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Will our property values be impacted by proposed Calpine power plant? -- July 19, 1999

Many people have asked and wondered if our community property values will be impacted by the proposed Calpine power plant also known as Metcalf Energy Center. Since our community neighborhoods are not already in a current heavy industrial zone of San Jose, there is bound to be some impact. Calpine has assured our community that our property values will not be impacted and some community members have asked Calpine to guarantee that. The city plans to ask local real estate professionals their opinion at an upcoming "Advisory Committee" meeting hosted by District 2 Councilmember Charlotte Powers. The California Energy Commission plans to do a special study as well as part of their siting process. Since the proposed site is in close proximity to neighborhood homes, schools and parks, the CEC has decided to study the property value issue special for this case.

About two weeks ago, I came across a television program called "Let's Talk Real Estate" hosted by Robert Aldana of Fine Homes & Estates Seville Contempo Realty, Inc.. I sent him an email the next morning asking him if he could provide his professional real estate experience and professional opinion to answer that question. He was intrigued by the question and in fact read a portion of my email on the air of his Sunday night radio program and spent the last ten minutes of the program responding to it. He followed up his response on the radio in writing and offered to do a survey via email of over 1000 current home-buyers in the market and other professional real estate collegues of his. Today, he shared his unbiased findings with our community.[SAS]

My initial email to Robert Aldana of "Let's Talk Real Estate"

Are you ready? I am not sure if you have been following the news in this area as it hasn't been receiving much attention, but our community is being faced with the likelihood of a 600 megawatt power plant being built in our community. It would be 0.5 miles from hundreds and thousands of homes in the Santa Teresa area. It would be 1.4 miles from the closest elementary school and six schools are within a 3 mile radius. Our community web site has been following this issue and the community has been providing feedback as to what they think about this proposal. A poll on our web site has been holding steady at 86.5% against the proposed power plant.

When asked, the power plant company, the California Energy Commission (the governing body which allows power plants to be built), and city officials claim that they don't know if property values will be impacted by the close proximity of a power plant. I am wondering if you would like to provide your expertise and professional opinion on what you feel would be the property value impact and any other impacts on real estate transactions due to this power plant proposal?

Best regards,

Scott
http://www.southsanjose.com

Survey sent out by Robert Aldana of "Let's Talk Real Estate"

Subj: Your Comments Needed....
Date: 7/12/99 3:23:29 PM Pacific Daylight Time
From: robert@letstalkrealestate.com (Robert Aldana)

Hello there,
I have been asked by a neighborhood group for an opinion and I would like your input.

A particular neighborhood is being faced with the possibility of a 600 Megawatt Power Plant being built in their neighborhood. It will be .5 miles from thousands of neighborhoods and 1.4 miles from an elementary school and within 3 miles from a few others.

My question to you is this, would this in your opinion affect the desirability for you as a home buyer or would it not bother you at all if you were looking for a home and it happened to be near this power plant?

If you are a real estate professional, do you feel this affects property values whether it be slightly or greatly and have you shown these types of properties to buyers? If so, did your buyers have an opinion regarding this?

Your response and any further comments are greatly appreciated for this survey.

Have a Super Day!

Cordially,

Robert Aldana
"Let's Talk Real Estate!"
Fine Homes & Estates Seville Contempo Realty, Inc.
Yo Hablo Espanol!
408-777-3852  Direct Line
800-882-7896  24 Hour Info Hot-line / Ext. 800 = Mobile Phone/Voice
Mail/Pager
408-996-9068  Fax

mailto:robert@letstalkrealestate.com

http://www.letstalkrealestate.com

DON'T FORGET TO:

Listen to us "Live", Sunday nights from 10pm - midnight on 96.1 FM, KSQQ, San Jose/San Francisco

Watch our TV Show, Mon. at 10pm, Wed. at 9pm and Thurs. at 6:30pm on channel 15A - TCI, San Jose, Campbell, Cupertino.

Professional Experience and professional opinion of Robert Aldana of "Let's Talk Real Estate" and Fine Homes & Estates Seville Contempo Realty, Inc.

