1 / 24

Garfield County

Garfield County. Land Values and Solutions Study. BBC Research & Consulting 3773 Cherry Creek North Drive, # 850 Denver, Colorado 80209 800-748-3222 www.bbcresearch.com June 1, 2006 Report Presentation. Two Economic Studies Are Underway The Economic Impact Model

alton
Download Presentation

Garfield County

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Garfield County Land Values and Solutions Study BBC Research & Consulting3773 Cherry Creek North Drive, # 850Denver, Colorado 80209800-748-3222www.bbcresearch.com June 1, 2006 Report Presentation

  2. Two Economic Studies Are Underway The Economic Impact Model The Land Values and Solutions Study Introduction

  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 Land Characteristics: • Presence of “good” vegetation (CRV only) • Size (acreage) • Presence of water features • Presence of outbuildings • Heated space in outbuildings • Central wastewater system (RFV only) Structural Characteristics: • Size of home • New home (less than 10 years old) • Presence of garage (CRV only) • 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) Locational characteristics/ industrial proximity • 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 Value appreciation over time: • Increase in value per acre by year • Increase in value per square foot by year

  9. Variables Tested for the Property Value Models — Tested and Rejected • South facing percentage • All flat terrain Land Characteristics: Structural Characteristics: • 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 Locational characteristics/ industrial proximity • Distance to nearest town • Adjoins Federal land • Distance to I-70 • Distance to railroad • Proximity of high voltage lines • Proximity of land fill

  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. Well activityat time of Sale Well completed at time of sale Well completedlong before sale $254,736 $271,623 $280,070 Well completed less than 90 days after sale Well olderthan two years (16%) (11%) (8%) Revised Colorado River Valley Property Value Model Total Value = $303,079 Baseline Property: (Average Property With Gas Well)

  15. Generalized Gas Drilling Impact on Property Value in Colorado River Valley Value Loss/Gain Exploration Phase +$100,000 Drilling Phase Completion Phase +$53,000 +$50,000 Typical Residential Change in Value +$25,000 $303,0791 Drill Site Properties Change in Value ($32,000) ($50,000) ($49,000) ($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 25 26 27 28 29 30 31 32 33 34 35 36 Months 1 Typical property with a well — 40 acres, small home, 24 miles from Glenwood.

  16. Generalized Gas Drilling Impact on Property Value in Colorado River Valley Value Loss/Gain Exploration Phase +$100,000 Drilling Phase Completion Phase +$53,000 +$50,000 Typical Residential Change in Value +$25,000 $303,0791 Drill Site Properties Change in Value ($32,000) ($50,000) ($49,000) Perception of Risk Institutional Uncertainty Quality of Life Impacts ($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 25 26 27 28 29 30 31 32 33 34 35 36 Months 1 Typical property with a well — 40 acres, small home, 24 miles from Glenwood.

  17. Generalized Gas Drilling Impact on Property Value in Colorado River Valley Value Loss/Gain Exploration Phase +$100,000 Drilling Phase Completion Phase +$53,000 +$50,000 Typical Residential Change in Value +$25,000 $303,0791 Drill Site Properties Change in Value ($50,000) Impact of Gas Employment Demand ($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 25 26 27 28 29 30 31 32 33 34 35 36 Months 1 Typical property with a well — 40 acres, small home, 24 miles from Glenwood.

  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

  24. Garfield County Land Values and Solutions Study

More Related