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High Voltage Transmission Lines and Montana Real Estate Values

High Voltage Transmission Lines and Montana Real Estate Values. Hosted by: Montana State University Extension March 21, 2012. Chalmers & Associates, LLC 406.861.1642 jameschalmers@vcn.com. Research Study Team Contributors:. Land Decision Resources, LLC Billings, Montana. EconLit, LLC

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High Voltage Transmission Lines and Montana Real Estate Values

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  1. High Voltage Transmission LinesandMontana Real Estate Values

    Hosted by: Montana State University Extension March 21, 2012 Chalmers & Associates, LLC 406.861.1642 jameschalmers@vcn.com Research Study Team Contributors: Land Decision Resources, LLC Billings, Montana EconLit, LLC Phoenix, Arizona Thomas Appraisal Services, Inc. Lewistown, Montana
  2. Introduction Article on impact of Massachusetts / Connecticut Transmission Lines on real estate values appears in The Appraisal Journal, Summer 2009 Issue and crosses Pat Asay’s desk at NorthWestern Energy. Any research like this done for Montana? One of the authors, Jim Chalmers, lives in Montana. Discussions with Chalmers & Associates begin in Fall 2009, with a contract signed in March 2010. High Voltage Transmission Lines and Montana Real Estate Values
  3. Introduction The impact of High Voltage Transmission Lines (HVTL) on real estate values is prominent in the professional literature. General conclusions: About half of studies find no effect; about half find some. When found, effects are generally small (3% to 6%). When found, effects dissipate rapidly with distance and are usually gone at 200 to 300 feet. Studies span 40 years and conclusions have remained consistent over time. Most of the studies involved developed residential property in urban areas. HVTL are viewed negatively, but apparently aren’t given enough weight in the purchase decision to have a consistent, material effect on price. High Voltage Transmission Lines and Montana Real Estate Values
  4. Introduction How relevant is the literature to Montana? Land value is a larger proportion of total property value. Natural features and amenities may be more important determinants of overall property value. Western viewsheds are often more open to visual intrusion than those of urban properties. Many properties represent a mix of agricultural, residential and recreational uses. Buyers of these properties presumably have different criteria. High Voltage Transmission Lines and Montana Real Estate Values
  5. Introduction Dr. Chalmers and his team are well-qualified to carry out the proposed research. James A. Chalmers, Ph.D. in Economics and Certified General Real Estate Appraiser Directed the damage assessment for the NRC at Three Mile Island. Directed the social and economic assessment of oil shale development on Colorado’s West Slope for 36 shale developers, 6 counties, 21 municipalities, the State of Colorado and various Federal Agencies. Directed the assessment of the Yucca Mountain High Level Nuclear Waste Repository for the State of Nevada. Directed many assessments of pollution (carbon-based, VOC’s, metals, pesticides) on real estate values. Directed many assessments of physical facilities and infrastructure impacts on real estate values including transmission lines, highways, pipelines and power plants. High Voltage Transmission Lines and Montana Real Estate Values
  6. Introduction Dr. Chalmers retained key subcontractors with a combination of technical expertise and deep Montana-based experience. Land Decision Resources, LLC – Bruce Burger Over 12 years experience in rural property markets, providing real estate-based consulting services for ranches, recreational properties and agricultural lands in transition. Experienced in rural land development planning and feasibility, with unique expertise in open-space oriented, conservation development projects. Knowledgeable in applying GIS and valuation methodologies in rural land use applications. Thomas Appraisal Services, Inc. – Dave Thomas, MAI Montana Certified General Appraiser #416; over 18 years experience. Has appraised over 280 separate parcels for transportation ROW acquisition since 2003. Past President, Montana Chapter of the Appraisal Institute. EconLit, LLC – Frank Voorvaart, Ph.D. Extensive experience in statistical analysis of impacts on real estate values from physical facilities and infrastructure such as transmission lines and highways. Stewart Title of Bozeman – Samantha Matlack-Folkman Senior Title Officer, 17 years experience in title and recorded documents research statewide. High Voltage Transmission Lines and Montana Real Estate Values
