leader FARM CREDIT OF CENTRAL FLORIDA
A LOOK INSIDE... Veterans Choosing Careers in Agriculture Lease vs. Purchase: The Best Option Castillo Family Farms
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FALL 2017
Greetings, You will notice a new look to this edition of the Leader. We redesigned the content and layout of the magazine in hopes that you not only find the readability to be improved, but the articles meaningful too. We’re excited with how this redesign turned out and we hope you enjoy it, too. As we enter another fall season, we look forward to time with family, football games and cooler weather ahead. We count our blessings after a trying hurricane season and look ahead to a new year. Happy reading,
R E G G I E H O LT
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LEADER is published quarterly for stockholders, directors and friends of Farm Credit of Central Florida.
PRESIDENT Reginald T. Holt BOARD OF DIRECTORS Robert R. Roberson, Chairman W. Rex Clonts, Jr., Vice Chairman Jenny R. Black C. Dennis Carlton John S. Langford Randy L. Larson Dale McClellan David A. Mereness Keith D. Mixon Randall E. Strode Ronald R. Wetherington EDITORS Tory Moore, Marketing Manager Hannah Dugger, Marketing Coordinator
INSIDE THIS ISSUE 4
Veterans Choosing Careers in Ag with New UF/IFAS Program
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Lease vs. Purchase
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Preserving Your Power: 10 Tips for Negotiating a Solar Farm Lease
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Association News
Castillo Family Farms Farm Credit Scholarship Winners The Balance of Passion and Economics in Farming
Detjen Appointed Chief Credit Officer
PUBLISHER AgFirst Farm Credit Bank DESIGNERS Joey Ayer Athina Eargle Darren Hill Amanda Simpson Travis Taylor Brittany Wilt PRINTER Professional Printers
Address changes, questions, comments or requests for copies of our financial reports should be directed to Farm Credit of Central Florida by writing P.O. Box 8009, Lakeland, FL 33802-8009 or calling 863-6824117. Our quarterly financial report can also be obtained on our website: www.FarmCreditCFL.com
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VETERANS CHOOSING CAREERS IN AG WITH NEW UF/IFAS PROGRAM
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esearchers at the University of Florida’s Gulf Coast Research and Education Center (GCREC) and Hillsborough County Agriculture Extension understand that feeding a growing global population will require a 70 percent increase in food production by 2050. They also understand that military veterans have leadership training, skills and perspective that will help America meet the challenges of producing food and rebuilding rural and urban communities. Through the new Veteran Agriculture Selection Program (VASP), the GCREC has a mission to “expose veterans to various modern crop production practices and helping them develop positive relationships and
TRACTOR TRAINING AT THE GCREC
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career opportunities within the Florida agriculture industry while they are enrolled in a University of Florida certificate program.” Farm Credit of Central Florida’s Credit Analyst Intern, retired U.S. Air Force Major Michael Burrell, is the first participant of this unique program. “The purpose of VASP is to help veterans transition into viable and rewarding careers in the agriculture industry,” said Burrell. Burrell started his experience in the military as an aircrat mechanic in England. He later relocated to the United States as an ear, nose and throat surgical technician stationed in Illinois. He obtained a bachelor’s degree in business administration from McKendree University.
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I want to leave a legacy for my children and grandchildren, and farming is a sustainable way to do that ... I also chose farming because I do want to own my own farm-to-table restaurant and pastry shop, and in order to execute that I needed to learn how to farm.
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BURRELL EXPERIENCING THE LOCAL CULTURE WHILE DEPLOYED IN DJIBOUTI, AFRICA.
RETIRED U.S. AIR FORCE MAJOR MICHAEL BURRELL
“I was given the opportunity to enter officer training school after my time in Illinois and did so at Maxwell Air Force Base in Alabama,” said Burrell. His tenure as an officer began as a finance manager, overseeing budgets over $1 billion. In 2005, Burrell earned his MBA from Trident University International. When deployed to Iraq, Burrell worked as a finance operations manager. He then moved on to serve as an executive officer at the National Guard Bureau in Arlington, Virginia. Afterward, he was deployed to Djibouti, Africa, as special forces director of financial operations at Camp Lemmonnier. His final stint in the Air Force was as an aircraft and weapons cost analyst with the Air Force Cost Analysis Agency in Maryland. “After retiring from the Air Force in late 2013, I was enrolled at Johnson and Wales University in North Miami where I earned an associate’s degree in baking and pastry, hoping to one day open a classical French pastry shop,” said Burrell. “I want to leave a legacy for my children and grandchildren, and farming is a sustainable way to do that,” explained Burrell. “I also chose farming because
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FIELD WORK WITH THE URBAN TREE AND LANDSCAPING LAB. LEADER • FALL 2017
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Since I started with Farm Credit, I’ve realized what financial opportunities are available to farmers. ... My dream seems a little closer to reality.
