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This is a really important step back to take to get the 20,000 ft view and make sure we're not making any mistakes while lost in the minutiae of the deal. We a

This is a really important step back to take to get the 20,000 ft view and make sure we're not making any mistakes while lost in the minutiae of the deal. We are interested in leasing the land. One thing that they did explicitly write out was that they would be responsible for returning the land to it's original condition so that's not as much of a worry. The developer did provide us with a brief resume, but I'll be sure to get more specific. That's some good insight into the development process and thanks!

brudgers 11y ago
The lease may require the lessee to return the land to the original state. Unless the money to do so is escrowed, there's significant likelihood that it will not happen at their expense. Businesses fold. They go bankrupt. Industrial sites go on the Superfund list. Power generation no matter how green is still industrial. A great deal of real-estate development happens via limited partnerships. These are specifically designed to be easy to terminate. Real estate development projects are often designed to be sold on and then the LP folds. Suppose the lessee doesn't restore the landscape at the end of the lease. Is your organization willing to lawyer up? Will your organization necessarily benefit from returning the land to its original condition? The value of the land with the lessee's improvements may be higher than in the original condition. Finally, is leasing the land for an industrial process really consistent with the long term vision and mission? The feel good of green energy promises shouldn't outweigh those values. A project that requires a subsidy to be feasible is less likely to be viable over the long run. By which I mean, if your organization doesn't lease the land, the developer should still be able to make a go of their project via an ordinary real-estate transaction. If the developer cannot, it's a red flag on their pro forma.

brudgers 11y ago

The lease may require the lessee to return the land to the original state. Unless the money to do so is escrowed, there's significant likelihood that it will not happen at their expense. Businesses fold. They go bankrupt. Industrial sites go on the Superfund list. Power generation no matter how green is still industrial. A great deal of real-estate development happens via limited partnerships. These are specifically designed to be easy to terminate. Real estate development projects are often designed to be sold on and then the LP folds. Suppose the lessee doesn't restore the landscape at the end of the lease. Is your organization willing to lawyer up? Will your organization necessarily benefit from returning the land to its original condition? The value of the land with the lessee's improvements may be higher than in the original condition. Finally, is leasing the land for an industrial process really consistent with the long term vision and mission? The feel good of green energy promises shouldn't outweigh those values. A project that requires a subsidy to be feasible is less likely to be viable over the long run. By which I mean, if your organization doesn't lease the land, the developer should still be able to make a go of their project via an ordinary real-estate transaction. If the developer cannot, it's a red flag on their pro forma.