[MD] Capitalism: A Question of Morality

[Dan Glover]

Hello everyone

>From: Khaled Alkotob <khaledsa at juno.com>
>Reply-To: moq_discuss at moqtalk.org
>To: moq_discuss at moqtalk.org
>Subject: Re: [MD] Capitalism: A Question of Morality
>Date: Fri, 3 Nov 2006 20:15:22 -0800
>
>
> > >[Dan]
>
> > > > What is the right thing for the land? What about the farmer who
> > now leases the land for crop production - isn't he entitled to some
>small
> > > > measure of loyalty?
>
> > > > How would you advise Roy? What would the MOQ say about this?
>
>Well I thought about that. In a way, thanks to that farmers renting of
>the land for the last few years that had kept the money flowing. i had
>thought about that. I a way he was his partner in keeping the cash coming
>when maybe no other sources were available ( maybe?).

Hi Khaled

I understand, yes. "Roy" is in effect partners with the man who leases his 
fields to plant crops. However, Roy and the man renting his fields have no 
experience growing trees, only crops.

>
>[Khaled earlier]
> > >Well I live here in California's Central Valley where things get
> > even more complicated. Do to what is know here as proposition 13, the
> > taxes are assessed on the land by the original purchase price. So if he
>
> > bought it at 1,000 and now it's worth a million, well he only pays
>taxes
> > on the $1,000.
> >
>[Dan]
> >
> > Wow. That's got to stress the infrastructure. I mean, someone has to
> > pay for roads and schools and myriad other things we all take for
>granted.
> > And those  costs go up every year. How do they do it?
> >
>
>Well here are 2 points of view to this:
>
>A person plans to retire along the California coast, so in the mid 1970
>he and his wife buy a house along the coast for under 100K.
>Twenty five years later, they sell it for about 500k and move close to
>the water in a house they buy for about 700K. It's now the year 2000. it
>took about 25 years for the house to be worth 5-6 times the original
>price. Their taxes are now for the 700K house.

I get it. As long as you live in your house and don't sell, your taxes are 
frozen. But when you sell, then they are adjusted.

>Today, that house is worth about 4-4.5 million dollars. at 1% property
>tax that's $40,000 a year in taxes. They are retired. No kids in the
>local schools, the cost of the upkeep on the roads and the police surely
>has not gone up 8-10 times in the last 6-7 years. Whatever happened to
>the American dream of work hard invest in your future so you can plan
>your retirement.

All the equity has been taken out of that dream.

>
>A close friend of mine bought a house 5 years ago at 75K, it's now worth
>325K. His salary hasn't gone up in five years. Why should he get
>penalized just because the housing market went crazy.

Right. That's rough.

>The flip side is, a person buys a lot in town, and the area develops and
>values goes up he leaves the lot barren. renting only to the Christmas
>tree people once a year. Had that person been assessed the current
>property tax, he would have had to develop the lot ( make it viable to
>the community to) instead of just leaving it as an eyesore the rest of
>the year.

During negotiations on the 1033 exchange I wrote of earlier we came to an 
impasse on money. The park district was offering a certain amount but my 
client wanted more. My client had mentioned to me in passing once that he 
also had a vacant lot in a nearby town that wasn't doing a thing for him. 
Now it so happened that the vacant lot was close to the park district 
headquarters. I knew (from attending city meetings) that the park district 
was looking for a place to build a storage building for city vehicles. I 
mentioned the lot to my friend at the park district and we were able to 
incorporate it into the transaction, raise the price on the farmland, and 
seal the deal.

So sometimes those vacant lots can be a lot more than just an eyesore.

>
>[Dan}
> > They say our oceans are dying and there will be no more wild seafood
> > within
> > 50 years. 50 years! We have some hard choices to make.
>[Khaled]
>someone in this group had a link to the story about that. very alarming.

I remember the first time I saw the ocean it seemed as vast as the sky. No 
more.

>
>
>[Khaled previously]
> > >1. Help his friend start the nursery
>
>[Dan]
>This isn't an option. The nursery man isn't a friend, only a
> > interested  party.
>
>[Khaled]
>What I meant is to help the buy who is currently renting it for corn and
>soy switch over to the nursery business.

He doesn't know the nursery business. It's tough enough succeeding at 
something you know, much less at something you don't know. I think that's 
the general hangup.

>By the way, you mentioned the land becomes useless for general farming
>after being a nursery. Why?

Well, I am no expert but the way it was explained to me is that growing 
trees puts certain chemicals into the soil that precludes the soil from 
being used to plant crops such as corn and soybeans, the predominate (legal) 
cash crop in our area.

>
>
>I am glad your posted this subject. It's something that hits very close
>to home here in  Central California. We built dairies that in the end can
>be classified as a super fund site. The Nitrates they leach in to the
>ground water is a big problem. The latest snake oil they are trying to
>sell us here in Ethanol.
>
>the best government estimates say that it takes 4 gallons of energy to
>produce 5 gallons of ethanol. ( Planting, lowing, water, growing the
>seeds, harvesting, processing, transporting). The 2 naysayers, one out of
>Columbia the other out of Berkeley say it's the other way around, it
>takes 5 gallons of fuel to produce 4 gallons of ethanol. The only reason
>it's financially viable now is do to a welfare system ( tax subsidies).

Ethanol is big here in the Midwest too. They're pushing E-85, a blend of 
ethanol and gasoline. But now some genius has figured out that the pumps 
they're using to deliver the fuel to our cars are being eaten up on the 
inside by the corrosive mixture. So there's a very real danger that all the 
E-85 pumps are leaking into the soil unbeknownst. The corker is that they 
knew about the corrosive properties all along as only certain vehicles can 
burn E-85 - or flex fuel. I must be dense because I just don't get it.

>
>take care

You too,

Dan