On a brutally hot afternoon last June, about 500 people packed the high school gym in downstate Prophetstown for one of the largest land auctions ever held in Illinois.
Larry McKenna was there. Nothing, he says, could have kept him away.
He didn’t seem bothered by the crushing 100-degree heat in the airless gym. And he didn’t even notice that a few bidders–some hoping to buy the same land he wanted–had come from as far away as Texas.
The only thing that mattered to McKenna was that, through an odd twist of fate, the house where his family had lived since 1960 was part of the nine-square-mile area on the auction block.
“This was our home,” said McKenna, whose family had sold its farm and house to Commonwealth Edison Co. in 1975, but had leased it back from the utility in order to stay there. “We didn’t know what was going to happen.”
The bidding was as intense as the heat. One participant described the eight-hour auction–a multiple-bid system as complex as picking a Pentagon contractor–as “grueling.”
In the end, there were winners and losers. Some farmers weren’t able to repurchase the land they had worked for years. Others got back only a piece of what they once had owned.
McKenna was lucky enough at least to buy back his house and the five acres around it for $60,000.
“My grandparents had some of this land in the 1940s. We’ve been in this area for quite awhile,” he said. “Both my parents are glad to own the house again.”
With the final bang of the gavel that day, McKenna and 19 other buyers purchased a slice of 5,800 acres about 100 miles west of Chicago on the Rock River. The massive tract fetched $8 million–about $2 million more than land brokers had expected.
The property had belonged to one of the state’s largest land owners, Commonwealth Edison, which lately has been on a selling spree. The company has decided it no longer needs so many big rural sites for new power plants.
In a second Downstate auction in November, the utility sold 3,300 acres in Carroll County near the Mississippi River. That sale brought about $3.8 million from 19 separate buyers.
Hunters bought some of the Carroll County land because large parts of it were wooded. But the bulk of the bidders at both auctions were farmers, hoping to buy back their old land or expand their operations.
Twenty years ago, Jim Nowers sold his 900-acre farm to Edison. At the time, he cut a deal with the utility–as did some of the other farmers–to keep his house and a bit of land around it. Then he leased back the farmland and worked it just the way he always had done.
“I’ve lived here 40 years and it never felt like I sold. I’ve just kept on with what I was doing,” said Nowers, who bought back 300 acres at the auction so he could keep farming. “I am old enough that I don’t need as much.”
The auctions also drew farmers who had never owned a piece of the available property.
Russ Rosenboom paid $1.95 million for the biggest Whiteside County parcel, about 1,300 acres, where he plans to grow corn and soybeans.
“This spreads out our weather risk,” said Rosenboom, who can no longer afford to buy land near his Kankakee County farm because urban sprawl has boosted prices there as high as $3,200 an acre. “I’m saving about $1,000 an acre. It’s hard to find this kind of quantity and quality of land for sale.”
That’s probably why the Commonwealth Edison auctions generated so much interest. By Midwest standards, the land tracts were massive.
Joe Bubon of Schrader/Westchester Auction Co., of Champaign, which handled both auctions, figures the Whiteside County land sale was the second largest in Illinois history. (The biggest was about 7,000 acres in Southern Illinois.)
“To find a contiguous property in Illinois that’s this large is very uncommon,” Bubon said.
By other measures, though, the sales were modest.
In 1989, Bubon says his company sold 64,000 acres in Arizona to one buyer. It’s not uncommon, he says, to auction western ranches of 5,000 to 8,000 acres.
Big tracts, though, are hard to assemble in more densely populated states like Illinois, land experts say.
But that’s exactly what Edison did in the 1970s when it started buying farmland along the state’s rivers. The plan was to build power plants, many of them nuclear, near waterways.
“We purchased the land piecemeal,” said Steve Nailor of Commonwealth Edison. “We worked agreements for farmers to lease back the land and farm it.”
The idea, Nailor explained, was to hold the land until the utility needed more capacity, then build on the sites.
Real estate broker and farm owner Bud Bull originally helped Edison purchase the Carroll County land.
“It took about three-and-a-half years to buy all the land,” said Bull, who had sold part of his farm to the company and recently repurchased it at the auction.
Curiously, Bull encountered little resistance from farmers who were originally asked to sell. He thinks most local residents were even a bit disappointed that Edison has changed its mind about building a power plant nearby.
“We are kind of a depressed county and we needed it,” he said.
But the utility didn’t.
In the mid-1970s, the company undertook a long and costly nuclear construction program. A decade passed before the newest nuclear plants at Byron and Braidwood were completed.
Today, that building program has left the company with the nation’s biggest nuclear power plant system and saddled with high debt, industry analysts say.
Nailor says the nuclear construction program did result in excess capacity and little call for new plants, thus prompting the land sales. (The company still owns 2,900 acres near LaSalle-Peru on the Illinois River, but has no plans to sell that land just yet).
“There was a time when nuclear was the way to go and they were the most economical plants,” said Nailor, who says another nuclear station may never be built. “We decided it was better to sell the property back to the land owners and help our investments as a corporation. The land sale is strictly a business decision from our standpoint.”
Edison won’t say how much it originally paid for the land. But the company was able to maximize its take at the auctions by using a multiple-bid system.
Before the sale, auction company Schrader/Westchester divided the land into a number of parcels, or tracts.
“It would have been unusual for one buyer to come forward. There are few people out there who could buy millions of dollars worth of property in one chunk,” said auctioneer Bubon.
The Whiteside County property, known locally as Spring Hill, was broken into 39 tracts, from 5 to 1,349 acres. Bubon says the boundaries of the tracts didn’t match those of the original farms. Instead, natural borders, such as streams or the presence of certain soil types, determined the tracts’ shape.
“By selling smaller pieces, you can maximize the price,” said Bubon. “It discourages large buyers, like developers, who are looking for something cheap that can be improved. People will put a higher premium on smaller parcels that are special to them.”
At auction, bidders vied for any number, or combination of tracts–a lengthy, complex process.
“I hated it,” said Tom Neumiller, who paid $1.25 million for 974 acres of sandy soil to grow potatoes, sweet peas and corn.
“It’s terrible with all those dollars going by so fast. It was the worst eight hours of my life.”
Neumiller, like other farmers who bought land at the Commonwealth Edison auctions, says he paid more than he anticipated. Auctioneer Bubon says prices did exceed expectations, but points out that land prices are spiraling again.
Illinois farmland prices peaked in the early 1980s, when an acre of good black dirt brought about $4,000, before falling to less than half that in the early 1990s. But Bubon said that in the last 18 months, “we’ve seen about a 15 to 20 percent increase in land prices.”
Bubon figures prices at the Whiteside County auction easily bettered conventional sales of similar-quality land. The most desirable parcels averaged about $2,375 an acre. The Carroll County land, which had a fair amount of woods not suitable for farming, brought less–an average of $1,211 per acre.
How did the farmers fare?
Vernon Law repurchased 146 acres of his farmland in the Carroll County sale and says it was a wash for him financially.
“We needed the land back or we would have been out of business. I’m not sour about it, but we ended up trading dollar for dollar,” he said.
Real estate agent Bull, who was anxious to buy back his property from the utility, figures he made a profit despite 20 years of fluctuating land prices.
“I sold the land at a good price and bought it back at an average price,” he said. “I certainly didn’t lose money on it.”
