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#318068 - 11/19/19 01:22 PM Who owns the land?
NW Ponderer Offline
Moderator
Carpal Tunnel

Registered: 09/09/11
Posts: 17184
On another forum (yes, I've strayed), an interesting suggestion was made regarding ownership of land. I describe myself as an Eco-Social Democrat or an "Eco-Social Marketeer" because I believe, like most of us here, in a "mixed" economy along the lines of ESME - Eco-Social Market Economy, balancing free market economics, the strive for social fairness and the sustainable use and protection of the natural resources.

In that discussion a suggestion was made that a central failure in our economy is there concept of "owning" real estate. That is, the private ownership of vast swathes of land by individuals and private interests. If, instead, we think of the land itself, like natural resources, as a public "good", why not consider the land itself that way. People do not exist in perpetuity like the land, so why should their real estate interests outlive them? It got me thinking.

I own time shares. In each case, my ownership interest is of limited duration (50-75 years) and will eventually revert. Nonetheless, that interest is fully "defeasible" - meaning I can sell it, bequeath it, and encumber it (mortgage, lien, sublease, etc.).

It seems perfectly feasible to consider all land the same way, and identify the actual ownership, like mineral rights and the air above it, as public goods temporarily controlled by the "owner". That makes every government regulation with regard to the land far more sensible and enforceable. We already treat most "Indian lands" that way - as "owned" by the tribe, and temporarily "possessed" by the individual member.

This concept lit a fire in my brain and I have been perseverating about it ever since. The implications are profound, yet sensible. Instead of appreciating endlessly and accumulating to private benefit, ownership would benefit the public over the long term. Ownership would depreciate in concert with appreciation and could be extended through negotiation. Anyway, I wanted to get the idea out there to my fellow Rant denizens for their thoughts and discussion.
_________________________
A well reasoned argument is like a diamond: impervious to corruption and crystal clear - and infinitely rarer.

Here, as elsewhere, people are outraged at what feels like a rigged game -- an economy that won't respond, a democracy that won't listen, and a financial sector that holds all the cards. - Robert Reich

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#318077 - 11/19/19 03:49 PM Re: Who owns the land? [Re: NW Ponderer]
logtroll Offline
veteran

Registered: 04/26/10
Posts: 9585
Loc: One of the Mexicos
I do believe you are onto something, though I think it encompasses a much more general field of "commons".

I have been working with the LLC form of ownership for business ventures - the LLC being more amenable to supporting triple-bottom-line interests. In the operating agreement it is possible to detail out a management structure (none of the LLCs I'm a member of have their general operations run by a committee of all, there is either a trusted managing member, or a small board of managing members - but certain larger decisions are to be voted on by all members). The LLCs all own property, but the members own a piece of the company and do not directly own any of the property themselves.

One of the first LLCs I participated in was a historic hotel. At first the initial owners were following the closely held ownership model. They borrowed money from a local bank and proceeded with some really major renovations (it was an abandoned hulk when they purchased it). They ran into a couple of major financial issues after they had sunk about $2 million into it; one was that they didn't borrow enough money to complete the renovations, the other was that the 2008 recession hit (there's a really interesting but complicated and sordid story there). They had organized as an LLC with only two members (husband and wife).

The owner managed to slog though a Chapter 11 bankruptcy and reorganize, this time with the idea of acquiring capital through new member investment. The hotel was partially open and generating revenue. The pro forma indicated that once certain of the remaining renovations were complete that it would have a positive cash flow at around 32% occupancy. It was at an annual average of 24% occupancy, with some months exceeding 50%, which meant that operating expenses were always covered but the mortgage ($22,000/mo) was eating up the new member capital.

After much analysis and a search for ways to bridge this no man's land between staying open and getting to 32% occupancy, and really diving deep into the LLC model, we did a DPO (direct public offering) with a goal of raising $600,000, which would carry the budget through completion of the renovations and a projected rise in occupancy to 65% within two years (the local Holiday Inn enjoys an annual 80%).

We also saw that if we could sign several hundred new members from the community, most of them at a modest $10,000 level, we could buy out the loan and eliminate $22,000 in monthly expense. The benefits associated with that, aside from the basic financial calculations, were that the business would become essentially risk free - the property could not be taken by creditors, and all of the profit would stay in the community. This situation would enrich the local economy and create a stable, sustainable, recession-proof shared asset. And the whole community would be advocates and salesmen for the hotel.

