The LandThink Summit 2010 — September 30 at the Gwinnett Center in Duluth, Georgia — will address the good, the bad and the ugly in today’s land business.

Consider three recent items:

Jim Rinehart, president of R&A Investment Forestry which concentrates on managing and advising institutional investments in timberland, wrote in “U.S. Timberland post-recession: Is it the same asset?” (April, 2010) that timberland will continue to be a steady asset, but one that is likely to produce lower returns with higher risk than seen during the last 15 years or so. He thinks timberland as measured by the NCREIF Timberland Index has actually declined 15-20 percent in value, but the bulk of that decline has been masked by low transaction volume and the valuation process.

Conor Dougherty and Sara Murray report in the September 17, 2010 Wall Street Journal (“Lost Decade for Family Income”) that inflation-adjusted income of the median U.S. household fell 4.8 percent between 2000 and 2009. In the 2007 to 2009 period alone, median household income fell 4.2 percent. Recent declines follow a “long period in which incomes stagnated even through the recovery of 2003-2007.” Second-home sales, land purchases and residential real estate have been clobbered by middle-class income stagnation coupled with unemployment, underemployment and tightened lending standards.

P.J. Huffstutter in the September 19, 2010 Los Angeles Times (“Investors seeing farmland as safer bet than stocks”) reports that institutional investors and wealthy individuals are putting money into farm operations of all types because returns have outperformed stocks and the risks inherent in farming seem safer than those in equities.

But Michael Swanson of Wells Fargo’s Agricultural Industries Group warns that the combination of super-low interest rates and high crop prices have inflated land values, and a 1980s-type farm crash might reoccur as a result.

Is land a buy-now opportunity, a long-term neither-here-nor-there investment or a place to make respectable, though not, spectacular returns?

Find out this Thursday at the LandThink Summit.

Here are two samples of what conference participants will hear.

Barry Gittleman, vice-president for land and strategy at John Wieland Homes and Neighborhoods, believes that distressed land presents a “huge opportunity” for investors.

He says: “In reality, 2009 and 2010 will probably be the best years during our lifetime to purchase a home of any type, if you take the time to do your homework and make sure you get a great deal.”

He would put his own money in bank-owned developed lots in Atlanta, “the closer to in-town, the better. There are lots being sold for less than the cost of development in some places, so the raw land is essentially free in those deals….  Other opportunities include raw land or developed lots in any city where I expect a strong economy in 5-10 years in locations or submarkets where I think they will be building new homes in 5-10 years. I would include parts of Raleigh and Charlotte on that list. And I would stay away from non-residential land, which I don’t think has bottomed yet.”

Brooks Mendell, founder of Forisk, advises small timberland investors to analyze a purchase in the following way:

“The recipe for analyzing timberland investments is straightforward, though it requires discipline and patience.  First, understand the local wood market.  Timber markets are uniquely local.  The same timberland property in two different baskets will have two different values.  In understanding the local basket, this goes beyond knowing all of the wood outlets into which you might sell trees.  It includes knowing in advance how you will access these markets.  Will you work through a forestry consultant?  If so, who?  Will you work directly with loggers?  If so, who?

Second, question your forest data.  In forestry, we have a somewhat bizarre relationship to data as compared to data for other assets such as bonds, equities or even commercial real estate.  In forestry, everything is a sample.  A forest cruise, which estimates the volume and value of the standing forest on a given property, is a sample of what’s out there.  If we use data from the US Forest Service, it’s based on samples.  If we use a timber pricing service, whether public or private, all reported prices are based on samples, not all transactions.  So ask questions about the data.

Third, …know what’s knowable.  In evaluating the value to you, the investor, you want to nail down, to the extent possible, what’s left over each year after revenues are generated and bills paid. That means being specific about what exactly will the property taxes be for THIS property, what are the annual management costs for THIS property, and what are the fees paid to consultants, accountants and lawyers to acquire and manage THIS property.  Plus, fully explore the revenue potential for the timberland property, above and beyond forestry.  Cell towers?  Mineral rights?  Kaolin?  Hunting?  Spiritual retreats?

We recommend to investors that they become familiar with their local markets first, and then patiently seek and evaluate timberland investment opportunities.  This approach leads to building solid models with tested assumptions for buying properties.  Then, when the numbers look good, move fast.”

Dan Hatfield, national president of the Realtors Land Institute, will discuss current and future legislation that will impact the land market. Craig King, president and CEO of  J.P. King Auction Company, will describe how auctions have changed the land market. Jason Denton, vice-president of corporate lending at AgSouth Farm Credit, will talk about financing of timber and land investments. And Harry Mehre, of Jones Lang LaSalle, Tom Margo of AFM Land Sales and Brooks Mendell will form a timberland-investment panel.

