BBC Research & Consulting 3773 Cherry Creek North Drive, # 850 Denver, Colorado 80209 800-748-3222 ...
-
date post
21-Dec-2015 -
Category
Documents
-
view
217 -
download
0
Transcript of BBC Research & Consulting 3773 Cherry Creek North Drive, # 850 Denver, Colorado 80209 800-748-3222 ...
BBC Research & Consulting3773 Cherry Creek North Drive, # 850Denver, Colorado 80209800-748-3222www.bbcresearch.com
June 1, 2006
Report Presentation
Garfield County
Land Values and Solutions Study
2
Introduction
Two Economic Studies Are Underway
The Economic Impact Model
The Land Values and Solutions Study
3
Land Values Study: Project Objectives
Demonstrate what factors drive residential land values in Garfield County.
Document how rural industrialization (gas, gravel, power lines, etc.) affects the value of residential property.
Offer mitigation strategies for situations where value losses occur.
4
Land Values Study: Three Phases
Phase I. Data Collection and Analysis
Phase II. Statistical Analysis and Conclusions
Phase III. Solutions and Mitigation Evaluation
5
Phase I: Process
Assembled a data base of 7,600 sales transactions Unincorporated, residential sales; 1987-04 Cleaned and added data: gravel roads, geographic
features, water & sewer, etc. Ultimately used 20+ variables per property
Assembled gas drilling and industrial data Location of power lines, gravel pits, highway, railroads Location & dates of gas wells
Integrated GIS with Community-Viz mapping software
Analyzed data in light of interviews and anecdotal observations.
6
Phase II: Statistical Analysis
Meet with committees; revised conceptual approach
Completed Statistical analysis
Tested 20+ property variables
• Land characteristics (e.g. size, presence of water)
• Location (e.g.; RFRV vs. CRV, distance to town)
• Structural characteristics (e.g.; size, age, number of bedrooms)
Determined factors that explain value
Provided a basis for understanding impact on property value and strategies for mitigation
7
What is Hedonic Regression Analysis
Hedonic regression analysis is a method of explaining demand or prices for a particular good (e.g. a housing unit) by attaching estimates of value to its component characteristics (e.g. size of structure, age, quality of construction)
Why Use? Produces results with statistical authority
8
Variables Tested for the Property Value Models — Included in Model
• Size (acreage)• Presence of water features
Value appreciation over time:
• Size of home• New home (less
than 10 years old)• Presence of garage
(CRV only)
•Increase in value per acre by year•Increase in value per square foot by year
• Presence of outbuildings
• Heated space in outbuildings
• Central wastewater system (RFV only)
• Distance from Glen. Sprgs. (CRV only)
• Distance from Pitkin County (RFV only)
• North of Colorado River (CRV only)
• View of Mt. Sopris (RFV only)
• Distance to nearest paved road
• Distance to nearest gravel pit (CRV only)
• Gas well completed within 90 days after sale (CRV only)
• Gas well completed less than 2 years prior to sale (CRV only)
• Gas well completed more than 2 years prior to sale (CRV only)
• Presence of “good” vegetation (CRV only)
Locational characteristics/ industrial proximity
Structural Characteristics:
Land Characteristics:
9
Variables Tested for the Property Value Models — Tested and Rejected
• South facing percentage• All flat terrain
• Number of bedrooms• Number of bathrooms• Construction type
(e.g., modular, condominium, etc.)• Additional house age groupings
(e.g., 10 to 20 years old)• Water system other than a private well
• Distance to nearest town• Adjoins Federal land• Distance to I-70• Distance to railroad• Proximity of high voltage lines• Proximity of land fill
Locational characteristics/ industrial proximity
Structural Characteristics:
Land Characteristics:
10
Challenges
Wide variation in property characteristics and locational influences
Value effects across three key dimensions — property characteristics, size and time of sale
Sample sizes diminish with multiple variables
Difficult to measure some key factors
All data sets have some inaccuracies
11
Results
We can explain influences on property values with a reasonable level of accuracy:
76% of value variation in Roaring Fork Valley (2,726 observations) (95% confidence level)
81% of value variation in Colorado River Valley (4,727 observations) (95% confidence level)
Provides a reliable basis for overlaying impacts of gas drilling and other industrial effects.