After conducting a survey of my own with hundreds of real estate professionals of many different companies and both buyers and sellers of properties regarding the effect of the proposed Calpine project, I have come to the following conclusion and opinion:

For many years, it has been believed, NOT proven to my knowledge, that people near power plants have been victims to side effects such as Cancer, Birth Defects and others. To date, I am unaware if any studies exist that WOULD prove there to be any side affects. Many officials after reviewing these reports claim that there are no side effects and issues and that in fact may be true. However, it has been my experience as a full time real estate professional who has delt with hundreds of buyers throughout the years that properties near a power plant, power towers, power lines, etc. have in fact been affected in regards to the disirability of those properties. I also feel that a stigma does in fact exist about these properties and in my experience when showing a property of this nature to a potential buyer almost all of the buyers have said they did not want to even go inside the home.

Does this affect the value of properties close to powere plants? My personal and professional opinion is yes. To what extent I do not know. It would depend on where exactly the power plant was, how large it was and it's proximity to residential property. Also, if I was a homebuyer I would myself not want to buy a property in the immediate neighborhood of a power plant. If I found out that a power plant was going to be built in my neighborhood, I would be the first in line protesting such a building because I personally care about my property value and also do not find such buildings as an attractive addition to my neighborhood.

Please keep in mind that this is strictly my opinion as a homeowner and a real estate professional. I have no proof other than my personal experience as a real estate professional for many years working with homebuyers. I also as I said earlier have no proof of any adverse conditions that have resulted from living near a power plant, etc. Also, it seems that the farther away the property is, the less negative effect it suffers. Another factor will be what the structure looks like and how big it will be and will it be an eyesore? If it doesn't change any of the scenery in the neighborhood, the negative effect would probably be minimal. But even if there is a minimal appearance or no appearance, there will still always be a mental psyche that potential buyers will have when it is disclosed to them that a power plant exisits near their neighborhood. How much is uncertain but what is certain is that some - regardless of how small - negative stigma will exist.

When you asked my opinion, I hope that you can understand that I answered exactly how I felt about this issue and I am not taking sides one way or the other. I am answering your question to the BEST of my knowledge and opinion. Also, having a network of hundreds of buyers, sellers and agents, I have polled these sources and the results should be a pretty good indication of what the public feels about this issue. Please excuse any misspelled words as they were cut and pasted directly from their email responses. To be fair, I am adding ALL "for and against" replies and opinions that were sent back to this survey.

Responses from consumers who were actual people who have expressed interest in buying and selling homes with no bias on the subject.

When consumer were asked whether their decision to buy a home be affected if it were near a power plant they said the following:

"I wont like high voltage power lines passing thru my neighborhood. Also it has ill-effect on childrens health, because of the the intense magnetic and electrical fields these HV line generates. So my vote is big 'NO'."

"Yes it will reduce my willing to buy the house."

"It depends on what it looks and sounds like, and what risks might be associated (fire, health, etc). I suppose if I have a choice between near a power plant or not, if there even a suspicion if nuisance or risk, I would prefer not to buy there. However, if the risks can be minimized and there were offsetting benefits such as more open space, less traffic or neighbor noise, etc, then perhaps it could be considered a selling point. Personally, I would want third party information to validate whatever "spin" was being presented."

"I would not buy a house, no matter how good a bargain, near a power plant."

"Hi Robert,
I would not buy a home next too or near a power plant nor have my children or relatives attend schools near them. If it doesn't affect property value now, I'm sure over the years it would."

"Yes it'd greatly affect my decision/desirability to purchase a home in the neighborhood where there's a power plant nearby. And by the way, thanks for keeping me updated with all the home buyer's information."

"Yes it would affect our decision. We would not purchase a home in this area."

"It would absolutely have an effect on our decision to live in a certain area. With all the uncertainties with power plants, living near one would not be a risk we would be willing to take if we had a choice. In our minds, the site of one would take away from the idea that we were living in a residential area. No, we would not want one near our home."

