Good Fences Make Good Neighbors

It comes to little more: 

“There where it is we do not need the wall: 
He is all pine and I am apple orchard. 
My apple trees will never get across 
And eat the cones under his pines, I tell him. 
He only says, ‘Good fences make good neighbors.’”

Excerpt from “Mending Wall” by Robert Frost

       Adhering to the staid logic of the immortal poet Robert Frost, the neighbors in Solano County, California will need to invest in quite a lot of fencing after the current litigation ends.  Currently at issue is whether existing landowners in Solano County conspired together to artificially raise the price of their acreage in violation of federal anti-trust law.  The accusations are made by Flannery Associates, the real estate acquisition arm of the California Forever development project, which itself is backed by multiple billionaires, Silicon Valley tech elites, and venture capitalists seeking to site and create an entirely new city on what is now rural California farmland.

       Flannery Associates sought to acquire thousands of acres of rural land just beyond San Francisco’s current population spread (about sixty miles northeast of the city).  The initial efforts were quiet with the buyer’s actual identity and purpose withheld.  The offers were unsolicited and more than fair – usually several times the current market value of the tracts being sought.  Owing to the secrecy inherent in the approach, local landowners, politicians and even a nearby Air Force base were left to wonder who was making these offers with concerned guesses ranging from Disney siting a new theme park to some as yet unknown effort backed by the Chinese government.

       In reality, this was only the latest effort to solve California’s muddled housing problem.  The goal was to build a new city from the ground up thereby avoiding the local politicians, zoning issues, and reluctant neighbors that had ended all previous attempts.  Several “start from scratch cities” had been proposed over the preceding decades, but all failed to progress beyond the conceptual stage.  Flannery had access to an incredible amount of money to allocate toward the acquisition effort.  In total more than $800 million dollars were spent acquiring the thousands of acres that would form the core of the new city.  That sum demonstrates the success this outreach and acquisition effort had in securing acreage from local landowners.  In addition to the above market offers being made, Flannery also allowed the landowners to retain the royalty payments then being earned from existing wind turbines sited of many of the parcel and, as is common is such long duration projects, allowed the current owners to remain on the property rent free during the pre-construction phase of the project by offering long-term leaseback agreements.  All told, over thirty thousand acres were acquired during this effort.  Flannery was able to negotiate and acquire just over 140 tracts of land from over four hundred separate owners in just over five years of work.  Given the relatively tight geographic limits of this project area this was a massive accomplishment rivalling and even exceeding some of the nation’s largest onshore wind farm projects.

       While there were, apparently, many takers when presented with Flannery’s offer, there were many who refused to sell.  It is these entities and their acreage that remained the target of Flannery Associates acquisition campaign.  In most acquisition projects that do not enjoy federal condemnation powers once the limits of the acquiring entity’s purse have been reached the project starts to wrap up.  Final letters of recission are sent to all those with active offers and the project either proceeds on the acquired acreage if possible or fails if insufficient acreage was acquired.  The land negotiators forward new contact information to those they interacted with and head out of town for their next project.  But not here. 

       As we all know there are two Golden Rules and, unfortunately, once we leave childhood behind “He who has the gold makes the rules” takes precedence over the more morally and ethically palatable one.  But even with that understanding firmly in mind, the situation that many Solano County landowners find themselves in is quite rare and somewhat unprecedented.  These landowners did not initiate contact with the developers – certainly not the owners of the initial acquisition targets.  They did not, in most instances, have their acreage up for sale nor were they looking to cease their current operations and leave their land.  It would seem unlikely that they would be comfortable selling their acreage to an entity masking the actual buyer.  Regardless, Flannery Associates refused to accept that target acreage within their target area was not acquired and eventually brought suit against multiple unsigned landowners claiming that they colluded to inflate prices.

       This is where Flannery perhaps went a step too far.  I was not a part of this acquisition, nor do I know any of the Solano County landowners against whom the collusion suit was brought, so I cannot speak in any fashion as to the actions of the landowners or the veracity of Flannery’s claims.  Having said that, a developer bringing suit against landowners for collusion merely because they chose not to accept an unsolicited offer, even a more than fair one, is indeed novel.  Barring evidence of such collusion or conspiracy, of which none has yet been offered, it will be difficult for the developer to sway either the court or local public opinion that they were in fact wronged in any way.  Barring such evidence, it will be difficult to cast the reality as being anything other than an effort was made and met with rebuke and they are unhappy with the result.  This in turn will lead to local public opinion turning against their effort which in turn leads to extra pressure being placed on the county board of supervisors and local zoning commissioners.  A project of this magnitude cannot go forward without the support and accommodation of these entities.

       Personally, I am very interested to see what type of evidence will be offered by Flannery should this ever actually reach open court.  Several landowners have already settled, but this alone should not imply guilt on their part.  A long, drawn-out court battle against a very well-funded adversary is difficult to contemplate for the vast majority of Americans.  The court just refused a defense motion to drop the case, but this as well is far from an implication of guilt as it is only a procedural step that only acknowledges that the plaintiff’s case could be reasonable if proper evidence is later offered at trial.  I find myself interested in learning more about the evidence in this case because it would seem to rely on the theory that if multiple landowners refused to sell their acreage after being presented a better-than-market value offer, then there necessarily must have been collusion.  This is similar to the legal principle of “res ipsa loquitur” (translated from Latin as “the thing speaks for itself”) which allows a court to infer the presence of negligence in an action merely because of the nature of the action and not owing to any evidence produced proving such negligence ever in fact existed.  That doctrine would not be applicable here, nor would any extension of it seem reasonable either. 

       Is the plaintiff relying on the fact that landowners spoke about the offers and acquisition effort?  If so, this must have been the developer’s first acquisition project.  On large-scale projects, it is understood and expected that landowners speak amongst themselves.  In fact, seasoned developers use this reality to build trust within the community – when subsequent entities see that you have offered them the same terms and opportunities as you did during the initial outreach efforts they start to feel as though you are operating fairly. Beyond that, anyone who has spent any amount of time as a part of an acquisition project accepts as gospel that if you meet with “Farmer Bob” out at his gate at 9:30 am, make your pitch, and then drive the hour back into town to meet “Farmer Steve” at Dairy Queen for lunch, that Farmer Steve knew the details of your offer well before you parked your car.  The only way to disseminate information faster in a rural community would be to meet a landowner right before church services on a Sunday morning. Two hours later and the entire town is aware of your intent and terms.

       I hope this is more than just sour grapes at missing the rosiest of acquisition projections or a well-funded effort by the developer and their well-heeled backers to force their way.  Landowner fatigue is a real and growing issue all throughout the United States and highly visible and contentious issues like this only add to a landowner’s suspicion, hesitation, and distrust when meeting and interacting with the rest of the land development community.  As this develops it might provide ample fodder for future discussions.  Until then, as the poet counseled, good fences make good neighbors.