The potential for changes in property values due
to the proximity to a new power line has been well documented.[i] Real estate appraisers, utility consultants, and academic researchers
have studied the issue of how to assess the impacts of power lines on property
values since the 1950s. In general, there are two types of property value
impacts that can be experienced by property owners affected by a new transmission
line. The first is a potential economic impact associated with the amount paid
by a utility for a ROW easement. The second is the potential economic impact
involving the future marketability of the property. Although somewhat
interrelated, these two effects are discussed separately below.
Just compensation for a transmission line easement
has been typically interpreted as the difference between the fair market price
of the land with and without the encumbrance of the line. Economic impacts to
landowners could occur if they are not compensated for the “highest and best
use” of the affected parcel or if the effective “taking” is larger than the
actual easement. In addition, adjacent property owners are generally not
compensated at all, even if certain uses of their land are adversely affected.[ii] A number of court cases involving these issues
have resulted in differing opinions and decisions about what constitutes just
compensation.
Potential impacts related to the marketability of
a property include factors such as sale price, the amount of time required to
sell, and the debt carried over this time. The types of studies done to assess
changes in sale price of property containing a transmission line have evolved
over time. Initial studies were primarily surveys or attitudinal studies of
small numbers of homeowners. However, substantial differences may exist between
people’s perceptions about how they would behave and their actual behavior when
confronted with the purchase of property supporting a power line.
Because of this uncertainty, attitudinal studies
were replaced by “valuation” studies involving the comparison of sales prices
for properties similar in most respects, except for proximity to a power line.
The potential shortcomings in conducting these types of studies are: (1)
identifying what constitutes a pair of virtually identical properties is often
a matter of subjective judgment and (2) a limited number of suitable pairs is
often used to represent the “market.”[iii] A study conducted in west central Wisconsin in the mid-1980s, used
the comparable pair sales evaluation of residential properties.[iv]
A third type of research study to assess property
value effects involves large sample sizes, a high number of variables and
multiple regression analysis. These studies, which can better account for
numerous variables that affect sales, provide the best information to date on
the effects of power lines on property values.
When buying property, people are likely to
consider many factors, such as schools, community services, scenic beauty,
recreational opportunities, or distance to work. The relative importance of
each of these factors varies among individuals. Likewise, the importance of a
nearby power line varies among people.
A power line may either increase or decrease an
individual’s perception of a property’s worth. This perception is indicative of
how much one is willing to pay for the property (the fair market value).
The perceived value of a piece of property could
increase if:
Conversely, the perceived value of property may
decrease in value because of:
While no conclusive evidence of the effects of EMF
on health exists, it is recognized that people’s concerns about this issue can
influence their decisions related to purchase of property. In Criscuola v. Power Authority of the
State of New York,[vi] the New York State Court of Appeals ruled that whether the danger of
EMF is a scientifically genuine or verifiable fact should be irrelevant to the
central issue of its market value impact. The visual profile of transmission
lines structures and wires can also decrease the perceived aesthetic quality of
property. These conclusions have been cited in several court cases and legal
opinions.
On properties that are farmed, installation of a
power line can remove land from production, interfere with operation of
equipment, create safety hazards, and foreclose the opportunity to consolidate
farmlands or develop the land for another use. The greatest impact on farm
property values is likely to occur on intensively managed agricultural lands.
Lastly, the presence of a power line may not
affect some individuals’ perceptions of a property’s value at all. These people
tend to view power lines as necessary infrastructure on the landscape, similar
to roads, water towers, or antennae. They generally do not notice the lines nor
do they have strong feelings about them.
While the data from many of the studies reviewed
are often inconclusive, some general observations among the studies are:
With respect to the second to last point, homes
not directly adjacent to the ROW or beyond 200 feet from the ROW were affected
to a much lesser degree than those abutting the line or ROW.[viii] [ix] It is very difficult to make predictions about how a specific
transmission line will affect the value of specific properties. The property
values effects discussed in this section are on “fair market” value. No studies
have indicated that there may be an effect on the “assessed” value of property.
[i]
Approximately 30 papers,
articles, and court cases covering the period 1987 through 1999 were reviewed
by Commission
staff in its analysis of this subject.
[ii]
Furby, L., Robin, G.,
Slovic, P., and Fischoff, B. 1988. Electric Power Transmission Lines, Property
Values, and
Compensation. J. Env. Mngmt. 27:69-83.
[iii]
Kinnard, W. Jr. and S. A.
Dickey. 1995. A Primer on Proximity Impact Research: Residential Property
Values Near High-Voltage
Transmission Lines. Real Estate Issues 20(1):23-29.
[iv]
Solum, C.L. 1985.
Transmission line impact study based on paired sale comparisons of residential
properties located within
Northwest and West Central Wisconsin. Craig L. Solum & Assoc.
[v]
Ignelzi, Patrice and Thomas
Priestley. A Statistical Analysis of Transmission Line Impacts on Residential
Property Values in
Six Neighborhoods. Southern California Edison, 1991.
[vi] Criscuola v. Power Authority of the State of New York, 81 NY2d 649, 602 NYS2d 588, 621 NE2d 1199 (1993).
[vii]
The values can vary widely
depending on the area of the United States. In coastal states, such as
California and Florida, the
decrease in property values can be
quite dramatic; in states within the Midwest (Minnesota, Wisconsin and the
Upper Peninsula
of Michigan), the average decrease appears to be between 4 percent and 7 percent.
[viii]
Kung, H. and C. Seagle,
“Impact of Power Transmission Lines on Property Values: A Case Study,”
Appraisal Journal, July
1992.
[ix] Hamilton, S. and G. Schwann. 1995. Electric Transmission Lines and Property Value. Land Economics 71(4):436-444.