  7. Approach General Approach to the Study Study recent sales along an existing HVTL corridor Examine a range of property types Utilize a variety of methods Interviews and Sales Comparison Paired Sales Multivariate Statistical Analysis High Voltage Transmission Lines and Montana Real Estate Values
  8. Approach Route of 500kV Transmission Lines Across Montana High Voltage Transmission Lines and Montana Real Estate Values
  9. Approach Parallel Single Circuit 500kV lines on 120’ to 130’ guyed steel lattice towers (Colstrip to Townsend) Double Circuit 500kV lines on 185’ self-supporting steel lattice towers (Townsend to Taft) High Voltage Transmission Lines and Montana Real Estate Values
  10. Approach Study Procedure Identify every real estate parcel for which any part lies within 500’ of the 500kV infrastructure centerline. Aggregate the parcels into common property ownerships and retain title companies to capture all recorded documents with respect to transfer of these ownerships. Assemble chain of title for these ownerships. Review each chain of title and identify all transactions occurring in year 2000 or later that appear to be arms-length transfers between unrelated parties. Physically inspect the properties involved in these arms-length transactions. High Voltage Transmission Lines and Montana Real Estate Values
  11. Approach Study Procedure (cont) Contact parties to the transactions and confirm as many details of the transaction as possible including price, buyer/seller motivations, and effects of the 500kV lines on the sale. Conducted analysis based on comparable sales, paired sales or statistical analysis to determine whether market evidence appears consistent with the interview results. Summarize findings by property type in one of three formats: Sale Analysis Report Interview Summary Report Subdivision Study High Voltage Transmission Lines and Montana Real Estate Values
  12. Approach Sale Analysis Report Transaction Details: Date and Conditions of Sale Parcel Size / Property Extent Location on HVTL Route Property Attributes: Property Type / Highest and Best Use Category Access Characteristics Built Improvements (if any) Land Class Mix (if applicable) HVTL Location and Impact Descriptive Notes (physical features, locational attributes, site character, natural amenities, etc.) High Voltage Transmission Lines and Montana Real Estate Values
  13. Approach Sale Analysis Report (cont) Interview Notes: Buyer and/or seller comments Broker, developer or other third party clarifications Analysis of Comparable Sales Outside the HVTL Area of Influence: High Voltage Transmission Lines and Montana Real Estate Values
  14. Approach Sale Analysis Report (cont) Conclusions: Evaluate property attributes data, interview results and comparable sales analysis. Draw conclusions with respect to effects of the HVTL on the transaction based on the above. High Voltage Transmission Lines and Montana Real Estate Values
  15. Approach Interview Summary Report Same general format as Sale Analysis Report, but no comparable sales analysis because sale price of subject could not be confirmed. Summarizes useful input obtained through buyer, seller or broker interviews. Conclusions are purely qualitative, due to absence of verifiable sale price data to check against available market evidence. High Voltage Transmission Lines and Montana Real Estate Values
  16. Approach Subdivision Studies Applied when the object of analysis was a subdivision rather than an individual property. Aspen Valley Ranches Statistical analysis applied to a 156-lot rural subdivision in Jefferson County. Sanders County subdivisions Paired sales analysis applied to several rural subdivisions along the Hwy 200 corridor from Thompson Falls to Plains. High Voltage Transmission Lines and Montana Real Estate Values
  17. ApproachSubdivision Studies: Aspen Valley Ranches Statistical Analysis High Voltage Transmission Lines and Montana Real Estate Values
  18. ApproachSubdivision Studies: Aspen Valley Ranches Statistical Analysis High Voltage Transmission Lines and Montana Real Estate Values
  19. ApproachSubdivision Studies: Aspen Valley Ranches Statistical Analysis High Voltage Transmission Lines and Montana Real Estate Values
  20. ApproachSubdivision Studies: Aspen Valley Ranches Statistical Analysis High Voltage Transmission Lines and Montana Real Estate Values
  21. ApproachSubdivision Studies: Sanders County – Paired Sales High Voltage Transmission Lines and Montana Real Estate Values
  22. ApproachSubdivision Studies: Sanders County – Paired Sales High Voltage Transmission Lines and Montana Real Estate Values