"As a homeowner, I would not be that affected by a nearby power plant. I understand that they are necessary, and they have to go somewhere. I would be more affected if the area I was looking to move to was not able to supply the power needs of the community. All this is taking into consideration that the one they are planning to build is a "clean" power plant, as opposed to a coal burning or nuclear plant."

"If it is as ugly as some of them yes, it will greatly effect the property value. I would recommend that public hearings prior to approval by governing bodies, yes, city, county as well as the feds. If the thing is treated as alovely thing fine. My concern here is that are you talking about a neuclear plant or a substation type thing. If power is being generated how?? Drive by the one I think it is at either Tully & white, or somewhere out there. the darn thing is purely ugly. I really don't think they have to be. The literature shows no scientific effect from what I think you are talking about. It is public perception of problems."

"Thank you for the opportunity to provide input. As a homebuyer, I would be greatly concerned about purchasing or selling a home with a power plant near my home. I recall a segment on 20/20 providing research results showing the affects it has on children and even appliances working in the home. Even putting that element aside, it's also a bad idea esthetically. I would not like it if it was an area that I wanted to buy into or currently owned property in that neighborhood."

"hi robert, i think it would greatly affect the value of the property, and i would never live in an area that had the power plant that close to my own home."

"Hi Robert,
My personal opinion regarding homes values around the plant is that this will have very limited impact since it will be shielded from the neighborhoods by a low range of hills and will be a fairly "clean" and quiet generating facility. There are logistical reasons including the proximity to a major inbound gas line and efficiencies derived from being situated next to the sub station, but I personally believe that a location closer to the UTC plant would be more appropriate. Best case would be to locate the plant at one of the exisitng "lower efficiency" plants which this is supposedly displacing such as the one in Richmond."

"This would not be desirable. I would not buy a home in an area like this."

"If I were looking for a home and found out that a power plant was going to be built in a neighborhood, I would definitely NOT buy a home there. It would certainly affect the desirability of all the homes in that area to me. Also, if I lived in that neighborhood, I would do everything I could to get the building of that plant stopped. If the plant was going to be built no matter what, I would move as soon as I could."

"Hi Robert,
Thanks again for setting up this past weekend's seminar, I found it especially informative, and feel that I will now have a greater degree of confidence/comfort in my first-time home buying experience. Regarding the inputs that you are looking for on the power plant issue...
1. Although I know that numerous reports have been conducted on the effects of high voltage lines, I cannot say that I am aware of their findings. My general impressions (which are probably media driven) of such things are not favorable.
2. Just the same, if I had the choice, everything else being equal, I am sure that I would opt for the property not located near such as plant.
3. If however, the property near the power plant was substantially "a better buy" I would probably take the time to investigate the facts & figures to determine the real potential risks associated with living in the proximity to such an installation.
4. Other things that I'd take into account - Is the plant an eye sore from my home? Is there associated noise pollution? Are there other hazards like increased risk of fire? Is there a real need for such a plant?"

"Robert,
How big is a "600 Megawatt Power Plant"? Does that occupy something like a 100'x 100' piece of land, or a football field, or a shopping mall :-)? It depends on how large this is. I would not buy a house next to it, or in sight of it, but if it takes up less room than 100' x 100' for example, I don't think a house 0.5 miles away would bother me. I would not buy a house that had a high-voltage line running next to it or directly behind it (I've skipped maybe 4 houses in the Bay area because of that). If a house was 0.5 miles away and there were large high-voltage towers carrying the power to/from the power plant that went next to the houses I would skip the neighborhood. So for me it would be a buy or skip decision. If the high-voltage lines were nearby or if the overall feel was these large high-voltage towers running through the neighborhood I would not consider just paying a lower price, I would skip buying there all together."

"It would affect my decision. I would not want it so close to my residence. It would reduct the property value as far as I am concerned."

"It would bother me being that close to a power plant."

"Yes, I know it would affect me as a homebuyer from buying a house so close to a power plant. Kids now a days are very curious and to have something like that so close would be very risky and asking for danger."

"As a buyer, this would most definitely affect the desireablility."

