MPAC’s 2012 Study

Last week the Ontario Municipal Property Assessment Corporation (MPAC) released the 2012 version of their continuing study (following one in 2008) of wind turbines and property values in Ontario, entitled Impact of Industrial Wind Turbines on Residential Property Assessment In Ontario.  To sum it up, they still find no evidence that wind turbines cause property value declines.

The study consists of a 31-page main section [backup link] along with 12 appendices.   MPAC seems to have their own language and it isn’t easily penetrated by a layman. I’ve read over it carefully several times and there are still aspects of it that escape me.  The appendices are generally beyond anyone who is not a professional.  On page 4 they state their goals for this version of the study:

Specifically, the study examined the following two statements:

1. Determine if residential properties in close proximity to IWTs are assessed equitably in relation to residential properties located at a greater distance. In this report, this is referred to as Study 1 – Equity of Residential Assessments in Proximity to Industrial Wind Turbines.

2. Determine if sale prices of residential properties are affected by the presence of an IWT in close proximity. In this report, this is referred to as Study 2 – Effect of Industrial Wind Turbines on Residential Sale Prices.

Their two main conclusions, on page 5, are:

Following MPAC’s review, it was concluded that 2012 CVAs of properties located within proximity of an IWT are assessed at their current value and are equitably assessed in relation to homes at greater distances. No adjustments are required for 2012 CVAs. This finding is consistent with MPAC’s 2008 CVA report.

MPAC’s findings also concluded that there is no statistically significant impact on sale prices of residential properties in these market areas resulting from proximity to an IWT, when analysing sale prices.

Actually, there are three parts to this study, with the third contained in Appendix G [backup link].  Early in 2013 one Ben Lansink published a pretty solid study that showed property value declines of anywhere from 22% to 59% and averaging about 37% on residential properties close (all within 1 km) to IWTs, which I posted on at the time.  Apparently Lansink’s work was solid enough that MPAC felt obliged to attack it.

For me to critique all three parts would make for a very long posting, so I’m going to divide it up.  Obviously the details will follow in my subsequent postings, but for the impatient let me summarize below.

Part 1, are MPAC’s evaluations close to IWTs as accurate (equitable, in their words) as those further away?  This section is only of tangential interest to me, as the central question isn’t MPAC’s accuracy, but rather the effect of IWTs on prices.  It seems that, given MPAC’s explanations, their appraisals are accurate.  Still, there are some items in this part that are of interest.  For example, it seems that MPAC has been playing games to get the appraisals to agree with the market while hiding the effect of wind turbines.  They studied turbines 1.5mw and larger, not older turbines and the areas in Ontario where the impact has already been felt.

Part 2, do IWTs have an effect on properties closer to them?  This section is of central interest.  Unfortunately there are only 5 pages in Part 2, leaving lots of details missing.  Things like the sales prices within the close-in areas. MPAC’s major tool for doing mass appraisals (4.7 million in Ontario) is multiple regression analysis and we’ve had lots of experience with how that can be manipulated to obtain the answer your sponsor wants.  Instead of providing us the prices and letting us judge for ourselves what any effects might be, they opaquely run those prices through their regressions and voila! claim there’s nothing to see here!

But whoever wrote Part 2 must not have been talking to whoever wrote Part 1.  On page 18, well within part 1, there’s Figure 2.  It’s purpose there is to show how close the appraisals are to the sales data (the paired blue and green bars) for the different distances from the IWTs.

gulden-mpac-raw-dataNote the blindingly obvious.  Prices (and appraisals) within 5 km of IWTs are substantially lower than those further away.  I’ve added the horizontal lines so we can better determine the values, which are noted to the side.   Michael McCann, among others, has done a number of studies on IWTs and prices, and his overall conclusion is a decline of 25-40%, with almost 100% in some cases.  Does anyone want to calculate the decline from 228,000 to 171,000?  Perhaps the disparity is due to something as simple as the spread between rural and urban properties, but don’t you think MPAC would at least mention something?  Nope.  Nada.

Part 3, what are the problems with Lansink’s study?  Appendix G is more or less readable and provides an excellent example of what David Michaels book, Doubt is Their Product, talks about.  MPAC throws up, by my count, 7 objections to Lansink’s methodology; of which exactly zero actually indicate that Lansink’s numbers are wrong.  Sewing confusion seems to be the most logical explanation.  As an example, objection #4 of the 7 is that for some of the pre-IWT prices Lansink used, gasp!, MPAC’s own appraisals.  Perhaps whoever wrote Appendix G didn’t bother reading the conclusions in Part 1.

There’s more details, of course, in the following postings.

Critique of Part 1

Critique of Part 2

Critique of the Lansink hatchet job

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