Do Large Power Lines Near Properties Lower Their Values by 30% ?

November 17, 2014 - Uncategorized

Do Large Power Lines near properties such as that of Tata Primanti, ATS Kocoon, Chintels Serendipity etc lower the value of property? No systematic study has been done in India, but there is an interesting article about the US where claims have been made about power lines lowering the property values by 30%. A study of this issue for India would be interesting.

India Point Park group says proximity to large power lines lowers property values up to 30 percent

By Alex Kuffner on Sunday, November 16th, 2014 at 12:01 a.m.
http://www.politifact.com/rhode-island/statements/2014/nov/16/friends-india-point-park/india-point-park-group-says-proximity-large-power-/

politifact-photos-PFRI_Power_lines

A runner is dwarfed by towers carrying power lines over India Point Park in Providence, RI. (The Providence Journal / Andrew Dickerman)

For more than a decade, residents and officials from Providence and East Providence have lobbied to have the high-voltage power lines that traverse the waterfront along India Point Park buried.

The latest estimate to complete the job is $33.9 million, with a 25 percent contingency fund, meaning costs could be as low as $25 million or as high as $42 million, according to figures made public by National Grid.

The Friends of India Point Park, the group that has led the effort to move the power lines underground and take down the poles and towers that support them, argues that the project is worthwhile, primarily because it will remove what its members contend is a visual blight along the shores of East Providence and Providence.

Burying the lines would improve the scenic beauty of the park and make the vacant land abutting it near Route 195 more marketable — and more valuable, the group argues.

“Proximity to high-voltage power lines lowers property values by as much as 30%,” the group says on its website, adding that multiple studies bear this out.

We were curious if there really is a negative effect on property values and, if there is, whether  it’s that large. We called David Riley, the co-chairman of Friends of India Point Park, for more information.

He sent us a lot of documents and references to back up the claim — burying us in information, so to speak — but we decided to start with a paper published in 2010 in the Journal of Real Estate Literature that is cited on his group’s website.

That paper, written by a Texas A&M University professor and a colleague, reviewed more than a half-century of studies on the effects of electric transmission lines on property values.

The studies included a 1992 survey of appraisers, with the majority of respondents saying that high-voltage power lines would lower the market value of a nearby property by 10 percent on average.

They also included sales price analyses. Many were inconclusive or failed to quantify an effect. One 1979 model predicted a 6-percent decrease for homes between 50 and 200 feet of power lines. Another 1995 study said the effect was a drop in value of less than 5 percent and another done in 2002 in an area near Montreal put it at 9.6 percent on average. None mentioned a decrease of 30 percent.

“The studies reviewed, while having some inconsistencies in their detailed results, generally pointed to small or no effects on sales price due to the presence of electric transmission lines,” the authors said.

That didn’t sound like it supported the Providence group’s claim. So we looked at what Riley sent us.

His documents included a summary on the previously cited Montreal study that described the negative price effect as “ranging from 5% to well in excess of 20%.” We got a copy of that 2002study. Although it said that the average decrease was smaller, it did find a 21-percent decrease in residential sales prices for an area of homes within 50 feet of high-voltage power lines.

We found separate studies in Canada carried out in relation to a power line outside Vancouver that found negative price effects of up to 27 percent for homes in close proximity, according to a report on a transmission line proposal in Alberta.

Riley also sent us part of a report on property values near a power line outside of Houston. That 1993 report found that assessed values of properties abutting the easement for the power line were up to 31 percent less than those farther away.

And he sent an excerpt from a 2012 report on sales in Montana that found a decrease in the values of homes in a subdivision near a transmission  line of 25 percent to 30 percent.

Lastly, we found two references (here and here)  to a study in Quebec that found that values of second home lots near a high-voltage power line along recreational land were up to 34 percent lower than expected. (Because the study is in French — and our last French class was in high school — we were reliant on secondary sources that summarized it.)

We called Providence-based real estate appraiser Tom Andolfo, who has chaired the Rhode Island chapters of the Appraisal Institute and the Real Estate Appraisers Board, to get his view.

In testimony before state regulators in 1994  on removing the power lines that cross from East Providence to Providence, he cited the 31 percent number from the Houston study. He told us, however, that he believes the actual effect is not as large.

“A realistic figure could be from 5 to 15 percent,” he said.

But Riley said he believes that because the power lines running across East Providence and Providence are on the water, the effect on property values would likely be at the upper range of figures cited in the studies.

“It … seems logical to me that power lines obstructing water views will likely depress property values more than wires in front of, say, buildings, because they’ll be more conspicuous and obstructing a more pleasant, valued view that owners are paying for,” he told us.

Our ruling

The Friends of India Point Park says that proximity to high-voltage power lines lowers property values by as much as 30 percent.

There are many studies on the effects of power lines on property values. Nearly all of the ones that  we found determined that there was a negative effect on values. But they differ widely in what that effect actually is. Most put it at less than 10 percent.

But we found four studies in the United States and Canada that found decreases that ranged from close to 30 percent to more than 30 percent. They appeared to be isolated cases, but they did occur, according to the studies.

The Friends of India Point Park does not say that such a price effect is the norm. The group only says that a decrease in value can be as much as 30 percent. Riley says that language was chosen on purpose. (There’s also some question about what the group means by “proximity) but we won’t get into that here.)

Because the statement is partially accurate but leaves out important details — the preponderance of studies showing property value decreases of 10 percent or less —  we rate it Half True.

If you have a claim you’d like PolitiFact Rhode Island to check, e-mail us at politifact@providencejournal.com. And follow us on Twitter: @politifactri.

About this statement:

Published: Sunday, November 16th, 2014 at 12:01 a.m.

Researched by: Alex Kuffner

Edited by: Tim Murphy

Subjects: EnergyEnvironmentHousingRecreation

Sources:

FriendsofIndiaPointPark.org, “Burying Waterfront Power Lines: Higher Property Values & More Economic Development,” Friends of India Point Park, accessed Nov. 3, 2014

providencejournal.com, “Price to bury power lines from Providence to East Providence skyrockets to $33.9 million,” Nov. 3, 2014, accessed Nov. 4, 2014

Interview and emails, David Riley, co-chair, Friends of India Point Park, Nov. 5-6

Interview, Tom Andolfo, Andolfo Appraisal Associates, Nov. 6, 2014

Real-Analytics.com, “The Effects of Electric Transmission Lines on Property Values: A Literature Review,” Journal of Real Estate Literature, 2010, accessed Nov. 5, 2014

Pages.JH.edu, “Power Lines, Visual Encumbrance and House Values: A Microspatial Approach to Impact Measurement,” Journal of Real Estate Research, 2002, accessed Nov. 6, 2014

AUC.AB.ca, “Altalink Management Ltd. and EPCOR Districbution & Transmission Inc.: Heartland Transmission Project,” Alberta Utilities Commission, Nov. 1, 2011, accessed Nov. 6, 2014

BBREC.com, “Properties Near Power Lines and Valuation Issues: Condemnation or Inverse Condemnation?,” Institute on Planning, Zoning and Eminent Domain, Nov. 17-19, 1993, accessed Nov. 6, 2014

ConcernedCitizensMontana.net, “High-Voltage Transmission Lines and Rural, Western Real Estate Values,” The Appraisal Journal, Winter 2012, accessed Nov. 6, 2014

HeadwatersEconomics.org, “Transmission Lines & Property Value Impacts,” Headwaters Economics,” May 2012, accessed Nov. 6, 2014

Staff.Haas.Berkely.edu, “The Effects of Overhead Transmission Lines on Property Values,” Edison Electric Institute, 1992, accessed Nov. 6, 2014

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