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RETIRED U.S. AIR FORCE MAJOR MICHAEL BURRELL
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I would like to own my own farm-to-table restaurant and pastry shop, and in order to execute that I needed to learn how to farm.” Burrell was chosen as the first candidate of Hillsborough County Extension’s Veteran Agriculture Selection Program in January 2017. Candidates of this program spend six to nine months being introduced to field preparation techniques and cutting-edge agricultural research through an internship with the GCREC. Burrell’s interest in the program was sparked because he understood the utility farming provided. “The first month, I worked mainly with the farm crew. I was plowing fields, fumigating, building beds and laying plastic,” said Burrell. “From there, I did work in the strawberry breeding and strawberry pathology labs then moved on to the nematology lab. As part of my hands on internship, I was also placed in the plant pathology lab.” Burrell studied trials with downy and powdery mildew and common diseases affecting tomatoes, cucumbers and melons in the plant pathology lab. From there, he worked with urban landscaping, planting trees near Lake Crago in Lakeland. Candidates can also enroll in a variety of University of Florida agricultural certificate programs of their choosing — many of which are offered online, allowing flexibility for courses to be completed on nights and weekends. In Burrell’s case, he received a food service management certification during his time at Johnson and Wales University. The next step of the program is securing a three month internship with a local farm or agribusiness.
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Simon Bollin, Hillsborough County Agribusiness Development Manager helps participants find their perfect fit. “I sit down with candidates towards the end of their GCREC internship to determine where their interests lie,” said Bollin. “Hillsborough County Economic Development works with a variety of agricultural organizations to place VASP candidates in the best possible internship. Hopefully, that internship leads to a full-time position in the agriculture industry.” With over ten years of financial experience, working for Farm Credit made sense to Burrell. “Since I started with Farm Credit, I’ve realized what financial opportunities are available to farmers,” he said. “My dream seems a little closer to reality.” Burrell’s goal is to provide a source for fresh and local food accessible by those in the Hillsborough County area who do not have access to it. “I want to own an operational farm that can support the farm-to-table restaurant,” said Burrell. “Secondly, I would love to rent my property to those who don’t have access to fresh produce or a means to grow it themselves. The internship at the GCREC and my experience with Farm Credit will enable me to learn what I need to achieve my vision as I work to make a difference with my life.” Interested candidates for the Veteran Agriculture Selection Program should contact: Simon Bollin, Hillsborough County Agribusiness Development Manager at bollins@hillsboroughcounty.org.
LEASE VS. PURCHASE: TH E B ES T OP TION As equipment needs increase, be sure to consider the cost-benefit options of leasing versus financing or paying cash when acquiring equipment. To make the most beneficial long-term decision, consider more than the up front cost of the machine. When deciding how to structure your equipment financing
these advantages of leasing are worth consideration — it’s an excellent way to improve cash flow/free up capital, avoid equipment depreciation and maximize tax advantages — all saving you money. CONTINUED ON NEXT PAGE
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Improve Cash Flow/ Free Up Capital It’s simple: high residual + long-term lease = lower rental payment. There will be less demand on cash flow than if you finance the entire cost of the equipment. For example: a new $100,000 tractor with a 40% residual value at the end of a five year lease will have a rental payment based on 60% of the original value ($60,000). At the end of the lease term, the equipment can be purchased for the remaining 40% ($40,000) or turned in to the leasing company (depending on the type of lease). With this lower payment/cash flow strategy you are essentially renting the equipment at the lowest price. Realize that equity will not be built quickly and you may want to consider returning the equipment at the end of the lease.
These lower up-front costs allow the purchase of needed equipment and use of cash in other areas of the business.
A lease typically offers 100% financing— with only the first lease payment due at closing. This preserves cash by not requiring a down payment. These lower up front costs allow the purchase of needed equipment and use of cash in other areas of business. Leasing also maintains credit with current lenders: keeping your available credit lines open and freeing up capital to take advantage of other opportunities.
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Avoid Equipment Depreciation High-tech advances in equipment leases help avoid equipment depreciation. When you own equipment, you bear all of the risk of devaluation from technological advances. With leasing you can transfer risk of depreciation to the leasing company with no obligation to own equipment beyond the lease term. Additionally, if you add high hour usage to equipment, flexible lease terms give you the option to develop replacement cycles for regular upgrades to maintain a newer, state-of-the-art equipment lineup.