Curtis Seltzer will face the question: Land Investing: Now or Later? He refuses to disclose his answer in advance of the Summit. I know because I asked.

For more information including the agenda, speakers, program and attending, visit the LandThink Summit website at GetLandSmart.com.

Parties who have polar-opposite interests easily endorse the value of balance in land-use planning policies. Everyone wants to strike a balance between the benefits of development and the benefits of as-is, between the public costs of private development and the public costs of as-is.

Where the balance is finally struck rarely satisfies everyone. But solutions where each party gains a little more than each loses are increasingly possible. Deals of this sort require flexibility, creativity and a willingness to negotiate.

The amount of agricultural land — crop land and pasture — is declining in the U.S., mainly because population growth targets it for residential and commercial development. Most of the pressure on open, agricultural space spreads out from metropolitan areas and towns. Agricultural land is also used for second homes and a variety of commercial, public and non-profit projects. Building on what is considered “open” agricultural land is usually cheaper and easier than building on land already built on, which is why development is drawn to such parcels.

The idea of preserving privately owned agricultural land amid commercial and residential development emerged in the 60s and 70s as a response to the increasingly familiar pattern of sprawl and commercial strips. Both sticks and carrots were used to effect a public use of private property. Comprehensive plans and zoning restricted development and directed certain uses over others. Federal and state legislation offered substantial tax benefits to landowners who donated some or all of their development rights to preserve agricultural uses and open space.

Oregon was a battleground for many of these conflicts, beginning in the 70s when Senate Bill 100 set up a state land-use-planning policy and agency (Department of Land Conservation and Development, DLCD) that delegated implementation of DLCD state-wide guidelines to local jurisdictions. Land-use planning was more popular in the Portland-Eugene corridor than in the state’s rural areas. During the last 15 years, the system has been challenged with referenda and court cases, sometimes successfully, sometimes not.

One key issue has been whether private landowners should be fairly compensated by public money when land-use restrictions devalue their property. As it stands, if Oregonian governments — state or local — want to restrict development on private property, they must either pay the landowner for the reduction in value or forego restrictions. As a matter of practice, public agencies can’t pay, so restrictions are now dropped.

A balance is wanting here in my opinion. The no-pay philosophy was out of whack, and the no-restrictions antithesis is too. More than $15 billion claims for compensation have been filed, and none paid as far as I know.

The Wall Street Journal ran a piece on April 2^nd, “Oregon Pear Growers Sour on Land Law,” by Joel Millman, that examined the predicament of pear farmers in the Rogue River Valley near Medford. Pear farming has declined, both in terms of the number of farms and acreage. Three companies now account for about 90 percent of the Valley’s production.

Their problem is that they want to move their orchards to more rural areas but can’t sell their close-in land for market value because land-use regs require that it be kept in agriculture. No one, it appears, wants to pay $10,000/A for this perpetual agricultural land, and the owners aren’t allowed to sell it for its HBU value — $100,000/A — which would give them the money to move their operations farther out. The seller doesn’t want to sell for what he’s allowed to sell it for, and no buyers are allowed to buy it for what it’s worth.

1000 Friends of Oregon, a long-standing land-use and conservation organization, opposes loosening restrictions on agricultural land sales. They and other opponents of revising the system argue that HBU sales would shift the costs of development to citizens, and more land going into development would reduce land available for farmers to buy, thus raising its price.

The land-use controversy in Oregon has a long history and has solidified both sides. I don’t claim to speak with authority on its many related issues.

Still, I don’t like public takings of private property, though I admit that some circumstances exist where the general good outweighs the individual property right. I remember that one good friend was so angry at having her small apartment building confiscated for a small city parking lot that she refused to pick up the $300,000 check, which sat in escrow for many years until her death. Taking is a public power that’s easily abused.

Confiscating a use right without fair compensation — which seems to be what’s going on in effect with these pear producers — narrows the cost of environmental protection that benefits everyone to just these landowners.

If the public wants to preserve open land, then public dollars of one sort or another should pay for it.  Bonds pay for schools, bonds can pay for open space. Tax credits can be offered directly to the landowners, or purchase money can be raised through their sale to other parties. An off-set system could be set up that would allow development of some of this disputed land in return for the purchase and preservation of other land in the community as open space.

I’m much more in tune with preserving open space as parks — ranging from developed recreation to leave-it-be space — in cities and towns than keeping it in agriculture. I think the public benefits more from open space with many uses than it does with private land locked into one use that excludes most public benefits. Urban community gardens are a great way to keep city space open and green, but that’s a different set of issues than the pear controversy.

I understand why environmental-protection laws are set up with few, if any, exceptions. But they inevitably produce cases like this one where a better balanced outcome seems out of reach.