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168667 Exhibit 3 EXHIBIT 3 PSC REF#:168667 Part 1 of 3 2535-CE-100 Public Service Commission of Wisconsin 12/3/2012 (aff) RECEIVED: 07/19/12, 12:19:36 PM Docket 2535-CE-100 Witness: Peter J. Poletti A REAL ESTATE PROPERTY VALUE IMPACT STUDY OF THE PROPOSED HIGHLAND WIND FARM ST. CROIX COUNTY, WISCONSIN Ex.-HWF-Poletti-3 Docket No. 2535-CE-100 Ex.-HWF-Poletti-3 A REAL ESTATE PROPERTY VALUE IMPACT STUDY OF THE PROPOSED HIGHLAND WIND FARM ST. CROIX COUNTY, WISCONSIN Prepared for EEW Services, LLC Prepared by POLETTI AND ASSOCIATES, INC. 302 West Clay Street Suite 100 Collinsville, Illinois 618/344-3270 July 2012 TABLE OF CONTENTS Executive Summary.................................................... 1 Introduction......................................................... 2 Location............................................................. 2 Scope and Methodology of the Consulting Report....................... 2 Assumptions and Limiting Conditions.................................. 4 General Limiting Conditions.......................................... 5 Purpose and Intended User of the Report.............................. 5 Review of Literature................................................. 6 Description of the Proposed Highland Wind Farm...................... 10 Physical Characteristics of the Subject Area........................ 10 Economic and Social Data of Subject Area............................ 12 Impact on the Value of the Surrounding Properties................... 17 Rosiere and Lincoln Wind Farms; Kewaunee County, Wisconsin ........ 18 Results of the 2008 Through May 2012 Study ...................... 21 Results of the Kewaunee County 2005 Study ....................... 27 Twin Groves Wind Farm, McLean County, Illinois .................... 38 Single-Family Residential Values ................................ 41 Case Study: Residential Farmstead Values, Twin Groves ........... 49 Mendota Hills Wind Farm, Lee County, Illinois ..................... 52 Results of the Mendota Hills 2003-2005 Study .................... 55 Mendota Hills Wind Farm, Update; 2005 through February 2009 ..... 61 Case Study: 965 Bingham Road .................................... 72 Case Study: Meadow Brook Subdivision (Mendota, IL) ............. 80 Summary and Conclusion.............................................. 82 Certificate of Consulting Report.................................... 84 Bibliography........................................................ 86 ------- Appendices Residential Sales in Target and Control Areas, Kewaunee County, Wisconsin. ................................................... I All Residential Sales within Lincoln Town Plat .................... II All Sales in Target and Control Areas, Twin Groves Wind Farm I and II (1/1/06-3/31/09) ........................................ III All Residential Sales in Target and Control Areas of Twin Groves Wind Farm Phases I and II ................................... IV Photographs of Twin Groves Case Study Properties ................... V Residential Sales, Mendota Hills; 2003-March 2005 ................. VI Mendota Hills Area Residential Sales; Jan., 2005-March, 2009 ..... VII Analysis of Mendota Hills Residential Sales ..................... VIII EXECUTIVE SUMMARY Poletti and Associates, Inc. has undertaken a Real Estate Property Value Impact Study of the proposed Highland Wind Farm for the purpose of determining whether the request meets the criterion set forth in Wisconsin Statute 196.491 (3) and Wisconsin Administrative Code Section PSC 111.53. Specifically, this report will determine whether the proposed Wind Farm is so located as to not substantially injure or diminish the value of surrounding property. The date of the report is July 17, 2012. The effective date of the opinion is July 17, 2012. When a land use is proposed that is dependent upon a regulatory approval, such as in the case of the subject, it is important to consider its impact on the use, marketability, and value of other property in the vicinity. An analysis of this type is appropriate when addressing the standards of the State of Wisconsin. A review was conducted of the subject property, existing land uses in the surrounding area, and plans for the proposed wind energy center. In addition, detailed studies were conducted to assess the impacts on surrounding property values, if any, associated with three operating wind farms constructed in similar eastern Wisconsin and north-central Illinois agricultural areas: the Rosiere and Lincoln wind farms in Kewaunee County, Wisconsin; the Twin Groves Wind Farm, Phases I and II, in McLean County, Illinois; and the Mendota Hills Wind Farm in Lee County, Illinois. These studies included statistical analyses of sales transactions of agricultural properties, residential tract