Maximize Tax Advantages With the right structure, leasing will generate significant tax benefits that cannot be obtained if equipment is purchased through financing or cash. Lease/rental payments decrease taxable income by: 1. Providing a greater tax deduction by writing off equipment quicker than the predetermined IRS standard depreciation 2. Allowing for accelerated write off of capital purchases beyond the Section 179 and bonus depreciation threshholds (discussed below) To maximize your tax deduction, structuring your lease with a lower residual and a shorter term will result in a higher rental payment to offset taxable income. For example, the tax life of moveable agricultural equipment is seven years. However, with a three year lease and a lower residual, it’s possible to write off the majority of your leased equipment in three years.
If your annual capital asset purchases will be greater than the $500,000 Section 179 deduction limit and/or you are purchasing used equipment and are not taking advantage of the additional 50% bonus depreciation, leasing provides the option of accelerated tax write offs for equipment purchases in excess above these deductions. Example: if capital purchases of new equipment are $800,000 for 2017 - $500,000 deducted under Section 179; $150,000 under 50% bonus depreciation; and the remaining $150,000 could be structured under lease terms to maximize the rental deduction. Work closely with your accountant or tax advisor to determine the most beneficial financial structure for your situation and operation. For more information, please contact Regina Thomas, Farm Credit of Central Florida’s Director of Financially Related Services at 800-533-2773 or RThomas@FarmCreditCFL.com.
Regina Thomas is the Director of Financially Related Services at Farm Credit of Central Florida. She oversees the Association’s leasing, crop insurance and Farm Credit EXPRESS programs. She has served in various leadership positions with FNGLA, Florida Agri-Women’s, Seminole County Farm Bureau and various University of Florida advisory committees. She is also a lead coordinator of the Florida Agricultural Financial Management Conference. Regina earned her Bachelor of Science degree in animal science from Iowa State University and Master of Business Administration from the University of Central Florida.
2017 Tax Environment: Section 179 • 2017 deduction limit = $500,000 • This deduction is good on new and used equipment, as well as off-theshelf software • The equipment must be financed/ purchased and put into service in 2017 • Allows direct expense of an asset instead of depreciation • You can only write off what you paid in cash-cannot include the amount of trade equity in the deal • 2017 spending cap on equipment purchases = $2,000,000 • A small business that is managing cash flow can leverage a non-tax capital lease to minimize out of pocket cash, and still take the full Section 179 deduction
Bonus Depreciation • 50% bonus depreciation in 2017, 40% in 2018 and 30% in 2019 • New equipment only; regular MACRS depreciation on used equipment • Bonus depreciation is usually taken after the Section 179 spending cap is reached
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CASTILLO FAMILY FARMS Hilda Castillo and her husband Fidel are first generation immigrant farmers whose operation began with a single acre of land dedicated to growing strawberries, over 20 years ago. Today, Castillo Farms hosts over 100 acres and has grown everything from strawberries, cantaloupe and watermelon to peppers, squash, pickles and eggplant. Hilda describes it as “a little bit of everything.”
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We understand that providing research resources to IFAS and the NRCS is invaluable to the industry, and are happy we can help.
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HILDA CASTILLO
In November of 1988, Fidel Castillo came to the United States as a field worker in Florida. His wife and eldest son soon followed. After realizing that owning a farm would give them the financial stability and rewards they wanted, Hilda and Fidel purchased their first farm. The most integral part of their entire operation is the support of Hilda and Fidel’s four children and their daughter-in-law. José, Fidel Jr. and his wife Lorena, Alberto and Arnulfo. They have dedicated their lives to making Castillo Farms successful. Although Hilda is the sole farm manager, José has an outstanding work ethic; he is up early every
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day tending to day-to-day farm maintenance and activities, Hilda says. Fidel Jr., in addition to helping his parents’ farming operation, grows his own produce. His wife Lorena also helps with day-to-day farm tasks. Alberto will graduate from Florida State University with a degree in business marketing at the end of the summer. He plans to use his education to market and sell Castillo Farms produce. “Sometimes, his father makes us pinch him — just to ensure he’s not dreaming. We’re so proud of Alberto,” said Hilda. Hilda and Fidel’s dedication to share their legacy with their children only scratches the surface of their dynamic operation. As stewards of the land, Castillo
THE CASTILLO FAMILY ON THEIR PLANT CITY FARM (FROM LEFT TO RIGHT): FIDEL JR., LORENA WITH THEIR TWO CHILDREN, HILDA, FIDEL, ALBERTO AND ARNULFO.
