PUBLIC SERVICE COMMISSION OF WEST VIRGINIA CHARLESTON

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1 PUBLIC SERVICE COMMISSION OF WEST VIRGINIA CHARLESTON CASE NO. 0- -E-CN PA TH WEST VIRGINIA TRANSMISSION COMPANY, LLC PA TH ALLEGHENY TRANSMISSION COMPANY, LLC PATH-WV LAND ACQUISITION COMPANY and PATH-ALLEGHENY LAND ACQUISITION COMPANY Joint application for certificates of public convenience and necessity under W. Va. Code --lla authorizing the construction and operation of the West Virginia segments of a kvelectric transmission line and related facilities in Putnam, Kanawha, Roane, Calhoun, Braxton, Lewis, Upshur, Barbour, Tucker, Preston, Grant, Hardy, Hampshire, and Jefferson Counties, including modifications to the Amos Substation in Putnam County and a new substation in Hardy County, and for related relief. DIRECT TESTIMONY OF JAY GOLDMAN May 1,00

2 Page 1 of to Q. PLEASE STATE YOUR NAME AND BUSINESS ADDRESS. A. My name is Jay Goldman, and my business address is to 1 Bridge Road, P. O. Box 1, Charleston, WV 1. 1 PURPOSE OF TESTIMONY Q. PLEASE DESCRIBE THE PURPOSE OF YOUR TESTIMONY. A. On behalf of the Applicants, I wi ll address the likely effect of PA TH on the market va lue of rea l estate. Q. WILL THE USE OF VARIOUS TERMS IN YOUR TESTIMONY BE CONSISTENT WITH THE DEFINITION ASSIGNED TO SUCH TERMS IN THE GLOSSARY ATTACHED TO THE APPLICATION? A. Yes. I may also define other specific terms in this testimony RESPONSIBILITIES, EXPERIENCE AND EDUCATION Q. BY WHOM ARE YOU EMPLOYED AND IN WHAT CAPACITY? A. I am the President of Goldman Associates, Inc. Q. PLEASE DESCRIBE YOUR PROFESSIONAL EXPERIENCE AND EDUCATIONAL BACKGROUND. A. I have Bachelor of Science degrees in Real Estate and Business Administration, as we ll as a law degree. I have several professional designations in appraisal and other aspects of

3 PATH Allegheny Transmission Company, LLC Page of real estate, and hold, among other licenses, that of State Certified General Real Estate Appraiser in West Virginia, and real estate broker's licenses in the States of West Virginia, Virginia and North Carolina. I am also a licensed member of the West Virginia Bar, and am admitted to practice law in both state and federal courts. I have testified as an expert witness in numerous courts, as well as before the WV PSC. Additional details are summarized in my curriculum vitae, which is attached as Exhibit JG-l. Q. ARE YOU A MEMBER OF ANY PROFESSIONAL ORGANIZATIONS? A. Yes. As indicated in Exhibit JG-l, I am active in several professional organizations, including the West Virginia Chapter of the Appraisal Institute, of which I am a Past President and Past Director. Q. PLEASE SPECIFY YOUR PREVIOUS TESTIMONY IN COMMISSION PROCEEDINGS. A. I have twice testified before the Commission. The first occasion was on behalf of the applicant in Beech Ridge Energy LLC, Case No. OS-IS0-E-CS, in which I testified about the effects of a 1 megawatt wind-powered generating facility on the market value of real estate. I also testified on behalf of TrAILCo in Trans-Allegheny Interstate Line Company, Case No. 0-0S0-E-CN, in which the Commission certified TrAIL. In that case, I sponsored the December, 00 report entitled "A Study On the Impact of Electrical Transmission Lines On Property Values in West Virginia, for the Proposed

