High-Voltage Transmission Lines and Residential Property Values in New England: What Has Been Learned.

Author:Chalmers, James A.
 
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Abstract

This article summarizes work over ten years on the effects of high-voltage transmission lines (HVTLs) on residential property values in New England. It identifies what is often presumed--there are some properties for which HVTLs are sufficiently intrusive that their market value is affected. Since the class of affected properties is small, little insight into their defining characteristics has been possible in statistical studies. In the research presented in this article, however, a more traditional case study approach is employed, and a remarkably consistent pattern emerges that gives guidance to situations where there is a significant likelihood of an HVTL effect on value. The research results offer important support for the valuation of properties along existing HVTL corridors and for anticipating effects of proposed projects both in new and existing corridors.

Introduction

The generation and transmission of electrical energy is in a period of rapid change in the United States. The decommissioning of aging coal-fired and nuclear power plants combined with new, and in many cases, more decentralized generating sources is creating the need for significant upgrade and expansion of the electric grid. These projects are frequently controversial, and the possible effect on property values remains a high-profile and poorly understood issue.

The value effect issue is complex because it has two very distinct but interrelated parts. The first issue is the effect of one or more existing high-voltage transmission lines (HVTLs) on residential property values. The second, and increasingly prominent, issue is the incremental effect of system upgrades when existing corridors are reengineered to carry increased loads. The purpose of this article is to address both the issues and examine the implications for the evaluation of proposed projects.

The research has been carried out in the context of three large projects.

* Project 1: 2008 Massachusetts and Connecticut Study. The first research project involved the 2008 statistical analysis of over 1,200 home sales during 1998-2007 in four Massachusetts and Connecticut study areas. The results of that research were published in The Appraisal Journal in 2009. (1) For purposes of discussion, this study will be referred to as the "2008 Massachusetts/ Connecticut Study."

* Project 2: New Hampshire Research Study. The second research project involved a case study of residential sales in New Hampshire; this research was carried out in 2013 to 2018. Due to the low density of housing development in much of New Hampshire, a statistical study was not possible. Therefore, the focus of the New Hampshire research was on 78 case study sales of residential properties that were either encumbered by, or adjacent to, an HVTL right-of-way (ROW). The case study research is described, and the results presented, in what will be referred to as the "New Hampshire Research Report." (2)

* Project 3: 2018 Massachusetts and Connecticut Research Study. The third research project was carried out over the period 2016 to 2017 and consisted of two components: a statistical study of over 1,800 residential property sales in eight Massachusetts and

Connecticut study areas and a case study analysis of 42 residential property sales in the same eight study areas. The results of this third project are presented in what will be referred to as the "2018 Massachusetts/ Connecticut Research Report." (3) Exhibit 1 shows the locations of the statistical study areas and the 120 case study transactions in the research projects. The purpose of this article is to synthesize the findings from these research initiatives, with an emphasis on their implications for the evaluation of value impacts of proposed high-voltage transmission line projects.

Research Background

Literature Review

The prior research on the effects of HVTLs on property value has been exhaustively reviewed in the professional literature and will not be repeated here. (4) There are two recent articles, however, that deserve mention. The first article reports on research by Tatos, Click, and Lunt, and appeared in the Summer 2016 issue of The Appraisal Journal. (5) The approach there was unique in that data were collected for approximately 125,000 sales in Salt Lake County, Utah, over a period of fourteen years. Sale price was related to approximately 450 property characteristics (for example, it included eighteen floor variables--cherry, oak, maple, carpet, tile, laminate, slate, etc.).

While this approach is remarkable in the number of observations studied and the large number of control variables, its application to the HVTL issue is limited because of the lack of site-specific measurements (which is understandable given the number of observations) of the key HVTL-related variables. The three critical drivers of HVTL effect on residential property values are generally assumed to be proximity, visibility, and encumbrance, and there are shortcomings with each of these measures in the Tatos, Glick, and Lunt study. Specifically, in that study there are no visibility measures; there is an easement variable, but as the authors note, it is not clear whether it refers to all easements on the property or to some subset of the easements; and finally, there is no distance measure from the home to the ROW--rather there is a separate distance measure to every line. As a result, there is no distinction between proximity to two 115 kV lines in the same corridor or to two 115 kV lines in separate corridors. The authors acknowledge that additional refinements of the data could address the easement issue and the proximity issue, but the critical visibility question is very difficult to resolve without a site visit.

A second study of note, by Wyman and Mothorpe, shares some similarities with the Salt Lake County study in that it uses public domain property records and GIS databases to look at a large number of transactions. The subject of this study is over 5,000 vacant lot sales that took place over the period 2000 to 2016 in Pickens County, South Carolina. (6) Unlike the Salt Lake County study, which is cautious in drawing conclusions with respect to HVTL price effects, the Pickens County study finds a 44-9% pricing discount for properties adjacent to transmission lines and a 17.9% discount for non-adjacent properties up to 1,000 feet from the HVTL.

It should be noted that development in Pickens County is extremely diverse. Its western boundary is Lake Keowee, which has been successfully developed into several ultra-high amenity golf course/lakefront communities where lots sell from low- to mid-six figures. Clemson University is located in the southwest corner of the county. The southeastern portion of the county is oriented to the Greenville metropolitan area and its strong manufacturing base. Moving north to the central and eastern portions of the county, development patterns are more scattered and very rural, and property values are low. In this broad and very heterogeneous context, all vacant lot sales of properties with fewer than 20 acres were studied over a seventeen-year period. (7) However, there are no controls for zoning, highest and best use, or for the extent to which certain residential lots benefit from extensive infrastructure and amenity improvements. The lots presumably range from commercial, industrial, agricultural, and residential highest and best uses. Further, those lots with a residential highest and best use have a range of current uses, from unimproved rural acreage to improved residential lots in amenity-rich subdivisions. The study includes some controls, but these do not adequately account for the lack of uniformity in the study properties. Also, as with the Salt Lake County study, there are issues with the three critical HVTL variables of distance, visibility, and encumbrance. Distance is measured from the centroid of the parcel, which on large parcels may be a poor proxy for the likely home site. Visibility is calculated from viewshed analysis that relies on topographic and land cover data sets that lack the granularity to support reliable inferences with respect to individual properties. Finally, there is no encumbrance measure. This research advances interesting ideas for using increasingly rich geocoded databases, but such databases require refinement before they can make a significant contribution to understanding of HVTL effects on residential property values. (8)

The central message from the literature continues to be that about half of the statistical studies find some measure of adverse property value effects and half do not. Where negative effects are found, they are small (usually in the 1% to 6% range), and the effects diminish rapidly with distance. (9) Most troublesome is that there is no explanation for the variability in the research findings. (10) 11 It follows, therefore, that residential property value effects on nearby properties cannot be presumed. It is also the case that the absence of effects cannot be presumed. The research has not produced results that are sufficiently robust or consistent to allow generalization to unstudied situations.

Study Methodology

Statistical Analysis. Ever since William Kinnard's pioneering work in this area, the dominant research methodology related to HVTL effects has been multiple regression analysis applied to large numbers of property sales located in the vicinity of an HVTL. (11) While this was a major step forward from what historically amounted to anecdotal accounts, the research frequently suffered from a lack of precision in measuring the key variables that determine the extent to which an HVTL intrudes on a property--namely, proximity of the house to the ROW, visibility of structures and conductors, and the extent to which the property is encumbered by the ROW easement. Since these variables are correlated with one another, each must be clearly defined if its...

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