Farms allows the University of Florida’s Institute of Food and Agricultural Sciences (UF/IFAS) and the National Resources Conservation Service (NRCS) to utilize land samples for soil and water research. “We understand that providing research resources to IFAS and the NRCS is invaluable to the industry, and are happy we can help,” said Hilda. Involvement in the Plant City community also takes priority at Castillo Farms. Strawberries are donated to Plant City’s St. Clement Catholic Church for their delicious strawberry shortcakes at the annual Strawberry Festival. The farm hosted the National Farmers Union Women’s Leadership Conference attendees for a tour of their facilities and even hosted former United States Secretary of Agriculture.
The Castillo family’s unique operation and story was highlighted nationally by Farm Credit in the past. This year, they received the Agriculturist of the Year award from the Plant City Chamber of Commerce for their contribution to the industry. “We appreciate all the tools and resources Farm Credit has provided and will continue to do business with them,” said Hilda. Solid work ethic, passion and community involvement have made Castillo Farms a vital member of Florida’s agriculture industry. With hard work and dedication, the Castillos will continue to expand their operation, in order to provide a nutritious and abundant food supply for families across the country.
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FARM CREDIT SCHOLARSHIP WINNERS Farm Credit of Central Florida presents scholarships to students who hold residence in our 13-county territory and are studying agriculture at the University of Florida or Warner University. Congratulations to our 2017 scholarship winners!
Douglas Batson
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Attending Warner made me dive deeper into the world of agriculture.
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I believe each individual can leave an impact on the world in a positive way, and attending the University of Florida takes my goal to the next level.
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Douglas Batson, Jr. is a senior at Warner University pursuing a Bachelor of Arts degree in agricultural studies, with a graduation date of May 2018. As a member of Alpha Lambda Delta Honor Society and a recurring member of the Deans List, Batson holds his education in high esteem. His campus involvement is also extensive. Batson is a founding member of the Alpha Zeta Honor Society, an active member of Collegiate FFA and Collegiate Farm Bureau and is on the Warner University Clay Shooting Team. Batson says, “Attending Warner made me dive deeper into the world of agriculture. Everything I’ve experienced and been involved in has been a blessing.”
Heather Ryan Heather Ryan is a senior at the University of Florida pursuing a Bachelor of Science degree in agriculture education and communication, with a graduation date of Spring 2018. Ryan has fallen in love with the Gator Nation, where she served two summers as a member of the orientation staff and tour guide, assisting more than 16,000 first year students in their transition to campus. She has a passion for student development, which is the reason she is a College of Agricultural & Life Sciences student. This year, Ryan represented the University of Florida at a national conference and presented her policy initiative towards health education across America. After graduation, she plans to pursue this career field further through a postgraduate masters program. Ryan says, “I believe each individual can leave an impact on the world in a positive way, and attending the University of Florida takes my goal to the next level.”
THE BALANCE OF
PASSION AND ECONOMICS I N FA R M I N G
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he agriculture industry is being transformed at an accelerated rate by global and domestic economics. Coupled with major megatrends such as consumer taste, demographic and generational shifts, technology and a widening disconnect between farm and city, the landscape is definitely evolving. So, what is required of today’s producer to be successful? In short, the answer is balance.
While facilitating a young farmer conference, I asked participants to name some topics that they would consider industry opportunities, even if some may view the same topics as industry challenges. Their list included: the local, fresh, and organic movements; farm transitioning, whether generational or retirement; multi-complex businesses; entrepreneurial endeavors inside and outside of agriculture; and a younger group that often multitasks. CONTINUED ON NEXT PAGE
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This same session included a group of military veterans looking for ways to reconnect with agriculture and the land. This group struck me as special, in part because along with alumni from my high school, I recently celebrated the 50th anniversary of the 104 game winning streak of the boys basketball team; a modern day record. One teammate was critically injured on the front lines in Vietnam. After returning home, he served as an inspiration to all the players during the streak. For the veteran group, we asked how military experience and training could be advantageous in operating a farm business. Clearly energized by the question, the responses included critical thinking skills, strategic planning and execution, contingency planning, global awareness, attention to detail, coping with adversity, strong work ethic, good communication and the ability to develop solutions and teamwork. Interestingly, each of these skills has a direct connection in business.
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One of the keys to being a viable and sustainable agricultural business is balancing the passion and desire of farming with the logic of economics. How does one translate passion into an actual and viable business? That is where the logic of economics comes in, and a basic business plan. Recently, Farm Credit University kicked off a pilot program called Ag Biz Basics. This program was designed to provide introductory educational training on the development of goals and financial statements. Whether for a veteran or entrepreneur, the Ag Biz Basics program allows anyone with agricultural aspirations to make a game plan before going into the field. Let’s examine the necessary elements.