4 Page of Trans-Allegheny Interstate Line," which was admitted into evidence in that proceeding as TrAILCo Exhibit JG-l. EXHIBITS Q. PLEASE IDENTIFY AND BRIEFLY DESCRIBE THE EXHIBITS TO YOUR TESTIMONY AND SUMMARIZE THE CONTENTS OF THOSE EXHIBITS. A. I have no exhibits to sponsor at this time, other than Exhibit JG-l attached to this testimony. However, I wi ll refer in this testimony to the study performed for TrAILCo, and I reserve the right to sponsor all or portions of it as evidence in this proceeding LIKEL Y EFFECT OF PATH ON MARKET VALUE OF REAL ESTATE Q. HOW HAS THE ISSUE THAT YOU WILL BE ADDRESSING BEEN FRAMED? A. In many of the letters that the Commission has already received, people have stated that PATH, ifconstructed, wi ll reduce the market value of their land. Some of these people own property along the Proposed Route. These people would be permitted to claim that loss in condemnation proceedings, if they were unable to reach agreement for the conveyance of a ROW. The Supreme Court of Appeals of West 1 1 Virginia has held that the measure of recovery in an eminent domain proceeding is (1) loss, if any, in the fair market value of the property subject to the easement, together with

5 Page of () damages, if any, to the remaining property, sometimes called the "residue," that exceed any benefits to the residue from improvements for which the property was taken. ] But many people who have expressed the same concern own neighboring property, or property in the same area, and would not have the opportunity for compensation because their property will not be subject to any of the ROW. These individuals also assert that PATH wi ll make their property decline in market va lue. Q. ARE YOU SURPRISED BY THESE CONCERNS? A. No. The siting of highways, power lines, windmi lls, and other large, visible infrastructure is often controversial. In the TrAIL proceedings, area residents likewise urged the Commission to deny certification, based on the argument that TrAIL would have a negative effect on the market value of their land. Three witnesses in that case cited published materials, but no opponent of TrAIL's certification undertook any comprehensive review of the published scholarly literature, conducted a study of his own, or collected any relevant market data. Q. IS THAT WHAT LED TO YOUR INVOL VEMENT IN THE TRAIL PROCEEDING? A. Yes. We were retained to actually study the impact, if any, that existing electric transmission lines have had on property values where TrAIL will be built, and to use other appropriate methods to assess the assertions that were made about TrAIL. See. e.g, State v. Evans, W. Va., -, 0 S.E.d, (1) ("Where a part on ly is taken there is added to its market va lue the market va lue of the residue immediately before the taking, less its market value immediately after the improvement including all benefits to the land not taken by reason of such improvement.").

6 Page of Q. WHA T DID YOUR STUDY OF TRAIL INDICATE, AND WHAT DID THE A. COMMISSION CONCLUDE? For the reasons indicated in that study and my accompanying testimony, it was my opinion that there may be a minimal impact on some properties, but that most property values would not be permanently impacted by TrAIL. That opinion was supported by data that we co llected through interviews and courthouse research. It was also consistent with studies conducted in other parts of the United States and in articles authored by professionals in the real estate industry. The Commission addressed the issue in its August I, 00 Commission Order in the TrAIL proceeding: In the event that TrAILCo is unable to reach agreement with a property owner and institutes a condemnation proceeding, the property owner may seek in compensation not only the value of the land condemned, but also the effect, if any, that the presence of TrAIL has upon the market va lue of rea l estate beyond that subjected to the easement. However, several witnesses suggested that TrAIL, if constructed, would substantiall y reduce the market va lue of real estate in the surrounding vicinity beyond that on which TrAIL would be constructed. TrAILCo presented the only evidence based upon a rigorous study of the anticipated effects of TrAIL on area property values. TrAILCo's witness Jay Goldman, Goldman Associates, Inc., conducted a study indicating that the effects, if any, of TrAIL on the value of nearby real estate values will be confined to property within 00 feet of TrAIL, and wi ll be relatively minor. None of the witnesses whose opinions di ffered from that of Mr. Goldman professed to be qual ified in real estate appraisal, and none had performed any substantial work in order to confirm his di fferi ng opinion. The only competent evidence indicated that the effects, if any, of TrAIL

