Former U.S. Secretary of the Interior Ken Salazar once said that the future for solar energy is bright. For Vermaland, my family's Phoenix-based land development business, the foresight to expand into the solar industry lit our way during those dark nights of the Great Recession, while other companies lost their way and went out of business. A combination of investing in the solar industry and being conservative in putting capital in the market allowed Vermaland to not only survive the severe economic downturn, but flourish in the end.
In 2007, Vermaland was one of Arizona's largest landowners, holding more than 12,000 acres of land. During that time, home values in the Phoenix metro area were plummeting as the real estate market crashed. Foreclosure rates approached an all-time high and no one knew how long the recession would last. Rumors of banks having high levels of inventory scared many potential home buyers. As home values continued to decline, the economy worsened. In 2008, the U.S. reached a recession many called the worst since the Great Depression of the 1930s.
Given the housing and credit crisis, Vermaland's outlook appeared bleak. We heard stories of our competitors going out of business. No one knew how long the recession would last. During this dark time my father, Kuldip Verma, was steadfast and positive. "We need to keep our heads above water," he would tell us.
One of the ways we keep the company moving forward was my father's conservative investment prowess. Vermaland was able to maintain a good balance towards their cash inflow and outflow during this time.
But the major reason Vermaland survived the recession was our investment in the solar industry, and we as a company educating ourselves about solar. Companies from all over the world were coming to Phoenix due to its high solar resource and abundance of desert land. Vermaland began selling land to solar companies in 2007. The first to buy was Sempra Energy, the parent company of San Diego Gas and Electric. The Mesquite Power Plant, which provides energy to San Diego, now sits on the land we sold.
As a senior marketing analyst with Honeywell in 2007, I worked in a group that provided parts to Arizona's semiconductor industry. One of my responsibilities was to explore adjacent markets, one of the primary ones being solar energy. This background was invaluable as I delved deeper into the industry. Besides the technical knowledge involved, I also learned which parcels we owned that would best be suited for the different renewable energy technologies. I met with solar professors at Arizona State University, solar developers and various governmental personnel and industry experts to educate myself. Every night I would sit down with my husband, who is an engineer, and try to understand the different technologies and which parcels we had that would best be suited for the different technologies.
Due to the credit crisis, even the solar industry was facing challenges in getting investment capital. There was great economic uncertainty and I faced many rejections trying to market our properties for solar expansion. I kept meeting with industry experts in order to find opportunities for our business to grow in. I would get comments often at industry trade shows on how it is unusual for landowners to attend, since we aren't technically in the industry. But I never gave up.
In 2010, things seemingly changed overnight! The economy was improving and President Obama was encouraging solar developments and providing federal funding for projects. APS, the local Arizona utility, began issuing solicitations for solar projects. Immediately, all the contacts I had made over the past few years were calling non-stop, scrambling to tie up land that had suitable solar qualities before their competitors beat them to it. We eventually finalized more than 25 agreements with solar developers around the world who purchased, leased, or did joint ventures with us. Although land values had plummeted, solar developers were paying peak prices for our land, since the characteristics they were looking for -- such as proximity to transmission, high solar resource and flatness -- were so rare.
We even began developing our own solar facility, an initial development on a 40 MW solar facility in Hyder, Ariz. We eventually turned this project over to a solar developer, who is currently developing this site.
Three lessons I have learned on how to survive a recession are invest wisely in a rapidly increasing market, have a reserve to help you get through lean money times, and always look for new market opportunities for your product.