Setting Goals Before embarking on any business adventure, one should articulate one’s goals in writing. In other words, a working document that can be reviewed is
One of the keys to being a viable and sustainable agricultural business is balancing the passion and desire of farming with the logic of economics.
necessary. This process should include goals that are one to five years out, separated by business, family and personal aspirations. In order to maintain focus and balance in your goals, use the S.M.A.R.T. principle (specific, measurable, attainable, reasonable and rewarding, and timely). This goal setting process establishes the mission and vision of the business. The other initial step in this process is developing and collecting all your financial documentation such as credit scores, tax forms, wills, insurances, etc. This information will be required in any meeting with a lender or advisors, and needs to be updated and accurate. Of course, one’s financial documentation should include the next three steps.
Cash Flow The next step is a cash flow statement, or the business side of production planning. This step exercises critical thinking skills. In essence, the cash flow is an outline of your production plan and timetable with numbers. Specifically, using different scenarios of price and cost. For example, conservatively estimate different levels (low, average, and high) of bushels per acre and price per bushel, or production and price per pound of meat or milk, to develop a cash flow for the farm. For the military, this is similar to contingency planning, or planning for the unknown.
Balance Sheet
resources available to generate earnings. Often, the processes of developing cash flow and the balance sheet require one to work side-by-side with a lender, spouse, partner, mentor or team of advisors. This step helps you determine what you are worth financially.
Projected Income Statement Finally, a projected income statement is a useful tool because it shows whether or not you made a profit. This step allows for monitoring results, revealing the tweaks needed along the way. This attention to detail in production, marketing, finance and risk management increases the probability of long term success. Whether it is on the basketball court, in a military operation, or in business, viability and sustainability require a balance between one’s passion and the logic of economics. Undoubtedly, farming is a passion; and those in the industry, young or older, share a love and respect for producing. However, in a rapidly evolving industry, economics must be present to turn passion into profit; and specifically, the elements of setting goals, projecting cash flow and developing balance sheets and income statements. The critical thinking and planning on the economic side of the scale balance the passion, but remember that neither passion nor economics are as strong without the other.
Developing a balance sheet, both business and personal, allows one to determine net worth, examine debt levels and identify the assets and
David Kohl received his M.S. and Ph.D. degrees in agricultural economics from Cornell University. For 25 years, Kohl was a professor of agricultural finance and small business management and entrepreneurship in the Department of Agricultural and Applied Economics at Virginia Tech in Blacksburg, Va. He was on special leave with the Royal Bank of Canada working on advanced initiatives for two years, and also assisted in the launch of the successful entrepreneurship program at Cornell University. Kohl is professor emeritus in the AAEC Department at Virginia Tech.
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PRESERVING YOUR POWER:
10 TIPS FOR NEGOTIATING A SOLAR FARM LEASE
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s Florida’s major electric utility companies increase their efforts to invest in affordable clean energy, advancing technologies and phasing out older coal-fired and oil-burning power plants, locating land suitable for large solar is becoming increasingly competitive. Leading the way is Florida Power & Light (“FPL”). FPL plans to add eight (8) new universal solar power plants by 2018. The new solar plants will require the installation of 2.5 million panels at the eight centers being located across the state. In addition to the solar expansion plans that FPL has for its sites, Duke Energy and Tampa Electric, an Emera Company (“TECO”) are also making great strides in Florida with their expansion plans for future solar plants. Duke Energy renewable assets includes 60 solar facilities operating in a dozen states, with
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Duke’s 8.8 megawatts (MW) Suwannee Solar Facility expected to be fully operational by the end of this year. Once up and running, the facility will produce enough energy to provide electric service to about 1,700 homes at peak production. TECO completed construction on its largest solar area site, located at Big Bend in Apollo Beach earlier this year. This 23 MW solar center is located on 106 acres and is capable of providing electricity to more than 3,300 homes. Electric utility companies will continue to expand their solar footprint across Florida, and as a result large tracts of agricultural lands will be in increasing demand. Power companies have found that land already farmed has less wetland and endangered species issues and, the more isolated the location, the less likely it will attract potential Not In My Back
Leasing your property to a reputable energy provider for use as a solar farm (energy center) may definitely be something to consider.
