Impact of Wind Turbines on Market Value of Texas Rural Land
Gardner, Derry
Will a wind turbine affect my property value?
Will a wind turbine on my property affect the market value of my neighbor’s property?
Would you pay the same price for this land after wind farm as before wind farm?
Do you know how big they really are?
When valuing real property, first determine the property rights to be appraised; the most complete form of ownership is “title in fee” or “fee simple interest”:
• Most complete form of ownership
• Unencumbered by any other interest or estate
• Only subject to limitations imposed by the government (taxation, eminent domain, police power, escheat)
Bundle of rights
Real property ownership includes a bundle of rights – each with a value:
• right to sell/lease/mortgage an interest
• right to occupy the property
• right to convey
• right to do nothing at all
• unlike mineral rights, Texas is undecided as to “wind rights” – can they be conveyed? can they be retained?
Market forces create value; same market forces have a bearing on the highest and best use of land.
Highest and best use means the use of the property that results in the highest value that is also: legal; reasonably probable; physically possible; and finanacially feasible.
Highest and best use is the foundation upon which market value rests.
In the past 25 years the highest & best use of Texas rangeland has changed from agricultural use to recreational use.
Taylor County hunting (recreational) leases bring $12.00 to $18.00 per acre, compared to grazing leases which bring $2.50 to $3.50 per acre.
Recreational use includes: hunting, fishing, camping, hiking, etc., wildlife resources & conservation, live water, weekend place, peace & quiet.
Direct sales comparison approach
• Most widely used and accepted approach to valuing rural property.
• Defined as an estimate of value of recent sales of similar property in the surrounding or competing areas – as compared to the subject property.
Property characteristics necessary for the comparison
• Property rights conveyed
• Financing of the purchase
• Conditions of sale
• Market conditions over time
• Mineral interests
• Improvements
• Size/shape
• Physical characteristics
• Live water
• Fencing
• Location/access
• Views
Not comparable: Residence vs. Rural
Paired sales analysis
Within the direct sales comparison approach, several techniques are used to quantify adjustments – most commonly used technique is that of paired sales:
When two properties are in all other respects equal, a single difference can be measured to determine the difference in price between the two.
Paired sales technique is used in determining the value of:
• Undivided interests (multiple owners of property)
• Conservation easements
• Burned Property (due to wildfires, grassfires)
• Presence of power lines & transmission lines
• Presence/viewshed of wind turbines
• Other property conditions
What we know about wind turbines (common sense stuff):
• Up to 600 feet tall
• constant noise
• shadow/flicker
• viewshed effect – turbines tower over horizon, changing the view
• construction, transmission lines, substations
• turbines forever change the aesthetics; a more industrial feeling
• loss of native wildlife habitat
Renewable Energy Policy Project (REPP) May 2003
Findings:
• Wind turbines will not diminish property values, but will enhance property values.
Flaws:
1. Funded by proponents of wind power (built-in bias in conclusions).
2. Methodology used lacks necessary variables for analysis.
Variables not used in REPP:
• Rising or falling market
• No. of days from listing to sale
• Residential property; not rural property
• Effect of noise, flickering, shadow
• Distances.
• Possible change in highest and best use because of presence of wind turbine
Appraisal Research Shows:
• A view adds value to rural property.
• Take view away – added value goes away.
• Brokers in rural areas confirm that property values in areas of wind facilities are 10%–30% less than property not in areas of wind facilities.
• Wind energy development creates an income stream, increasing property’s production value; increased production value does not necessarily result in increased market value.
Case Study One – 2007
• 350 acres in Erath County – top end ranch purchased for retirement homestead … 27 wind turbines within 1-1/2 mile radius …
• Prospective buyer agreed to sales price.
• Disclosure of wind turbine project to buyer, Buyer backed out of offer.
• Seller agreed to 25% discount to Buyer, Buyer declined discounted offer.
• Currently little interest in property in spite of other characteristics of property.
Case Study Two – 2007
• Using paired sales analysis – sales of seven large tracts of rural land with varying proximity to wind turbines in Taylor County, Texas.
• Sales 1 (1,700 acres, 3 wind turbines on property), 2 (1,110 acres, 2 wind turbines within 0.2 and 0.4 miles), and 3 (550 acres, 1 turbine visible 1.8 miles away) compared to sales 4-7 (no wind turbines in visual range)
• Sales occurred between 3-06 & 8-07
• No time adjustment
• Contributory value of improvements deducted from each sale
• All other characteristics considered similar
Diminution in Value Summary:
• Turbines on property: Diminution in value 29%-45%, average 37%
• Turbines within 0.2-0.4 miles: Diminution in value is 17%-35%, average 26%
• Turbines within 1.8 miles: Diminution in value is 15%-34%, average 25%
Possible additional diminution in value in value of property due to the following:
• wind turbine infrastructure
• high-power transmission lines
• substations
• additional traffic for service of wind turbine and power lines
• additional roads
Market Data and common sense tell us property values are negatively impacted by the presence of wind turbines.
Consider and weigh impact on your property’s overall value when leasing for wind turbines.
The big question: Does increased income from wind turbine offset the potential decrease in market value?
Gardner Appraisal Group, Inc.
Derry T. Gardner
147 E. Mistletoe Avenue
San Antonio, TX 78212
www.GardnerAppraisalGroup.com
Prepared for the South Texas Plains Agriculture Wind & Wildlife Conference, February 13, 2009
American Wind Power Center & Museum,
Lubbock, Texas
Download original document: “Impact of Wind Turbines on Market Value of Texas Rural Land [1]”
URL to article: https://www.wind-watch.org/documents/impact-of-wind-turbines-on-market-value-of-texas-rural-land/
URLs in this post:
[1] Impact of Wind Turbines on Market Value of Texas Rural Land: https://docs.wind-watch.org/gardner_wind-property-values_2_13_09.pdf