"I don't consider it at all unless the house price already reflect it. That means the house price should be lower than that without power line."

"Robert,
My family or myself would not even consider a house close to a 600 Megawatt Power Plant no matter how beautiful the house was. Hope this helps."

"Hi Robert, for me personally, I would not like to be near with any power plant. I believe it also affect the property value - it makes the property value lower. Do you know that electromagnetic field can cause cancer? Althought some researcher claim this is not true, I still believe it is dangerous and still affect people health."

"Robert, To my opnion, I would rather not to buy a house with the Power Plant close by. Not noly to say that may effect the value of the property, destroy the nature view of the neighborhood, but also have the potential danger for the children and teens. I donot understand why a power plant has to be built in the residential area."

Responses from actual licensed real estate agents in all areas of Silicon Valley.

When real estate agents were asked if they have noticed a negative effect both in value and public perception when they have shown this type of property and also how they personally would feel if they were buying, they answered the following:

"IN RESPONSE TO YOUR QUESTION, I DEFINATELY KNOW THAT A PROPERTY BY OR AROUND A POWER PLANT BEING BUILT BY OR AROUND HOMES IS A NEGATIVE AND I DO BELIEVE IT DOES AFFECT THE PROPERTYS' DESIRABILTY. I HAVE EXPERIENCED IT HERE IN CAMBRIAN, THEIR ARE SOME LARGE POWER TOWERS AND PEOPLE THINK THEY EMIT SOME SORT OF RADIATION OR SOMETHING, THE OWNERS CLAIM THEY DON'T DO ANYTHING AND HAVE RECEIVED REPORTS FROM P.G. E. THE NEW HOMEBUYERS COMING INTO THIS AREA SOMETIMES QUESTION THIS CONCERN. IT IS A NICE AREA AND SOMETIMES IT IS OVERLOOKED. ALSO, DEPENDING ON THE LOCATION OF THE PROPERTY AND HOW IT IS SITUATED AMONGST THE POWER TOWERS MAKES A DIFFERENCE."

"i don't think there is any danger-------how it would affect property values would depend upon how the plant was seen by the neighborhood ie: if it was hidden by a hill etc. it would lesson its impact.....we need more power plants or we'll have brown outs....the question is: is this a min. impact site......"

"Robert,
I most certainly think that any installation of a 600 Megawatt Power Plant being built near a populated residential neighborhood is going to have a negative impact an both market value of the nearby homes as well the desirability for potential home buyers. This situation would give homes closest to the Power Plant what I refer to as a property with a "BLEMISH". I hope that is helpful."

"yes it adversely effects property value and desirability of the home."

"Yes I seriously think it would and does affect property values. I would not purchase there myself and would steer clients away from the area."

"Hi Robert:
I have worked with a number of buyers through out 8+ years. In my opinion, any distance less than 100 yards or so will have impact on the value of the home. And closer to the power lines the larger the impact will be. A distance of .5 mile to the power lines should not scare away any buyers, especially in Santa Clara County."

"Hi Robert - It would not bother me at all - Dr. Dean Adelle of radio fame tells us that test after test show that there are no ill effects from living near such installations. However... it will effect the value of the properties in the neighborhood since some buyers will have fears anyway, and more will have fears about values when *they* go to sell. It's sad. Good luck."

"I just sold my first home to a young couple who had specifically requested staying away from high powered lines. There is no way they would have considered a home any where near power plant. This proposed power plant will defenatly affect the value of homes in the area as well as the health of those home owners."

"Yes, I do believe that power plants have an affect on the desirability of a home or neighborhood. I also, believe that it has a negative effect on the value of a home. I personally would not purchase a home in close proximity of a power plant or main power lines. I generally do not show homes that are close to power lines at the request of my clients, who say they do not want to live in such an area. Buyers almost always have an opinion on the subject when I first meet them."