Yard (“NIMBY”) opposition. Yes, even something as green as solar energy suffers from NIMBY exposure. Abandoned citrus groves seem to be the most desirable sites. Leasing your property to a reputable energy provider for use as a solar farm (energy center) may definitely be something to consider. Careful drafting of the terms and conditions of the lease is critical in avoiding stormy weather in what otherwise could be a sunny business arrangement. Here are just some of the things to consider:
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Beware of signing a listing or option agreement with someone that is only interested in tying up as many sites as possible in hopes that the power
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company may want one. Deal with a reputable solar array developer or real estate consultant that has experience in site selection and dealing with large properties and power companies. Do your due diligence and preliminary engineering as to the proximity to transmission lines that have capacity and demand for the power to be produced. Know what you have to market so you drive the negotiations rather than accepting the first offer that may never be realized. As the property owner, you should not be responsible for any increased assessments as a result of the solar “improvements” that the tenant installs on your property. Additionally, any roll-back taxes associated with the conversion of the property use from agricultural to the use of a solar farm should be passed along to the company that is leasing your property. Florida has recently enacted new tax incentives for these new solar projects that make them more attractive to the power companies. Zoning and permitting approvals, while typically requiring the property owner’s approval to process, should be the responsibility and at CONTINUED ON NEXT PAGE
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FPL Accelerates Major Solar Energy Development Projects - Now Plans to Add Eight New Universal Solar Power Plants Cost-Effectively by Early 2018. (2017, February 20). Retrieved July 26, 2017, from http://newsroom.fpl.com/2017-02-20-FPL-accelerates-major-solar-energydevelopment-projects-now-plans-to-add-eight-new-universal-solar-power-plants-cost-effectively-by-early-2018
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Solar Energy Centers. (n.d.). Retrieved July 26, 2017, from https://www.fpl.com/clean-energy/solar/energy-centers.html
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Wheeless, R. (2017, January 30). Duke Energy Expands Renewable Energy. Retrieved July 26, 2017, from https://illumination.duke-energy. com/articles/duke-energy-innovates-its-way-into-2017
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Id.
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Solar Power at Big Bend in Apollo Beach. (n.d.). Retrieved July 27, 2017, from http://www.tampaelectric.com/files/renewableenergy/ renewableenergyannualupdate.pdf
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the expense of the solar company leasing your property. This includes site plan approvals to address set back requirements, as well as building permits and approvals for any structures and/or fencing that are to be constructed and installed. The location of any infrastructure, including roadways, together with easements and rightsof-way necessary for the improvements should be conditioned upon mutual agreement to the greatest extent possible, particularly if you own property adjacent to the property which is being leased for the solar farm. A standard condition in a solar farm lease is one that prevents any intentional or preventable shade from being cast on the solar array, which would negatively affect production. This may limit an owner’s use of adjacent property to some extent and should be taken into consideration when entering into a lease.
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A provision that stipulates the terms and conditions of the assignment of the lease should be included in the lease agreement to allow the property owner to approve of any assignment. The property owner should at all times be assured that the proposed tenant has the financial wherewithal to satisfy the financial obligations required by the lease. This may require a guaranty by a corporate parent or assignor. As the property owner, you will want the flexibility to sell the property that is the subject of the lease, should the need arise. Therefore, a provision contemplating the sale of the property during the term of the lease should be included. Additionally, if the property is subject to a mortgage, or should a mortgage be sought during the term of the loan by the property owner, the lease should provide for a provision that would allow for the same. The tenant will want to specify that the lien of the mortgage will
Solar farms provide a source of renewable clean energy for distribution by the electric companies while providing an income stream for the property owner from a crop that keeps on giving.
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The lease should provide for a provision to address the removal of improvements at the sole cost of the solar company upon the termination of the lease, together with the costs and expenses of restoring the property to its original condition. In certain situations, the property owner may want to consider incorporating an option that would allow the property owner to elect to cause the solar company to remove all improvements at the sole cost of the solar company after the termination of the lease, or elect to have the improvements assigned to the property owner at no cost after the termination of the lease.
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not attach to their equipment. Often, the tenant will want to negotiate a Right of First Refusal with respect to any potential sale by the property owner. The property owner may want to consider limiting the Right of First Refusal requested by the tenant to a Right of First Offer. The lease should assign any and all liability that may arise from the use of the property as a solar farm to the solar company. This should include claims from any third party liability and any and all liability that could arise under federal, state and/or local rules and regulations, including, but not limited to environmental statutes, regulations and ordinances.
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Solar leases are not short in duration and typically tie up the land which is the subject of the lease for several years, minimizing and/ or eliminating any and all other uses on the property that is the subject of the lease for the duration of the lease. As the property owner, one must be mindful of the length of time that the property will be “tied up”, perhaps providing for regular adjustments tied to an index. In addition, long-term solar leases need to address the potential for condemnation and how any award will be apportioned between the property owner and the tenant.
Most importantly, just as no two properties are alike, no two solar farm leases are alike. Each lease must be written to address the specificities of the deal. Hiring a qualified attorney familiar with both agricultural operations and solar farming will assure the property owner that their interests are protected.