7 PATH Allegheny Transmission Company, LLC Page of II Q. A. on the value of nearby rea l estate values wi ll be confined to property within 00 feet of TrAIL, and would be relatively minor. The Commission concludes that there is insufficient evidence in the record to deny certification of TrAIL due to its anticipated effects upon the market value of adjacent or nearby real estate. * * * * * * * *. TrAILCo presented the on ly evidence based upon a rigorous study of the anticipated effects of TrAIL on area property values. Mr. Goldman's study indicates that the effects, if an y, of TrAIL on the value of nearby real estate values wi ll be confined to property within 00 feet of TrAIL, relatively minor and temporary. (TrAILCo Exhibits JG-R and JG I; Tr. January 1, 00 at, - (Mr. Goldman).). None of the witnesses whose opinions differed from that of Mr. Goldman professes to be qualified in rea l estate appraisal, and none had performed any substantial work in order to confirm his di ffering opinion. (Giessler Exhibit SFG- I; Staff Exhibit MJI-D; Sierra Club Exhibit DGN-D; Tr. January 1, 00 (Dr. Nichols).) See Trans-Allegheny Interstate Line Company, Case No E-CN, Commission Order entered August 1, 00, pages -0, 1 (internal citations in discussion omitted). HAVE YOU REACHED THE SAME OPINION ABOUT PATH THAT YOU REACHED ABOUT TRAIL? Yes, but not to the same degree of confidence along the entire Proposed Route. The effects of an EHV transmission line or any other infrastructural improvement upon real estate prices in any particular market can not be full y assessed without a competent study of that market. Our study concerning TrAIL is also about 1 months old. However, it is my opinion, rendered to a reasonable degree of certainty, that there is unlikely to be

8 Page of anything beyond a minimal impact on some properties, and that most property values are unlikely to be permanently impacted by PATH. It is also my opinion that the Q. A. Commission can not reasonably find otherwise except to the extent that someone with the requisite qualifications undertakes a competent study of a particular real estate market. ON WHAT DO YOU BASE THESE OPINIONS? Each of the studies that I have personally been involved with indicated that the EHV transmission line at issue would not have any lasting, substantial effect on real estate market values. The current knowledge in the real estate industry is to the same effect. "Power Lines and Property Values Revisited," published in the Fall 00 edition of The Appraisal Journal, included at pages 1 - of the TrAIL study, concisely summarized the scholarly literature. Among experts in the field, there is substantial consensus that any market impacts are constrained to areas very near EHV lines, are far less in their magnitude than has been suggested by PATH Project opponents, are highly affected by the lay of the land, and are temporary, not permanent. Quoting directly: When negative impacts are evident, studies report an average discount of between 1 % and % of property value. This diminution in value is attributable to the visual unattractiveness of the lines, potential health hazards, disturbing sounds, and safety concerns. These impacts diminish as distance from the line increases and disappear at a distance of 00 feet from the lines. Where views of the lines and towers are completely unobstructed, negative impacts can extend up to a quarter ofa mi le. If the HVTL structures are at least partiall y screened from view by trees, landscaping, or topography, any negative effects are reduced considerably. Value diminution attributable to tower line proximity is temporary and usuall y decreases over time, disappearing entirely in to years.

9 Page of Our previous studies have borne out each of these phenomena. Q. ARE ANY OF THE MARKETS RELEVANT TO PATH AMONG THOSE THAT YOU ASSESSED DURING YOUR WORK CONCERNING TRAIL? A. Yes. The Proposed Route coincides with or runs very near TrAIL as certified by the Commission between (i) a point in Tucker County near Lead Mine approximately five mi les west of Fairfax Stone and (ii) a point in Hampshire County approximately seven mi les southwest of Delray. During our work concerning TrAIL, we looked into several markets sufficiently proximate to this coincident route that I consider them to be relevant to any serious analysis of PATH: (I) The Aurora area of Preston County, addressed at pages -0 of our TrAIL study () Grant County, addressed at pages 1- of our TrAIL study. () The Ashton Woods subdivision in Hardy and Hampshire Counties, addressed at pages - of our TrAIL study. Each of these markets, at the time of our work concerning TrAIL, was consistent with the general principles that I have previously summarized. None of them recognized any negative impact associated with being located in proximity to a 00 kv power line. In addition, PATH's Proposed Route begins at the Amos Substation in Putnam County. Pages - of our TrAIL study addressed the effect of kv lines in other areas of Putnam County that are being successfull y developed for residences. Neither

