In 2016, the Strategic/Long Range Planning Committee created our Plan on a Page to be used as a guideline for one- to five-year goals for the Association. Added to the list of One Year Action Plans was to study and assess the viability of land acquisition in the surrounding area; this dates back to the 2005 Comprehensive Master Plan. This action step has been on the Plan on a Page every year since.
In 2017, one of the goals for General Manager Shaun Nordlie, determined by the Board of Directors, was to study and assess the viability of land acquisition in the surrounding area. Part of what Shaun did with this goal was to talk with a local realtor and ask to be alerted to any land going up for sale around ACL. When the realtor would alert Shaun, he would share this info with the Board so that the Board could discuss the land and be aware of what is on the market. There have been numerous pieces of land around ACL in the past that either sold prior to ACL learning they were for sale, or ACL not having the resources to purchase the land. This plan assures the Board of Directors would know about any land for sale and have the opportunity to discuss a purchase.
The realtor notified Shaun of a piece of property for sale on the northeast side of the lake in December 2017. The Board discussed this property but decided it did not fit into our plans well enough to pursue a purchase.
In July 2018, Shaun was notified about a piece of property at the corner of Lake Road #3 and Apple Canyon Lake Road. The property was 134 total acres and was broken up in two tracts– one just over 100 acres, stretching from Lake Road #3 to Schapville Road; the second was just under 34 acres at the corner of Schapville Road and Scout Camp Road. The land has a current ground contract , with two more years on the lease. The seller has moved to Florida and is starting to liquidate his Illinois assets and allowed the realtor to bring this property to ACL first before making the sale public. This information was shared with the Board at their July 21 meeting.
In the next month, the GM was instructed to contact legal, banking, and owners in the farm community that can give us insight to the purchase.
Shaun spoke to the Association’s legal counsel regarding the governing documents and CICAA to confirm that the Board of Directors could make this purchase legally. They confirmed that a purchase could be made by the Board of Directors.
Shaun spoke to the Association’s banker regarding the possibility of using reserve funds, or financing if a purchase was made. Shaun was told that the rate on loan, at the time, was 5 percent. The banker also shared with Shaun some comparable farms that sold north of the lake and some news on commodities.
Shaun then spoke to a local property owner with extensive agricultural experience regarding the price of the land, lease price, commodities and future leases. This owner gave Shaun information regarding the purchase price of the land and how it compared to all of Jo Daviess county and NW Illinois. The lease price was also comparable to Jo Daviess and northwest Illinois prices. Commodities prices on soy beans have fallen from $10 a bushel to $8.50 since the tariffs talks with China. So, this could affect future leases if prices did not go up, but it was felt that leasing the property would not be a problem in the future. The owner also knew the current tenants and discussed their practices and other farms that they leased in our area. It was also discussed that if ACL passed, he thought the realtor would have multiple people that would pay the asking price immediately.
Shaun then spoke to another property owner who owns farmland south of ACL. The owner told Shaun how much he paid for his land, how it was rated, and what he charged for rent. Jack said the asking price was fair for the land and the lease price was a very good deal for ACL.
All of this information was shared with the Board at the August 18 BOD meeting.
The board discussed the pros and cons of purchasing this land.
- Control the use of the land – ACL already fought once to not have a prospective owner in the past put up condos, gas station and convenience store. If we own the land, we control what goes on the land.
- The land is contiguous – it is not in the watershed, but it does bring in a lot of water to the golf course and to Hell’s Branch below the dam. To have the opportunity to purchase land that connects to ACL in this location is an opportunity that needs to be considered.
- Return on Investment (ROI) – the money the lease brings in every year is a higher return on investment than what the money makes in the bank.
- Future amenities can be considered at this location at some time. Just like the Lower 80 offers opportunity for expansion of amenities, this property will do the same.
- Uncertainty in the commodities market – not sure about the price of soybeans or corn in the future with tariffs. Could bring in less lease money
- The purchase would use reserve money, which would most likely delay CAMP or the next capital project.
Based on these facts, the Board felt that they should pursue this purchase. At that time, it was decided that Shaun and Mike Harris would talk to the realtor about an offer and find out where he felt we could start with an initial offer; this meeting was on August 21. Mike and Shaun were told that the owner bought the land in 2014 and paid $7600/acre at the time. On August 22, Apple Canyon Lake made an initial offer of $7800 with the contingency that an accepted offer would have to be approved by the Board of Directors. The owner rejected our offer and stood by the original asking price of $8000/acre. We countered again with $7900 on August 28. The owner stood by his price of $8000/acre. But did say he would pro-rate the rent for the year, so if we close by October 1 we would receive a check for $10,500 or $3500/month depending on the closing cost, the owner gave us until September 16 to accept the offer.
The Board of Directors felt that this purchase was important enough to possibly delay CAMP or another capital project. CAMP is delayed now with the soil boring results so 2020 would be the earliest that anything could start and that might be pushing it.
The opportunity to own this land, when at one-point ACL had to fight to not have condos and retail space go up is something that needs to be considered.
We do not have plans for this land at this time. We will continue to lease the land as farmland as we do the Lower 80. If the time comes that we want to develop this land for additional amenities it will be considered and planned, just like the Lower 80. There are no plans at all to add more lots at any time to ACL.
This process was quick and not communicated to membership for a few reasons; the Board of Directors had to keep this quiet since we were given the first opportunity for this land and sharing that with the owners may have jeopardized the asking price or our purchase. We were also given a deadline by the owner to accept the offer, we could not spread this out further to hold discussion with membership.