"Next door or a few blocks may YES. 1/2 a mile from homes and 1-3 miles from any school does not even approach being a significant problem. We live in a mature, fully developed area. It is next to impossible to buy an AVERAGE property secluded enough to be Half a mile to three miles from some sort of undesirable element( i.e. Freeway, noise, commercial facility, airport, etc.). People do not live in Silicon Valley because its lovely, they live here to be near their jobs. Given some alternatives and sufficient resources any Buyer will find an optimum location in a less developed environment ( I.e. Saratoga, Los Altos Hills, Woodside or Atherton). With Bay Area's high housing demand, an electrical service station, half a mile away, poses no significant impact to its value. Draw a three mile radius around San Jose International Airport and you'll find thousands of happy homeowners and price appreciation comparable to adjacent and more distant similar neighborhoods."

"Hi Robert, Yes I have had clients very concerned. Even the one in Los Altos was a concern and really depressed that area- mostly within a 1/2 block distance. I would safely say that within a block it was an issue. I hope this helps."

"yes, this is a negative"

"I would not want to live within a mile of a sub station power plant, nor would I want my son to attend a school that is just a little over a mile away from one. The effects of electromagnetic waves is up for scientific debate and I for one do not want to be another statistic. I believe that my buyers feel the same way. They do tend to shy away from the homes that are close to large power sources. I do believe that the presence of such a station would effect the value of the immediate neighborhood."

"Robert,
I feel asituation as this would definetely affect my decision as well as my buyers in deciding the purchase of a home.The issues of safety,enviromental hazards are key factors in obtaining a sound decision.Have agreat day Robert."

"Yes, it would affect value. Partially depends on if power lines can be seen and if they will be above or below ground. Are there visual proposed plans created for people to review the situation? Personally, a power plant would not bother me -- but that depends on if I have to look at it every day and if the lines are visible. I don't think there's a major problem with power plants and health, but there are people who do. As a RE pro, the same types of questions apply. Also, as an appraiser the same types of questions apply."

"Robert,
In some cases I've had clients drop a property from consideration because of the presence of high tension power lines going through the neighborhood. Most felt the negative aspect of this factor was aesthetic in nature but a few felt strongly that these power lines constituted a health risk. Consequently, there is no question that a limiting characteristic such as being located on busy street, near high tension power lines, or in proximity to commercial/industrial, etc. reduces demand for a home and impacts the value negatively.
In this particular case, however, the distance of .5 miles probably makes the impact slight because it will not be readily VISIBLE to most (or all) people in the neighborhoods. I've found it is often merely the "perception" of undesirable characteristics that concerns most buyers. The only real objection may come from the ultra conservative few who perceive their exists a potential "health risk" from the power plant and this distance is not adequate to avoid this perceived risk. I personally have no research data that would support the validity of such a concern."

"I currently have a home listed on Park Manor, and the high voltage lines behind it have brought comments - no one is sure of what they MAY do or cause, but the lines are a definite drawback!"

"Ahhh, the Calpine power project on Santa Teresa ....
Like being under powerlines in Santa Clara by Montague Park (EMF Concerns) or the path of the airport..SJ and Hillview, or being next to a major freeway, or having a wrecking yard nearby.....unequivocally "sane people" shy awaey from properties in these areas and the net effect is the deterioration of a proximate neighborhood, and the lowering of property values in the immediate area ..."been there, seen that!"

"DEAR ROBERT,
I HAVE BEEN SELLING REAL ESTATE IN THIS VALLEY FOR 25 YEARS AND THIS QUESTION ABOUT POWER PLANTS AND HIGH TENSION WIRES HAVE COME UP MANY TIMES. MOST BUYERS ARE NOT ONLY CONCERNED WITH THE PHYSICAL/MEDICAL EFFECT ON THEIR PROPERTY BUT MOSTLY, I FEEL, WITH THE VISUAL APPEAL OF SUCH AN OBJECT. MOST BUYERS WILL NOT EVEN BOTHER TO CHECK THE POSSIBILITY OF ANY PHYSICAL EFFECTS BUT WILL TELL THEIR AGENT TO "KEEP ON DRIVING","WE'RE NOT INTERESTED IN THAT HOUSE"...IT DOES AFFECT THE VALUE OF THE PROPERTY."