10 Page of recognized any negative impact associated with being located in proximity to a kv power line. Q. YOU PREVIOUSLY NOTED THAT YOUR WORK CONCERNING TrAIL WAS COMPLETED MORE THAN A YEAR AGO. ARE YOU AWARE OF ANY MORE CURRENT INFORMA non ABOUT THESE FOUR MARKET AREAS? A. Yes. I frequently am in Putnam County, and make a point of monitoring development there. I have noticed that, even in a national downturn in the housing market, homes continue to be constructed near the kv lines in those subdivisions. I am not as frequent ly in the other markets that are common to TrAIL and PATH. However, I am aware of no changed circumstances since my testimony in the TrAIL proceeding that would lead me to alter my opinions about those markets, either. I wi ll update my research in those markets prior to sponsoring this testimony. Q. PATH WILL BE A kv LINE, WHILE TrAIL WILL BE 00 kv. DOES THIS GIVE YOU ANY LESS CONFIDENCE IN YOUR OPINIONS? A. No. As I have noted, the developments in Putnam County addressed in the TrAIL study involved kv lines. Nor am I aware of any distinction between these two types of EHV lines in the scholarly literature concerning this issue. Q. DOES THIS CONCLUDE YOUR DIRECT TESTIMONY? A. Yes, it does. 0

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12 Jay Goldman, President GOLDMAN ASSOCIATES, INC. 1 Bridge Road Charleston, WV 1 (0) - Exhibit JG-1 CURRICULUM VITAE Education B. S. Real Estate - University of Charleston B. S. Business Administration - Morris Harvey College J. D. West Virginia University College of Law Professional Designations SIOR CCIM MAl CRE Member, Society of Industrial and Office REALTORS Certified Commercial Investment Member, REALTORS National Marketing Institute Member, Appraisal Institute Counselor of Real Estate, American Society of Real Estate Counselors License West Virginia #CG0 West Virginia # West Virginia # & 1 West Virginia # State Certified General Real Estate Appraiser West Virginia Auctioneer West Virginia Real Estate Broker West Virginia State Bar Teaching Experience Past instructor of real estate, real estate appraising, and real estate law at Morris Harvey College and the University of Charleston. Professional Memberships Member of local. state, and national Board of REALTORS - Past Director and Committee Chairman Member of REALTORS National Marketing Institute Member of the Kanawha Valley Multiple Listing Service - Past Director Member of West Virginia Bar Association Member of West Virginia State Bar Member of West Virginia Chapter, Appraisal Institute - Past President and Past Director Member of West Virginia Auctioneers Association - Past Director Member of National Auctioneers Association

13 Other Organizations Charleston Regional Chamber of Commerce - Past Director and Chairman West Virginia Chamber of Commerce - Director Business and Industrial Development Corporation - Past Director Previous Clients Banks, Corporations, Utility Companies, Governmental Agencies and Individuals Experience Admitted to practice law in the State Supreme Court of Appeals of West Virginia and United States District Court, Southern District of West Virginia. Licensed real estate salesman and broker in West Virginia since 1 and owner of own firm since 1. Licensed real estate broker in Virginia and North Carolina. Previous testimony given in Kanawha County Circuit Court, Harrison County Circuit Court, Boone County Circuit Court, Wood County Circuit Court, Mason County Circuit Court, Jefferson County Circuit Court, Putnam County Circuit Court, Braxton County Circuit Court, Greenbrier County Circuit Court, Mercer County Circuit Court, Monongalia County Circuit Court, Fayette County Circuit Court, Monroe County Circuit Court, Federal District Court, and Bankruptcy Court. Testified as an expert witness before the West Virginia Public Service Commission. Qualified as an expert witness by the West Virginia Supreme Court of Appeals. Brokerage, auction, consulting, and appraisal work in commercial, and industrial areas. Public Service Municipal Judge, City of Charleston, West Virginia from 1 to 1 Mayor, City of Charleston, West Virginia from 1 to 00 ($,000, Budget/0 Employees) Chairman, City of Charleston Sanitary Board from 1 to 00