you wrinkled your nose at on face value.
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