I won't belabor the potential any further (I have to get to work), but I believe this is an example of NWP's thoughts relating to land ownership.

Unfortunately, we were not able to sell the idea to enough locals in the time available, and the bank was actively working against us (they wanted the property). They did foreclose and take ownership of the property, which immediately plummeted in revenues. After three years they finally sold it to an out-of-state buyer for 1/3 of the amount of the loan balance. That's how greedy and narrow-minded capitalism works...
_________________________
You can’t solve a problem without first understanding what the problem is.

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#318078 - 11/19/19 04:46 PM Re: Who owns the land? [Re: logtroll]
Greger Offline


Carpal Tunnel

Registered: 11/24/06
Posts: 15781
Loc: Florida
And this is what happens to most "property". It changes hands pretty often. Escalates in price for one reason or another, then deflates.

The parents die and the house sells, the farm goes under and the land sells, the neighborhood goes to hell then someone buys it and builds apartments.

It worked about the same for native Americans...they'd live somewhere until it started to stink and the game was gone, then move a few miles away...The land will still be here when we all are gone.

Until a single mega corporation owns it all then everyone will just pay them rent.
_________________________
"Be yourself; everyone else is already taken."— Oscar Wilde

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#318090 - 11/20/19 02:20 PM Re: Who owns the land? [Re: Greger]
logtroll Offline
veteran

Registered: 04/26/10
Posts: 9585
Loc: One of the Mexicos
My intention was to show a model for a form of community ownership that exists today.

The hotel example drives home the point that standard capitalism is riddled with instability while the large group LLC, with a strong triple-bottom-line mission, is inherently less risky and more regulated - and it can outlast its members.

I am also a member of a farm LLC. The LLC purchased a small, historic farm that lies partially within the town and part in the county. It is where all of the food was grown in the late 1800s for the newly established mining community. About ten years ago it came up for sale after having been abandoned for farming by the previous owners when the father died and his heirs ignored it for 20 years. Consequently, the property was a mess and not highly attractive, as it would take a lot of cleaning up - it was also in the 2008 recession, so property wasn't moving.

In the ordinary free market capitalism system, it was headed for its "highest and best use" (meaning most monetary value) as a horse property + McMansion, or a subdivision. A group of conservation and sustainability minded folks stepped up and formed an LLC, each putting in $20,000 to buy it.

Below is the mission of the company:

1.2 Purpose.  The Company has been formed:

To conduct technologically advanced farming operations for profit, to provide a space for experimental agricultural technologies, to conduct educational experiments for local students, to conduct educational presentations, to become a destination for ecotourism, and to afford limited and reasonable space for recreational activities

To engage in all activities necessary, customary, convenient or incidental to the foregoing, and when doing so, make a concerted effort to incorporate the Triple Bottom Line -- community and environmental effects, economics and profit, and social considerations -- into the Company’s operations, evaluation, and decision making processes, as articulated in our Values.  

While the Company is organized as a for-profit organization, our Values direct we embrace a philosophy of business with purpose that addresses how we benefit (or impact) our community, employees, stakeholders, the natural environment, and customers.  We hold ourselves to a higher standard than simply looking only at how much profit can be extracted from this business.  The Company’s Operating Members shall measure their decisions, actions, and operations of the Company against the following:

People: TOCG will strive to create meaningful jobs in rural areas and local economies, seeing that the benefits are widely distributed and not concentrated in mega factory facilities.

Planet: Every aspect of the lifecycle of TOCG products will be developed to create a system of leveraged synergies resulting in production of healthy products and regeneration of environmental health.

Profit: It takes money to launch and grow any effort, whether for profit or not. But the opportunity to make a profit better supports long term vigor and sustainability than a donation-based enterprise - and the government is not a suitable entity to lead the way. TOCG believes that our culture’s current overemphasis on profit is one of the major drivers of environmental and social decay, and is following a new ethic - one where money is regarded as a tool for more success and community stability, and not as a treasure to be hoarded.
_________________________
You can’t solve a problem without first understanding what the problem is.

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#318094 - 11/20/19 06:37 PM Re: Who owns the land? [Re: logtroll]
Greger Offline


Carpal Tunnel

Registered: 11/24/06
Posts: 15781
Loc: Florida
Quote:
My intention was to show a model for a form of community ownership that exists today.


