Real estate appraisals raise Northern Pass temperature
By TIM BUCKLAND New Hampshire Union Leader
CONCORD - A settlement between a Franconia appraiser and the state Real Estate Appraiser Board has become the latest lightning rod in the ongoing feud between the developers of the Northern Pass project and property owners leading the opposition to the proposed high voltage lines.
James C. Walker, owner of White Mountains Appraisal, has agreed to pay a $2,000 fine as part of an agreement with the state Real Estate Appraiser Board to settle an investigation into his conclusion that the construction of electricity towers on a Dalton property could reduce its value significantly.
But Walker and the couple who hired him, Jim and Sandy Dannis, said they stand behind the appraisal.
"This was nothing more than a pragmatic business decision," Walker said of the settlement. Had he fought the charges of misconduct, he said, he likely would have spent much more and risked losing his appraiser license after nearly three decades of being an appraiser.
"I am a serious and ethical appraiser," he said.
The events leading up to the settlement have Northern Pass officials say they are defending the project from misleading public attacks that are coming even though the Dannis property is no longer on any proposed route for the transmission lines.
"The findings of this report, now determined to be flawed and misleading, were used in the media and in front of the (state) Legislature to distort the truth about the potential impact of the project across the state," Northern Pass spokesman Michael Skelton said in an email to the New Hampshire Union Leader. "The public deserves accurate information, and hopefully Mr. Dannis now understands that violations of any kind are unacceptable, even if they conveniently support his opinion."
Meanwhile, Dannis said the charges against Walker were part of a strategy by a large company with deep pockets to intimidate appraisers who find that the proposed high-voltage lines would decrease property value.
"We have 100 percent confidence in Mister Walker's assessment of our property," said Dannis, who with his wife owns 135 acres in Dalton that have become a focal point in the controversy surrounding the Northern Pass project. "This entire affair shows the extent to which Northern Pass is willing to attack messengers who deliver news they don't like."
Northern Pass, a collaboration between Public Service of New Hampshire's parent company, Northeast Utilities, NStar and Hydro-Quebec, has filed an application for a presidential permit with the Department of Energy to build a 180-mile-long transmission line from the Quebec border at Pittsburg to Deerfield. The project would bring 1,200 megawatts of power to the New England market.
The project seeks to use 140 miles of existing Public Service Company of New Hampshire right-of-way, but must still find 40 miles of line north of Groveton. The towers would range in height from 80 to 135 feet, which opponents of the project, including the Dannises, say would destroy scenic views and hurt tourism.
In the spring of 2011, Walker conducted an appraisal of the Dannis property that showed a 63 to 91 percent reduction in value due to the proposed power line, depending on the size of the lot. Walker said the reduction was because the transmission lines would shift the property's "highest and best use" from residential to ancillary, essentially keeping it an open field, because the lines would make the land difficult to sell for residential purposes.
At the time, one of the proposed transmission line routes would have run through his property.
When the Dannises made the report public and filed it with the state Legislature and U.S. Department of Energy, which generated significant media coverage, Northern Pass filed a grievance and asked the Real Estate Appraiser Board to review a Northern-Pass-commissioned analysis of Walker's appraisal.
"Given the fact that Mr. Walker's information was used by some opponents to create media stories and was actually presented to the New Hampshire Legislature in an effort to change state law, the project is pleased to see that the significant concerns expressed by our experts were valid and the (state) Real Estate (Appraiser) Board felt it was appropriate to take action on the matter to protect the public," Skelton said.
Walker said he agreed with one of the charges, that he didn't explain well enough why the land's highest and best use would shift from residential to ancillary.
"There should have been more verbage," Walker said. However, he said, "I stand by the appraisal 100 percent and my conclusions 100 percent."
Walker must complete seven hours of additional training, provide the settlement agreement to any potential employer of his appraisal firm and pay a $2,000 fine to the state, according to the agreement.
Reports prepared by Northern Pass on potential impacts on property values have estimated the impact at 10 percent or less.
"In each case, these studies have arrived at the same general conclusions: the presence of high voltage transmission lines statistically has little to no effect on the value of neighboring properties," according to Northern Pass's website.
But Walker's appraisal seems to mesh with the opinions of at least two North Country real estate agents, Andrew Smith and Peter Powell, who have reported that the possibility of the transmission lines has decreased values by 25 percent to 50 percent.
In a letter to the legislative committee now studying the feasibility of burying future transmission lines, Smith gave an example of a property that he said should be worth almost $400,000 in a normal market. It received an offer of $190,000, with a letter from the prospective buyer explaining that the low offer was because of Northern Pass.
Skelton said Northern Pass has no plans to take any kind of action against Smith or Powell.
"The opinions of two real estate agents who are openly opposed to Northern Pass is entirely different than an official appraisal that was submitted to the Legislature and Department of Energy," he said.
Conflict of interest claimed
But Dannis said he questioned the impartiality of the expert Northern Pass hired to independently review Walker's work, Rye appraiser Brian Underwood. Underwood is also the chairman of the state Real Estate Appraiser Board and has performed appraisals and reports on property value for Northern Pass in the past - his report on impacts in Deerfield and Littleton concluded there is no market evidence "that would indicate diminution of property value due to high voltage transmission lines."
Underwood, who could not be reached for comment, recused himself from the proceedings in the Walker case, according to the settlement agreement, but Dannis said his hiring still constituted "an obvious conflict of interest."
Executive Councilor Ray Burton told New Hampshire Public Radio that he likewise was concerned about a conflict of interest. The Executive Council approves appointments to the board.
"I certainly am not leaning towards reappointing Mr. Underwood," Burton said to NHPR.
Underwood's methods were criticized by Danny Wiley, a former chairman of the national Appraisal Standards Board. Walker said he asked Wiley to review Underwood's report and he provided a copy of Wiley's report to the New Hampshire Union Leader.
Wiley's report said Underwood failed to meet several reporting requirements when conducting an appraisal review, including failing to state the scope the work he did to review the appraisal and not addressing "many aspects of the report under review."
"Failure to meet report content requirements can be an issue of education (competency) or intent (ethics)," the Wiley report said. Given Underwood's position as chair of the appraiser board, "it appears that failure to comply with the applicable report content requirements was a matter of choice/intent rather than a matter of competency."
As part of the settlement agreement, Walker, who said he has been disciplined by the board in the past, agreed to drop an ethics complaint against Underwood.