Although drafting the right terms and provisions for a solar farm lease is a complex process, entering into such an agreement is worth consideration. Solar farms provide a source of renewable clean energy for distribution by the electric companies while providing an income stream for the property owner from a crop that keeps on giving.
Michael Minton is Managing Shareholder of Dean Mead’s Fort Pierce office, Chair of the firm’s Agribusiness Industry Team and Chair of the firm’s new Solar Energy Team. He represents family businesses with an emphasis on generationally-owned agricultural businesses. Mr. Minton assists with their organizational structure, federal income, estate and gift tax planning and business succession planning. He offers his clients extensive experience focusing on tax issues related to agri-business, as well as water resource issues and new innovative uses of land for value added propositions. He may be reached at mminton@deanmead.com. Anna Long is Of Counsel in Dean Mead’s Real Estate department and a member of the firm’s Solar Energy Team. She has been practicing law for over 30 years primarily in the areas of environmental law, land use, zoning and administrative law. Before moving to private practice, Ms. Long held numerous environmental managerial positions including, Director/Counsel for a large building supply company, Manager for Orange County Florida’s Environmental Protection Division, Director of Environment, Safety and Health for the largest semi-conductor company in the northwest and was In House Counsel and Manager of the environmental division of a major private electric utility company with services in nine states. She was also General Counsel and Director of Environmental Services for a multi-state environmental and engineering and consulting firm located in the Northwest. She may be reached at along@deanmead.com. Chris D’Amico is a Shareholder in Dean Mead’s Corporate and Tax practice and a member of the firm’s Solar Energy Team. He represents companies and business owners in all types of business and tax matters, including choice of entity, mergers and acquisitions, reorganizations, and other general business matters. In addition, Mr. D’Amico represents title and mortgage companies with respect to the formation and operation of “affiliated business arrangements”. He also represents clients in all aspects of the development and sale of solar photovoltaic electricity generating projects. Mr. D’Amico is Board Certified in Tax Law by The Florida Bar. He may be reached at cdamico@deanmead.com. Dennis Corrick is a Shareholder and member of Dean Mead’s Agribusiness Industry Team and Solar Energy Team. He practices in the areas of commercial real estate, zoning and land use, and general business law. He has experience in every element of real estate purchase, ownership, governance and sale. In addition, he assists clients in land use and zoning matters, permitting and licensing, and in agreements governing the use of property such as covenants and restrictions, commercial and agricultural leases, easements and licenses. Mr. Corrick has extensive experience working with issues unique to agricultural businesses and properties. These include conservation easements, grazing leases and matters related to water use and environmental permitting, as well as financing, operation, sale and purchase of farm and ranch properties. He may be reached at dcorrick@deanmead.com.
LEADER • FALL 2017
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LEADER • FALL 2017
ASSOCIATION NEWS
DETJEN APPOINTED CHIEF CREDIT OFFICER Scarlet Detjen was appointed Chief Credit Officer on June 1, 2017. Detjen is a native of Virginia where she began her career in public accounting before relocating to central Florida in 1987. She is a graduate of the University of South Florida with a Bachelor of Arts degree with a concentration in accounting and a Masters of Accountancy. Detjen is also a graduate of the Graduate School of Banking at Louisiana State University. She holds an active Certified Public Accountant license in the state of Florida. Her 10 plus years of public accounting experience includes financial reporting, auditing, and tax. Prior to her role as Chief Credit Officer, Detjen was the Chief Audit Executive for Farm Credit of Central Florida. Before Farm Credit, she was Chief Financial Officer and secretary-treasurer of a privately held, vertically integrated global agribusiness. As a member of the strategic management team, she led the development and directed the implementation of strategic business and operational projects. In 2010
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We are excited as she takes the helm of our lending operations to improve efficiency and the overall customer experience.
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REGGIE HOLT
Detjen obtained the CIA (Certified Internal Auditor) designation, the CRMA (Certified Risk Management Assurance) in 2012 and the CFE (Certified Fraud Examiner) in 2016. “Mrs. Detjen has been and will continue to be an incredible asset to our association,” said Reggie Holt, President and CEO. “We are excited as she takes the helm of our lending operations to improve efficiency and the overall customer experience. ”
CROP INSURANCE: THE SAFETY NET YOU NEED Patronage: Share in our profits with patronage refunds. They reduce the cost of a crop insurance policy and save you money, all while protecting your livelihood. Coverage for your agribusiness loans: Crop insurance lowers production risks and protects against catastrophic losses. Confidentiality: Your confidentiality is of the upmost importance. With our top-of-the-line cybersecurity, your private information remains secure. Expertise in Agricultural Risk Management: Simply put, we know agriculture. Our in-depth working knowledge of your operation allows us to craft an accurate policy that maximizes your risk protection.