"Robert:
for me this issue is one that depends heavily on how things are done. I would not mind a power plant .5 miles away if care was taken to screen the industrial aspects of the plant. Such a plant poses little in the way of safety hazards and modern power plants create little noise or traffic problems.
I wouldn't like to live right next door to such a plant, but it should pose no threat to neighbors and schools. As for its affect on property values - do the IBM and other industrial locations either in the area or proposed for the area lower property values? Done correctly - no. Done incorrectly- yes. Neighbors need to be involved in the planning process to insure that such a plant is situated on a large parcel and carefully planned to be a good neighbor. But, they also need to remember that if they force its construction somewhere out in the further hinderlands - they and all other consumers will pay a higher price because of the increased distribution costs.
There! You have my two cents."

"I say:
Keep the power plants in remote valleys where they aren't seen. No one has proof of health problems caused by electro-magnetic radiation but there is the perception that it's bad. Backing up to power lines is like being on a busy street, don't ya think?"

"I think it would depend on how much showed. Tall towers? I'm not sure I get too excited about the electricity part of it but the visual does affect me and would have a detrimental effect on clients. I do also think there are clients who would NOT like the electricity part of it either. I am an agent."

"Yes, in my opinion, it would affect the value of property."

"Hello Robert!
My opinion re: the power plant...I personally would not care for having that near my family. I have 2 small children, 5 yrs. and 2 1/2 yrs. old. I have heard both stories that these power plants, transformers do not cause health concerns, and that they do. Who do you believe??? I personally would not want to put my children or my wife in that position of uncertantly. Question 2. Yes I am a Realtor with Century 21 Champion and I have had listings and shown listings with transformers-not power plants. The comments that I received were that of concern. I think that they definately drive property values down, so I would imagine that having a full-fledged power plant at or near these houses would definately be a negative. Anyway Robert...I hope the comments help you out. Take care."

"I think this will heavily impact the neighborhood. I am aware that PG&E has literature and does studies on the effect of these type of plants regarding specific homes, however, I know from my clients that the perception of a plant is very negative and often times they would not want to purchase a home at any price near one of these sights."

"Robert,
In my experience, the fact that the power plant is there will not make a drastic difference unless either the plant or the high voltage wires are visible from the property. If either is visible from the property then the impact on values will be substantial. Obviously, the closer the property is to the plant or wires, the higher the impact."

"Robert,
Power stations definitely effect market value. You might pull Belden Drive and Belden Court comps in prime North Los Altos--then compare to the rest of area 211."

"I'll respond to you as a consumer and not as an agent. I would definitely NOT want a home near a power plant and I'm sure that it will affect the desirability and price of those homes. Besides, it is not aesthetically pleasing for the neighborhood."

"It depends. If the person will be buying and living there for the rest of their life (retired persons, etc.) or if they will be moving in 5-7 years as is common, or if they are investors. Personally I would buy the property because you can usually get a pretty good deal on a home near these sites or towers. Further, Silicon Valley, with the housing shortage or limited inventory situation, will always have people willing to buy as long as they can just get a home."

****************

Thank You for your interest and for watching and listening to my show. Please feel free to call me or email if you have any further questions regarding this or any other real estate matter.

Have a Super Day!

Cordially,

Robert Aldana
"Let's Talk Real Estate!"
Fine Homes & Estates Seville Contempo Realty, Inc.
Yo Hablo Espanol!
408-777-3852  Direct Line
800-882-7896  24 Hour Info Hot-line / Ext. 800 = Mobile Phone/Voice
Mail/Pager
408-996-9068  Fax

mailto:robert@letstalkrealestate.com

http://www.letstalkrealestate.com

DON'T FORGET TO:

Listen to us "Live", Sunday nights from 10pm - midnight on 96.1 FM, KSQQ, San Jose/San Francisco

Watch our TV Show, Mon. at 10pm, Wed. at 9pm and Thurs. at 6:30pm on channel 15A - TCI, San Jose, Campbell, Cupertino.

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