12
Industrial Impacts
We tested effects of highways, railroads, gravel pits, power landfills lines and gas drilling
Also tested positive site attributes: vegetation, views, proximity to USFS lands, rivers
Proximity to highways, power lines, landfills and railroads were not proven to have an impact on values
Proximity to gravel pits and gas drilling has an apparent (but not statistically significant) impact on property values
13
Gas Drilling Data Issues
Gas well permits 5,010
Operational wells 2,674
Parcels with operational wells 354
Valid single parcel sales of parcels with operational wells 140
Final sample “Well impacts”(less than 160 acres) 32
14
Revised Colorado River Valley Property Value Model
$271,623
Well completed at time of sale
(11%)
$280,070
Well completedlong before sale
Well olderthan two years
(8%)
$254,736
Well activityat time of Sale
Well completed
less than 90 days after sale
(16%)
Total Value = $303,079Baseline Property: (Average Property With Gas Well)
15
Exploration Phase
Drilling Phase
Completion Phase
Generalized Gas Drilling Impact on Property Value in Colorado River Valley
1 Typical property with a well — 40 acres, small home, 24 miles from Glenwood.
($100,000)
Typical ResidentialChange in Value
Drill Site Properties Change in Value
+$53,000
+$25,000
($32,000)
$303,0791
+$50,000
+$100,000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
($49,000)($50,000)
Months26 27 28 29 30 31 32 33 34 35 3625
Value Loss/Gain
16
Generalized Gas Drilling Impact on Property Value in Colorado River Valley
1 Typical property with a well — 40 acres, small home, 24 miles from Glenwood.
($100,000)
Typical ResidentialChange in Value
Drill Site Properties Change in Value
+$53,000
+$25,000
($32,000)
$303,0791
+$50,000
+$100,000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
($49,000)($50,000)
Exploration Phase
Drilling Phase
Completion Phase
Months
Value Loss/Gain
26 27 28 29 30 31 32 33 34 35 3625
Quality of Life Impacts
Perception of Risk
Institutional Uncertainty
17
Generalized Gas Drilling Impact on Property Value in Colorado River Valley
1 Typical property with a well — 40 acres, small home, 24 miles from Glenwood.
($100,000)
Typical ResidentialChange in Value
Drill Site Properties Change in Value
+$53,000
+$25,000$303,0791
+$50,000
+$100,000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
($50,000)
Exploration Phase
Drilling Phase
Completion Phase
Months
Value Loss/Gain
26 27 28 29 30 31 32 33 34 35 3625
Impact of Gas Employment Demand
18
Impacts of Gas Drilling: Conclusions
Properties that experience drilling see a reduction in market value, but seemingly temporary
On average, net residential loss of value of about 16% during drilling and about 8% three years after drilling ceases
Anecdotal data suggest: There is no average well site Some drilling instances have more severe impacts Problem compounds with contiguous site
operations or multiple drilling Micro site issues are hard to capture Recent wells tend to be closer to residential uses
19
Impacts of Gas Drilling: Conclusions (cont.)
Gas activity also has countervailing positive impacts:
Gas employment drives housing demand
Property lease payments
Site improvements
Tax revenues
Mineral owners have legitimate property rights, which can’t be ignored
Drilling is not locally regulated so operational restrictions are limited
20
Mitigation Possibilities
Institutional
Quality of Life
Perception of Risk
• Education material/seminar• Ombudsman• Recommend cooperative
lenders/brokers• Fund property purchase or buy
down
• Define and enforce best practices• IGA with COGCC
• Education• Remedial funds• Insurance• Certification of completeness• Environmental monitoring reporting
21
Land Values and Solutions StudyInstitutional Changes
Ombudsman/Advocate
Document county land value changes over time
Represent Owners
Clearing House of Information for Appraisers, Realtors and Buyers
Environment Response Agent
Intergovernmental Agreement with COGCC
Lending or Property Purchase
22
Quality of Life Mitigation Measures
Phase I Exploration
Landowner notification
Negotiated surface damage provisions
Ground water testing
Phase II Drilling and Field Organization
Reasoned environmental protections
Reasoned well-siting practices
Noise and nuisance abatement
23
Quality of Life Mitigation Measures
Phase III Production and Stimulation
Responsible stimulation techniques
Proper waste disposal
Air and water quality monitoring
Phase IV Abandonment and Reclamation
Certification of proper abandonment
Reclamation with native topsoil and vegetation
Garfield County
Land Values and Solutions Study