BOZEMAN – A long-awaited study of the impact of high voltage power lines on property values was released and discussed at Montana State University last week, however the study didn’t necessarily provide many clear answers.
It turns out the exact impact of high voltage power lines on property values is best analyzed on a case-by-case scenario, said James Chalmers, an economist and real estate damage specialist from Billings who authored the study. The study presented last Wednesday looked at property values along a 500-kilovolt transmission line that runs between Colstrip and the Idaho/Montana border west of Missoula.
However, the study does provide a sense of what kinds of properties may have their value diminished by the construction of a 500-kilovolt line, Chalmers told a group of about 50 people at MSU’s Procrastinator Theater last Wednesday morning.
The MSU Extension program sponsored Chalmers’ presentation and the subsequent discussion. The study was commissioned by NorthWestern Energy, which owns a portion of the transmission line in Chalmers’ study.
NorthWestern Energy is also proposing the Mountain States Transmission Intertie, which would be a 500-kilovolt line between Townsend and Jerome, Idaho. The line is proposed to run through Jefferson and Beaverhead Counties. However, a stretch of line could run through the Jefferson River Valley and Madison County. Residents in the three counties have been concerned about the impact of the lines to their lives, communities, property values and the environment.
Madison, Jefferson and Beaverhead County officials are currently part of a MSTI review team, which also includes a consortium of regional non-profit groups. The review team is analyzing several aspects of the MSTI proposal.
The Montana Department of Environmental Quality and the Bureau of Land Management are reviewing the official proposal from NorthWestern Energy. A draft Environmental Impact Statement on the project is expected sometime this year.
The MSTI review team is expected to wrap up their analysis of the project and issue comments to the DEQ and BLM sometime this spring.
However, Chalmers’ study has been anxiously awaited by the team as an important piece of information in developing comments about the impact of the MSTI project on local property values.
But for those looking for specific details about how the MSTI line will or will not impact property values may be disappointed. That level of detail is simply not what the study was designed to provide, Chalmers said.
The study looked at Montana property sales between 2000 and 2010 along the Colstrip line, which crosses 15 counties. To be included in the study, the properties sold had to be within 500 feet of the line and sold in an “arms length” transaction. An arms length transaction means one between a buyer and seller who act independently of each other and are not related.
The study looked at 74 transactions that met Chalmers’ standards. These transactions occurred with a variety of land types including production agriculture land, agriculture land with some recreation influence, agriculture land with high recreational influence, rural residential subdivisions with both large and small lots, large acreage rural residential tracts.
In general, the only properties where Chalmers was able to discern a price effect were residential. Not every residential property within 500 of the transmission line saw its value impacted, but some saw both the sale price and length of time on the market impacted by the presence of the transmission line.
Of the 74 sales Chalmers looked at, 19 were agriculture land and none of these sales were impacted by the presence of the transmission line, he said.
“We just didn’t get any in person evidence or market evidence of a price effect,” Chalmers told the audience.
He did hear from farmers and ranchers that having to work around the lines created problems, but this nuisance wasn’t transferred to the sale price for the land, he said.
The same was true on the agriculture properties with recreational values, which included seven properties within the analysis. Chalmers acknowledged the low number of properties of this type within the analysis was problematic in terms of drawing any conclusion. He could certainly see a situation where an agriculture property with recreational values could have its value negatively impacted by high-voltage transmission lines.
The residential properties within the study showed the most impacts. In Jefferson County, the Aspen Valley Ranch subdivision showed an average of 15 percent decrease in price for properties within 1,000 feet of the transmission line, Chalmers said.
He emphasized that figure is an average. Some properties within 1,000 feet of the transmission lines saw more of a drop in value; some saw no impact at all.
When the primary use of the property is residential, even on larger tracts, the presence of a high-voltage transmission line seems to matter more.
“You’re looking at what do I see when I drive up to the lot and what do I see when I’m sitting on the porch,” he said.
Another impact to these lots was the length of time they stayed on the market. In one subdivision near Thompson Falls, some lots subdivided in the mid to late 1980s are still on the market. These lots all have the transmission lines running across them.
Chalmers made the point several times that this study, while important in beginning to understand the impacts of high-voltage transmission lines on property values in Montana, can’t be used to accurately predict the impacts on property values of future projects, like MSTI.
“What it gives us is a good sense of the situation where the likelihood of effects is either larger or smaller,” he said. “It is not a study of the question of how a transmission line would impact an existing property owner.”
After Chalmers’ presentation, Thomas Priestley, an expert in analyzing impacts of transmission lines on property values and land use planning, commented on the study.
One key to the study is its analysis of property sales, Priestley said. Chalmers didn’t look at opinions about how the transmission lines impacted property values, but rather focused on the sale prices of the properties.
“This brings it right down to earth – what have people actually paid,” Priestley said.
Chalmers’ study is an important piece of research for Montana because it looks at a variety of property types. A wealth of research exists on impacts of transmission lines to residential property, he said. However, Montana’s unique property types present a slightly different scenario. Chalmers’ study attempts to provide some Montana-specific research.
The findings in the study that agriculture land with recreational attributes didn’t see a negative impact in value from the transmission line is counterintuitive, said Julia Haggerty, economist with Headwaters Economics in Bozeman. She also spoke about the study.
Headwaters Economics is a partner in the MSTI review project team.
The lack of impact could be because of the small sample size of these types of properties, or because the properties like this in the study were located in areas of Montana struggling economically and not seeing growth at the rate seen in southwest Montana, Haggerty said.
“It’s something that we’re going to really need to work through,” she said.
Haggerty herself has done research on ranch and amenity property sales in the northern Rockies and a frequently-cited reason buyers pointed to for purchasing property was privacy and views, so the idea that a high-voltage transmission line wouldn’t impact the values of these types of properties seemed a bit “hard to swallow,” she said.
However, Chalmers’ study does provide a wealth of information to begin to understand how to analyze the impacts of transmission lines on property values in Montana and as to what kinds of properties may be most vulnerable, Haggerty said.
Like both Chalmers and Priestley, she said that trying to extrapolate the study into specific impacts by MSTI was misguided.
Moving forward with reviewing the MSTI project, Chalmers’ study will have value in understanding what types of property may be most sensitive to value impacts by high-voltage transmission lines, Haggerty said after the presentation.
“It’s partly about helping planners and others responding to the proposal in identifying areas that will be particularly sensitive,” she said.
But ultimately understanding potential impacts of the MSTI project on property values could also benefit from dialogue with local real estate professionals and appraisers, Haggerty said.
“Realtors and appraisers active in local markets have an important perspective on current impacts from the MSTI project and on the specific dynamics of markets in the affected counties,” she said.