  23. ApproachSubdivision Studies: Sanders County – Paired Sales High Voltage Transmission Lines and Montana Real Estate Values
  24. ApproachField Research Summary High Voltage Transmission Lines and Montana Real Estate Values
  25. ApproachFinal Step The 57 Cases were grouped into one of seven property types Production Agricultural Lands (19 cases) Agricultural Lands w/Recreational Influence (4 cases) Agricultural Lands w/High Amenity Recreation and Natural Features (3 cases) Rural Residential Subdivision – Lots less than 5 acres (6 cases) Rural Residential Subdivision – Lots 5 or more acres (7 cases) Large Acreage Rural Residential Tracts (4 cases) Rural Recreational Tracts / Cabin Sites (14 cases) High Voltage Transmission Lines and Montana Real Estate Values
  26. FindingsIntroduction This study IS NOT A study of the effects of a transmission line corridor being imposed on an existing property owner. It IS A study of market response to properties where transmission lines are already in place. High Voltage Transmission Lines and Montana Real Estate Values
  27. FindingsIntroduction This study DOES NOT Provide a set of formulas that define damages for various property types. It DOES Provide a guide to which types of properties are most vulnerable to transmission line impacts. High Voltage Transmission Lines and Montana Real Estate Values
  28. FindingsIntroduction This study SHOULD NOT Create a presumption of effect, or lack of effect, for any specific property. It SHOULD Alert us to situations where the likelihood of effects is either larger or smaller. Determination of impacts to a specific property, MUST Be based on an in-depth analysis of how that particular property would be affected by imposition of a new transmission line corridor: In its current use, with consideration of mitigation opportunities. In potential future uses, with consideration of mitigation opportunities. High Voltage Transmission Lines and Montana Real Estate Values
  29. FindingsProduction Agricultural Lands High Voltage Transmission Lines and Montana Real Estate Values
  30. FindingsProduction Agricultural Lands Conclusions No evidence of price effects. Acquisitions are dominated by productivity and operating cost considerations, property access and assemblage. Nuisance factors are more significant for farming than grazing. No adjustment is made for the easement encumbrance in sale price. High Voltage Transmission Lines and Montana Real Estate Values
  31. FindingsAgricultural Lands with Recreational Influence High Voltage Transmission Lines and Montana Real Estate Values
  32. FindingsAgricultural Lands w/ Recreational Influence Conclusions No evidence of price effects. Recreational use is small (and speculative) for the four properties studied relative to agricultural use; hence agricultural productivity is still the dominant consideration for the market. All four properties are large (i.e. 3,000 acres or more in size), which decreases potential for conflicts and dilutes overall impact on recreational use. For these types of properties, the larger the property and the smaller the recreational influence, the less the likelihood of price effects and extended marketing periods. High Voltage Transmission Lines and Montana Real Estate Values
  33. FindingsAgricultural Lands w/ High Amenity Recreation & Natural Features High Voltage Transmission Lines and Montana Real Estate Values
  34. FindingsAgricultural Lands w/ High Amenity Recreation & Natural Features Conclusions Probability of HVTL effects on these properties is low because: The properties tend to be large. The properties tend to have unique combinations of natural features and attributes, making them scarce with few substitutes. There are so many property attributes important to their buyers that the transmission line effects become diluted. There do not appear to be any transmission line effects in the three transactions studied here. High Voltage Transmission Lines and Montana Real Estate Values
  35. FindingsRural Residential Subdivision – Lots less than 5 acres High Voltage Transmission Lines and Montana Real Estate Values
  36. FindingsRural Residential Subdivision – Lots less than 5 acres Conclusions High probability of HVTL effects on these properties because: Use is purely residential, Properties are small, and There are substitutes available which are very similar other than their proximity to the transmission lines. Three of the four Sanders County subdivisions showed significant price effects and two of the four showed significant absorption effects. High Voltage Transmission Lines and Montana Real Estate Values
  37. FindingsRural Residential Subdivision – Lots 5 or more acres High Voltage Transmission Lines and Montana Real Estate Values
