An expert in property valuation disagrees with the conclusion of the city assessor of Wauwatosa, Wis., who testified before state regulators that siting two 115-kV power lines above ground would reduce property values by as much as $30m.
In rebuttal testimony filed with the Public Service Commission of Wisconsin (PSCW) in connection with the Western Milwaukee County Electric Reliability Project (Docket No. 05-CE-139), the president of Real Property Analytics, Thomas Jackson, said the analysis performed by assessor Steven Miner was substantively flawed in that the conclusions “are not supported by market evidence.”
Jackson, who filed testimony as an expert witness on behalf of project co-developer American Transmission Company (ATC), teaches graduate level courses on real property valuation at Texas A&M and holds a Ph.D. in urban and regional science.
In his testimony, Jackson said Miner “makes assumptions throughout his testimony regarding the impacts of the proposed high voltage transmission lines (HVTLs), but he does not present any relevant market evidence to support those assumptions.”
Jackson pointed to a larger body of published literature on the topic than the four articles Miner referenced in his testimony. “Studies report an average discount of between 2% and 9% of property value [and that] impacts diminish as distance from the line increases,” Jackson said, adding that those figures differ from Miner’s assertion of a valuation discount of as much as 15% in some cases.
However, Miner told TransmissionHub Nov. 2 he was not attempting to do a formal appraisal.
“That really was not the intent of what I was instructed to do, so there is a bit of an ‘apples-to-oranges’ comparison going on,” Miner said.
Miner said he was instructed by the city attorney “to put together a summary of what I would expect to see happen on these parcels. My analysis was done based on the knowledge that I have obtained from staff, other local assessors, and the International Association of Assessing Officers.”
Miner’s testimony said aboveground power lines would have a negative impact on property values ranging from $1.4m to $29.4m.
In his testimony, Jackson countered with an article that said proximity to power lines could actually result in a premium attributable to an improved viewscape “due to increased visual clearance.”
He also cited a study of homes in proximity to HVTLs in Montreal, Canada, which said the power lines had impacts “ranging from an average discount of 9.6% for homes adjacent to an easement and facing a tower, to a premium of 7.4% to 9.2% for homes located one to two lots away from a tower.”
Again, Miner said, it was not an “apples-to-apples comparison,” and that timing and location are important factors.
“Demand is different in different locations, and buyers and sellers determine the value,” he said. “Buyers right now have a lot to choose from, and it’s a lot more of a buyer’s market today than it might have been in 2005 or 2006 when some of those reports were put together.”
Although Jackson testified that Miner’s methodology fell short of a proper appraisal, Miner made the same point about Jackson’s conclusions.
“There are a lot of factors that need to be dealt with,” he said. “I didn’t do that, and I don’t think he did that for Wauwatosa, either, so to do an appraisal and to do that in-depth analysis is really going to take significant effort that neither he nor I have done at this point.”
Miner, however, acknowledged Jackson’s expertise. saying, “He has a lot of experience and, quite frankly, that’s the kind of person who should review this [project] if this level of critique is going to be involved.”
He added: “Maybe he has information that he would be willing to share with the city that would be enlightening for us.”
Hearings before the PSCW are scheduled for Nov. 27 and 28. Regulators are expected to decide early next year whether the lines are needed. The PSCW would then select routes for the two lines and decide whether they should be built underground.
The PSCW will determine the final routes for the two lines. We Energies will build the necessary substation facilities, while ATC will build the transmission lines. The project is planned to be in service by March 2015.
We Energies is a subsidiary of Wisconsin Energy (NYSE:WEC).