And my intention was to blow it out of the water because it's a model that, while admirable, is not going to solve any problems. Communal farms and apartment buildings, employee owned businesses...all are admirable plans that could have been implemented with more regularity and could have become major influences on the economy.

But they didn't.

And they aren't going to now because the only model that currently works is the corporate model. Because that provided the highest profits to investors and the greatest protections.

It is now entirely up to government to do something about corporate greed, down here in the trenches, try as we might, we are just outgunned. It can't happen until enough voters want it to happen.
_________________________
"Be yourself; everyone else is already taken."— Oscar Wilde

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#318095 - 11/20/19 07:24 PM Re: Who owns the land? [Re: Greger]
logtroll Offline
veteran

Registered: 04/26/10
Posts: 9585
Loc: One of the Mexicos
Originally Posted By: Greger
It is now entirely up to government to do something about corporate greed, down here in the trenches, try as we might, we are just outgunned. It can't happen until enough voters want it to happen.

What do you want the government to do about it?

Just like with the Green New Deal, there are going to have to be some models of what can replace the cancerous corporate greed model.

There's a myth that corporations and limited liability companies are prevented by law from doing anything that isn't for the purpose of making the shareholders (corps) or members (LLCs) money. It's not a law, it's an effect from shareholders suing corporations for "wasting" their investment potential on activities that don't return money (other social and environmental benefits are not considered to be returns on investment).

But if the triple-bottom-line benefits are built into the operating agreement, it's a hard path to sue over there being reduced monetary returns.

The problem is that there are so many people who do not share the TBL ethic, and gathering investors means that some will inevitably be greedy bastards. It's a problem of culture, and by extension, human nature.

My position is that the only way to change human nature, and culture, is by example. Am I doomed to fail? I don't know, but I will die, I'm pretty sure. So as a fragile aspiration in life, I plan to die in the attempt to create a better culture than we have now. Call it a hobby if you want. crazy
_________________________
You can’t solve a problem without first understanding what the problem is.

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#318098 - 11/20/19 07:40 PM Re: Who owns the land? [Re: logtroll]
Greger Offline


Carpal Tunnel

Registered: 11/24/06
Posts: 15781
Loc: Florida
Quote:
What do you want the government to do about it?


1) A living Wage

2) National Healthcare

3) Tuition Free College Education

There are more but taking care of those three will pave the way for the rest.
_________________________
"Be yourself; everyone else is already taken."— Oscar Wilde

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#318114 - 11/21/19 01:33 AM Re: Who owns the land? [Re: NW Ponderer]
pondering_it_all Offline
veteran

Registered: 02/27/06
Posts: 8951
Loc: North San Diego County
All worthy goals and just expansion of programs we have now. They are just a complex patchwork now, with a lot of holes people fall through.

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#318123 - 11/21/19 03:32 PM Re: Who owns the land? [Re: NW Ponderer]
NW Ponderer Offline
Moderator
Carpal Tunnel

Registered: 09/09/11
Posts: 17184
Thanks for advancing the thread while I bought a new car and sold my old one.... (been a little busy)

In the interim, I've had more thoughts on the subject - especially after seeing a story about a couple of modern "ghost towns". Both towns were condemned as a result of long-term environmental degradation by mining companies - a salt mine, and a coal mine, respectively. I also thought of the 9th Ward, and other parts of New Orleans, after Katrina, and the looming natural disasters from climate change.

If the communities in question had been government-owned, and only subject to leasehold interests, responding in each case would have been simpler and more efficient. Moreover, the individuals who suffered tremendous losses would likely have been more quickly and more completely compensated for those losses (I used to advise on FEMA projects). Of course, such a structure for a nation of our size would itself have to be enormous. Perhaps even bigger than DHS. Our "tax" systems would have to be revamped - property taxes would become lease adjustments, for example - but, ultimately would become more nimble and equitable (much to the chagrin of certain corporate entities).

Perhaps most significantly, land use regulation would be far more robust - after all, we're the land owners - and there would be less opportunity for mischief and delays from intransigent land "users". Of course, that would also make government intervention more common and more onerous - eviction processes are much faster than foreclosures. But public interests would also be far more prominent. Imagine if the government only had to show a mining company breached its lease, rather than having to demonstrate it is a public nuisance.

I'm still thinking of other implications, but the concept still intrigues me. Wow... I just thought of another one - Trump's lease of the Old Post Office. So much for emoluments!

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