  38. FindingsRural Residential Subdivision – Lots 5 or more acres Conclusions These properties are vulnerable to both price and absorption effects. Probability of HVTL effects will increase with: Visual intrusion of transmission lines, Constraints on building site flexibility, and Availability of comparable substitutes not affected by the transmission lines. Analysis of properties in two Missoula area subdivisions indicate: One case where price effect may be on the order of 20% to 25%; an extended marketing period is also evident. In the other case there does not appear to be any price or absorption effect. Two of the three Sanders County subdivisions showed price effects and one showed an adverse effect on marketing time. High Voltage Transmission Lines and Montana Real Estate Values
  39. FindingsRural Residential Subdivision – Lots 5 or more acres Conclusions Although the AVR lots are 20 acres in size, the subdivision is relatively vulnerable to transmission line effects There is often little flexibility in building site location due to access and topographic constraints. The lots are relatively homogeneous and with 156 lots, there plenty of substitutes. Although there are some unique recreational uses (e.g. horse amenities, exclusive access to adjacent public lands, etc.), a residential homesite is still the predominant, and in most cases, exclusive use of the lots. Statistical analysis shows a discount in sale price of the AVR lots within 1,000’ of the HVTL centerline of about 15%, but none beyond that. The analysis shows no absorption effect, implying that pricing of the lots must have accurately reflected the market’s perception of relative strengths and weaknesses of the individual lots. High Voltage Transmission Lines and Montana Real Estate Values
  40. FindingsLarge Acreage Rural Residential Tracts High Voltage Transmission Lines and Montana Real Estate Values
  41. FindingsLarge Acreage Rural Residential Tracts Conclusions These properties are less vulnerable to transmission line effects than residential subdivisions. They are larger, offering greater flexibility in building site location. Residential use is important to prospective buyers, but additional diversity of use also plays a role. These properties tend to have their own individual character and unique combination of attributes with no immediate supply of comparable substitutes that are not affected by the transmission lines. The properties are of a scale where the HVTL is a conspicuous attribute, with some thinning of the buyer pool as a result. For the four transactions studied here, the HVTL do not appear to have affected either the sale price or the marketing period. High Voltage Transmission Lines and Montana Real Estate Values
  42. FindingsRural Recreational Tracts / Cabin Sites High Voltage Transmission Lines and Montana Real Estate Values
  43. FindingsRural Recreational Tracts / Cabin Sites Conclusions Buyer criteria are different and generally less sensitive to transmission line effects. Effect depends on line location relative to property access routes and potential building sites; given size, topography and vegetation, effects are often nominal. In 12 of 14 transactions studied, the lines appeared to be of no consequence. In two cases there were concerns raised by brokers, but we were unable confirm specific effects with market data. High Voltage Transmission Lines and Montana Real Estate Values
  44. ConclusionsOverall Three issues are dominant USE – the more heavily oriented the property is toward residential use, the more vulnerable it is to market effects from transmission lines. SIZE – the smaller the property, the more vulnerable it is to market effects from transmission lines. SUBSTITUTES – the availability of otherwise comparable substitutes increases the vulnerability of a property to transmission line effects. High Voltage Transmission Lines and Montana Real Estate Values
  45. Implications This study SHOULD NOT Create a presumption of effect, or lack of effect, for any specific property. It SHOULD Alert us to situations where the likelihood of effects is either larger or smaller. Determination of impacts to a specific property, MUST Be based on an in-depth analysis of how that particular property would be affected by imposition of a new transmission line corridor: In its current use, with consideration of mitigation opportunities. In potential future uses, with consideration of mitigation opportunities. High Voltage Transmission Lines and Montana Real Estate Values
  46. High Voltage Transmission Lines and Montana Real Estate Values
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