Upcoming closing dates! Pasture, Rangeland, Forage (PRF) Nov. 15 Blueberries Nov. 20
CONTACT US TODAY! Your loan officer or Jennifer Parrish | 863.904.3182
LEADER • FALL 2017
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ASSOCIATION NEWS
NEW HIRES Cynthia Falk Cynthia Falk of Frostproof, FL started at Farm Credit as a commercial loan servicing coordinator in June 2017. Previously, Cynthia worked for her family’s RV resort business in Avon Park. She received her bachelor’s degree in business from Warner University, where she graduated with highest honors, and is working on obtaining her M.S. in accounting at Warner as well. In her free time, Falk enjoys traveling, hunting and spending time with her family.
Kelsey Hobbs Kelsey Hobbs of Red Cloud, Nebraska joined Farm Credit in June 2017 as an administrative assistant. Kelsey graduated from Wichita State University with a Bachelor’s of Fine Arts in dance performance and choreography. Kelsey is also a dancer and performer for the Entertainment Department at Busch Gardens Tampa Bay. She was a member of the Wichita Contemporary Dance Theatre and traveled to perform in Italy, Spain and New York. Her choreography was also chosen for the American College Dance Festival Mid Region Performance. In her free time she enjoys working out, DIY projects, being involved in her local church, going to the beach and reading.
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LEADER • FALL 2017
Susan Hays Susan Hays of Lakeland, Florida joined Farm Credit as the agribusiness commercial sales assistant in April 2017. Previously, she worked in the savings and loan industry as a residential loan officer, branch manager and executive assistant. She continued as an executive assistant and coordinator of large events for a non-profit organization. She has two sons and six beautiful grandchildren. In her free time, she enjoys spending time with her husband on the water boating, fishing and visiting the beach. Susan is a vocalist and led a Christian ladies group for five years that touring the northern U.S. and Florida.
June Wyatt June Wyatt from St. Thomas, U.S. Virgin Islands joined Farm Credit as a Commercial Loan Processor in June 2017. Previously, she was a junior commercial lending officer at Banco Popular de Puerto Rico, then worked for a mortgage company as post closing analyst. Wyatt graduated with a B.S. in business administration from Southern Adventist University and has an MBA from the University of the Virgin Islands. In her free time, she enjoys spending time with her family, traveling and reading.
ASSOCIATION NEWS
INTERNS Mike Burrell Mike Burrell of Riverview, Florida joined Farm Credit as a credit analyst in July 2017. Mike has a bachelor’s degree in business administration from McKendee University and an MBA from Trident International. He also has a degree in baking and pastry arts from Johnson & Wales University. Before his employment with Farm Credit, he worked as a Financial Manager in the U.S. Air Force prior to retirement. After moving to Riverview, he worked in new home sales. In January 2017, Mike was selected as the first candidate for the Veteran Agricultural Selection Program (VASP), a joint effort with Hillsborough County and the University of Florida/ Institute for Food and Agricultural Sciences. Mike has visited four countries in Africa, and did additional work for the U.S. Airforce in the aircraft maintenance and medical fields. In Mike’s spare time, he enjoys creating new recipes ideas for his home-based business. One day, he hopes to own and operate a classical French pastry shop.
EMPLOYEE ANNIVERSARIES Anniversaries are recorded as of 8/1/17
1 Year Mark McRae Tiffany Knowles
5 Years Brock Overbaugh
10 Years Brittany Lopez
15 Years Yvonne Frasier
20 Years Jeffrey Phillips
Cameron Allison Cameron Allison of Orlando, Florida joined Farm Credit as a Credit Analyst Intern for the summer in May 2017. Cameron is a senior at the University of Florida studying Food and Resource Economics. Cameron spends his free time fishing, hunting and spending time outdoors.
LEADER • FALL 2017
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Farm Credit of Central Florida P.O. Box 8009 Lakeland, FL 33802-8009
PRSRT STD U.S. POSTAGE
PAID
COLUMBIA SC PERMIT 1160
Build the home of your dreams with our Construction Loan Program • Maximum loan amount of $424,100. • Single family, owner-occupied, primary residences, second homes or vacation homes. • Construction period of 12 months. • The One-Time-Closing construction loan program permits a borrower to finance the purchase of the land and the construction of the home — in one loan — with one interest rate and one closing. This program is structured so that the borrower only makes interest payments through construction and based only on the dollar amount disbursed to date.
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LEADER Call • FALL 2017 Vonda
866.245.3637
farmcreditcfl.com
Fulwood (NMLS# 688650) for more information / 813.904.3171