DOI 2012 Assessment of Potential Changes to Real Estate Resulting from Dam Removal: Klamath Secretarial Determination Regarding Potential Removal of the Lower Four Dams on the Klamath River: DOI 2012 August 2012 Contributors: Real Estate Sub Team: Renee Snyder, Bureau of Land Management (BLM); Dave Hansen, Bureau of Reclamation (USBR); Julie Bowen (USBR); Chuck LaFlamme, DOI Office of Valuation Services (OVS). Acknowledgements: Assistance for drafts was provided by Ali Kleyman, CDM-Smith. Table of Contents I – Introduction and Background ............................................................................................................................. 2 II - Purpose ............................................................................................................................................................... 2 III - Lands being transferred to the States................................................................................................................ 3 IV – Lands needed in support of the project ............................................................................................................ 3 V – Affected lands .................................................................................................................................................... 3 A. - Case Studes ........................................................................................................................................... 4 B. - Dam Removal Real Estate Evaluation Reports.......………………..……………………………….6 C. – Potential effect on property values in the Klamath basin due to improved water reliability…..….13 D. – Potential effect on property values down river of Iron Gate Dam…………………………...……14 E. – Landowner Docks………………………………………………………………………………....14 F. – Erosion………………………………………………………………………………………….…15 G. – Undesirable conditions during reservoir restoration……………………………………………....15 H. – Floodplain information…………………………………………………………………………….15 Appendix A – Literature review of effects of dam removal on adjacent property values……………………..…17 Appendix B – Literature review of effects of wildfire risk on property values………………………………..…27 References -…………………………………………………………………………………………………...….37 1 | P a g e I. Introduction and Background: This study is in support of the Secretarial Determination on the removal of four dams on the Klamath River and related restoration activities in the Klamath basin. The four dams are Copco I, Copco II, J.C. Boyle and Iron Gate. Lands under these reservoirs and adjacent lands associated with the hydroloelectric project and owned by PacifiCorp are to be transferred to the states of Oregon and California or an entity yet to be determined. Lands adjacent to Keno Dam presently owned by PacifiCorp are to be transferred to the Department of Interior to support the continued operation of the Keno dam and impoundment. All of these lands are described in the Klamath Hydroloelectric Settlement Agreement (KHSA) as Parcel B lands and represent approximately 8000 acres of property owned by PacifiCorp. These lands are to be managed for public interest purposes such as fish and wildlife habitat restoration, public education, and public recreational purposes as outlined in section 7.6.4 of the KHSA. Lands adjacent to Keno Impoundment are intended to support the continued operation of Keno Impoundment for the Klamath Project. Adjacent to Copco 1 Reservoir and in the vicinity of all four reservoirs are private lands, some of which have primary or secondary residences constructed on them. There are also lands administered by various state and federal agencies in the vicinity of all four dams. Drawdown of the reservoir areas is expected to alter the hydrology of the Klamath River and impact lands immediately adjacent to the reservoirs or downstream. Amongst the considerations regarding dam removal is the effect on real estate. Real estate issues are varied and fall into a number of categories for discussion. These categories include: Lands being transferred to the States, including lands currently inundated by the reservoirs Lands needed in support of the project Adjacent private lands that may be affected by the project II. Purpose: The purpose of this real estate report is to present to the Secretary the potential impacts and liabilities of an affirmative decision to remove the dams real estate including affected categories of land. III. Lands being transferred to the States: A. The KHSA stipulates that the States of California and Oregon will take ownership of certain lands of PacifiCorp, including formerly inundated lands, and manage them for the benefit of the public. The States or a designated third party approved by the signatories to the KHSA may accept ownership. While the 2 | P a g e intent of the KHSA (section 7.6.4) is that these lands would be managed for the benefit of the public, it provides an option to allow for other uses based on agreement by the settlement parties. At the date of this report, neither Oregon nor California has developed specific management plans. B. The disposition of PacifiCorp structures (houses) on lands near Iron Gate and Copco Reservoirs is unknown at this time. PacifiCorp has provided an inventory but no details about size or condition were included in the inventory. As more information becomes available the State of California will make a determination regarding their plans for the structures upon transfer to the State. IV. Lands needed in support of the project include: Temporary use of access roads for construction and staging areas: 1. Access routes identified for use during construction are on PacifiCorp lands, lands managed by BLM or within FERC project boundaries. The same is true for construction and staging areas. 2. Currently existing public roads will be used for removal of metal and other construction waste to landfill sites. All local weight and load restriction will be adhered to. No private roads have been identified for use at this time. Permanent rights to be acquired 1. Mitigation sites, spoil sites and any lands needed permanently as a result of the project are identified as being located on PacifiCorp lands, lands managed by BLM and adjacent private lands. 2. Permanent rights for lands to support the operation of Keno Dam by Reclamation for Klamath project purposes will be transferred from PacifiCorp to DOI. A description of the real estate to be transferred will be presented in a separate report to be available upon conclusion of negotiations on details of the transfer. V. Affected lands There are private lands adjacent to or within close proximity to the reservoirs. These are lands with access to or views of the reservoirs and are generally around Copco 1 and Iron Gate reservoirs. Construction of the Copco and Iron Gate dams created reservoirs behind the dams. These reservoirs are open to the general public and have been utilized for recreational purposes (fishing, boating, etc.) for many years. In turn, these recreational uses have led to light residential development of some of the privately held real estate surrounding the reservoirs. Other affected lands are lands adjacent to the river and downstream of Iron Gate Dam to the estuary for the Klamath River. The Klamath River passes through federally designated wilderness, National Forests, public land managed by the BLM, private lands, and rural tribal reservations for most of its course downstream of Iron Gate Dam. There are several unincorporated communities downstream of Iron Gate Dam such as Happy Camp, Hamburg, Seiad Valley, Gottville, Orleans, Weitchpec, Klamath, and Requa. Within a one-quarter mile buffer of the Klamath River downstream from Iron Gate Dam to the Estuary, there are approximately 40,500 acres of open space and public lands, 15,600 acres of 3 | P a g e agricultural lands, 290 acres of residential uses (of various densities), 24 acres of tribal reservation lands, 2,478 acres of urban reserve1, and 26 acres of commercial use. In addition, the entire Klamath River is designated a wild and scenic river downstream of Iron Gate. A. Case studies on effects to property values Appendix A contains a review of previously completed reports and studies on the effects to real estate of dam removal. The purpose of this literature review was to attempt to locate and review documents and studies which have examined the impacts of dam removal on private property values. By reviewing the conclusions of the previous studies it was hoped it would be possible to draw parallels with the potential impacts that removal of the four Klamath River dams could have 1 The following communities have been designated “Urban Reserve” in their county‟s General Plans to accommodate future growth: Orleans, Humboldt County at RM 48; Weitchpec, Humboldt County at RM 43; Klamath Glen, Del Norte County at RM 6; Requa, Del Norte County located 0.75 miles north of RM 1.25; Requa, Del Norte County located 0.75 miles north of Estuary (General Plans – Land Use [computer file]. Sacramento, CA: California Resources Agency/ University of California, Davis, 2004.) 4 | P a g e on the value of private property around Iron Gate and Copco Reservoirs. As described in Battelle, 2007, Economic Support for the Elwha River Watershed: Final Economic Characterization Report with Monitoring Recommendations, “the economic costs associated with dam removal are complex and difficult to define.” These case studies point out this complexity and illustrate the challenge of forecasting impacts on property values in other