acreage, and improved residential properties in a Target Area and a Control Area around each of the operating wind farms. In addition, comparable sales analysis (also called “paired sales analysis”) was performed for specific properties in close proximity to each of the operating wind farms. Finally, observations were made of continuing residential development after construction of the Mendota Hills wind farm. These studies identified no observable impact of the operating wind farm on surrounding property values. This finding also is consistent with the findings of numerous research papers in the published literature. Therefore, after reviewing the available data, it is my opinion that as of July 17, 2012 the proposed Highland Wind Farm is so located as to not substantially injure or diminish the value of surrounding property. The details of the analysis and the factors considered in reaching this conclusion are found on the following pages. 1 INTRODUCTION This report provides an evaluation of the proposed Highland Wind Farm for the purpose of determining if the proposed project is so located as to not substantially injure or diminish the value of surrounding property. The Highland Wind Farm is located entirely within towns of Forest and Cylon in St. Croix County. LOCATION The proposed wind energy farm will be located primarily within the Town of Forest with a substation located within the Town of Cylon in St. Croix County. The proposed turbines are located east of U.S. Route 63; generally south of 230th Avenue; west of 210th Street; and north of 180th Avenue. SCOPE AND METHODOLGY OF THE CONSULTING REPORT The purpose of this report is to determine if the proposed Highland Wind Farm is so located as to not substantially injure or diminish the value of surrounding property. To accomplish this purpose, a number of steps were undertaken. A review was made of published literature concerning the effect of wind generated electric facilities on surrounding property values. Plans for the proposed Highland Wind Farm were reviewed. Representatives of EEW Services, LLC were interviewed concerning design and operating specifics. Peter J. Poletti inspected the subject project area as well as land uses within that area. Information employed in this report was gathered from a variety of sources. The records of the sale transactions for the towns of Red River and Lincoln in Kewaunee County, Wisconsin, McLean County, Illinois, and Lee County, Illinois were reviewed for sales transactions surrounding operating wind generating sites. This record included the size of tract and the style, age, and size of the improvements. The methodology employed in this report is based upon accepted practices of the real estate appraisal profession. This methodology consisted of two basic quantitative analysis techniques: (1) a comparison of the average selling price of a property type in a Target Area compared to the average selling price of similar properties in a Control Area; and (2) a matched pair sales analysis using specific properties and making adjustments for specific differences between the properties. These techniques are employed by appraisers when estimating the percent or dollar adjustments that are necessary for valuing properties. In using the above techniques, the Target Area is defined as a zone in proximity to an operating wind farm and is defined by a combination of distance, intervening land uses, and visibility of the facility. In contrast, the Control Area is defined as a region 2 outside of the Target Area that is considered to be similar to the Target Area but outside the immediate influence of the operating wind farm. The first technique uses the average selling price of various property types as a comparison. Since it employs statistical analysis, this technique is considered the more exact approach. In this technique, if the wind farm was affecting values, there would be a statistically measurable difference between values in the target area and those in the control area. For the analysis, the operating hypothesis assumes that there is a measurable difference between values in the target area and those in the control area. The comparison is the test of this hypothesis. If the analysis of the data reveals no statistically significant difference between the two areas, the operating hypothesis is rejected and it is concluded that there is no measurable difference in prices between the Target and Control area. The second technique uses matched pair analysis commonly used by appraisers when valuing individual properties. This technique can also be used to estimate the amount that certain characteristics (ie a garage, basement, fireplace, etc.) add in value to a property. This procedure can also be used to measure other effects on properties
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