Re: Property Valuations
Cohocton Windmill Power Project
Dear Board Members:
The purpose of my comments tonight is to request that you consider the consequences of your actions with regards to the reduction of property values for those properties that are directly impacted by the construction of 400' windmills.
My name is Allen Fitzpatrick and I am a NYS Certified General Appraiser at Metro Appraisal Associates in Rochester. I have had experience in cases where nearby external influences have created locational obsolescence that reduced the value of surrounding properties. Our clients are primarily residential property owners who have had assessment reductions due to outside influences. We have had extensive experience with Cel Towers, power lines etc. - where the company provides revenue to the community and the assessments and lawsuits take it away.
When companies come to communities, they typically demonstrate that there is no loss in assessed value by preparing studies that either:
1. Compare total assessment from one period of time (before the announcement or construction of the non residential tower) to after the announcement or construction of the non-residential use. By blending the good with the bad, the company typically demonstrates no loss to the community.
2. Another tactic used by companies is to show that the appreciation rate for the properties near the towers (windmills) is the same as the appreciation rate elsewhere where there is not an influence from such a non-residential use.
Both of these studies are flawed. They do not demonstrate the loss in property values using a Paired Sales Analysis. This analysis incorporates sales of properties that have the influence of a windmill farm and compares them to sales of similar properties that do not have the influence. All items are adjusted for differences with the exception of location. That analysis produces a percentage loss calculation that is then used for court cases for assessment reduction or inverse condemnation cases.
To protect the interests of your community, please obtain a more detailed study from a qualified consultant that will demonstrate the loss in value based on the distance from the windmill influence. The greater distance from the windmill farm, the less decline in value. This analysis then assists the municipality with the decision of what is the correct set back requirement from residential dwellings in order to eliminate future assessment reductions and litigation.
The reason why buyers purchase in Cohocton is not because they like the $3.00 per gallon gas expense - it is the tranquility of living in a rural community. Every one on the board and citizens in the audience tonight is aware of the noise, flickering light, visual problems, etc. Please understand what the impact will be to your community if the location of these wind farms is not located correctly in relation to residential uses.
There is case law that demonstrates that the perception of a problem is enough for a court to decide in favor of a homeowner. Anything that provides reluctance among buyers to purchase and thus reduce the competitive nature of the real estate market will result in a loss of value. At Metro, we have been retained by various property owners in Cohocton and have had several law firms in Rochester contact us with regards to potential loss. The discussions revolve around two issues:
1 Property Assessment Reductions
2 Inverse Condemnation and the requirement for the Municipality to purchase or pay for a private residence when it reduces its value substantially based on a non-compatible use. For unique structures, replacement cost is considered to be an appropriate method of valuation, since purchasing a similar property may be impossible due to the unique features of the one that was damaged.
The majority of the residents in a community have real estate as their largest asset and investment. When you have reduced their wealth, you will be in court for many years. The windmill company will have constructed the windmills and be long gone - you will still be in court.
Summary:
1. Have a qualified consultant prepare the paired sales analysis described above to determine the impact of distance from the windmills on property values. This will aid you in determining the property set back. Metro Appraisal Associates cannot assist with this study, since we have been retained by others to review this loss of value study for future court cases.
2. Consider the total income that will be provided to the Town of Cohocton in relation to reduced assessments and court costs.
3. Make sure that your agreement with the Windmill Company is one that provides the town with a base fee plus a percentage increase as rates in the future rise and the company makes more money.
4. In the site plan process for each windmill - have the company complete a study that demonstrates the visual impact from surrounding homes.
5. Understand that the subdivision of land and the potential of new residential development or growth of additional assessment within the town will be put on hold while the windmill farms are located in the town. We have two staff members at Metro devoted to gathering data regarding sales and talking to Realtors. The local Realtors all indicate a reduction in sales and a reduction in interest to purchase in Cohocton. This should not change once the windmills are constructed.
6. Make sure that there is a requirement in your zoning code or permit for construction that has a time limit for the dismantling of the windmills at the end of the contract period. A reserve fund or some other guarantee should be made with the understanding that the company you are doing business with today will have had numerous mergers and not be the company in possession of the towers at the end of the contract period.
The purpose of this meeting is to provide the town with citizen involvement with regards to issues that they should consider when preparing the Final EIS. I am providing your board with a copy of my comments and the citizens of your community expect that you protect their interests.
Respectfully Submitted,
Allen Fitzpatrick
NYS Certified General Real Estate Appraiser
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