Palmetto Pipeline

There is some controversy surrounding the proposed Palmetto Pipeline, and there is also great concern over how it might affect the Savannah housing market and Savannah Real Estate values.While some details are still unknown, there are past examples that information can be drawn from in addition to many finalized proposals from the contractor, Kinder Morgan.

The proposed Palmetto Pipeline would run 360 miles (210 miles through Georgia alone) and bring a faster gas route to Savannah, North Augusta, and Jacksonville. As of now, the proposed route is set to pass under 603 private Georgia homes and 26 public tracts, including a path beside the Ogeechee River and through the Blue Sky Preserve in Chatham County. The pipeline would be 16-20” wide and buried 4 feet under the ground. The pipeline’s path begins in Jacksonville, Florida and ends at a massive storage facility in Belton, S.C. It would have a capacity of 167,000 barrels per day.Kinder Morgan has claimed that the pipeline would bring local jobs to Georgia, though only 28 would be permanent positions. They also state that the pipeline would bring an increase in tax revenues across several counties, though total estimates have ranged from $14 million to the more recent claims of just $4.5 million.What about Spills?One of the main concerns with any pipeline is the possibility of an accident or spill.
Looking at the aftermath of a pipeline spill, Savannah real estate values could be affected significantly should an accident occur. According to one study, “property contaminated with petroleum sustains a 14% to 16% reduction in sales price.” Furthermore, even if a property lies on unaffected land, it would still impact the value of any Georgia homes elsewhere on the pipeline’s path:“Other research on a pipeline rupture shows that non-contaminated [properties]… sustain a loss in value. This reduction, attributed to the expectation that another rupture may occur, indicates a 5.5% loss in sales price for single-family homes and 2% to 3% for multifamily units. The research also shows a price reduction continues for several years after the event.”

Another study suggests that Savannah real estate values will drop even if no break ever occurs, though these effects would be more understated. In the conclusions, the researchers stated that for properties on the pipeline, “Price declines, if any, generally fall in a range of zero to 10 percent[.]” It also stated, “Any negative price impacts that are felt tend to diminish over time; and… any negative price impacts tend to diminish as distance… increases, rarely extending beyond 200-300 feet.”

Although Kinder Morgan has claimed there have been no spills on their projects, there was, in fact, a 360,000 gallon spill in Belton, S.C., in December 2014 after a 26-inch pipeline burst. Therefore, many residents have spoken out at their recent press conferences, drawing double-capacity crowds that are largely against the proposal. Furthermore, Governor Nathan Deal recently expressed that he would not support the pipeline just two days after three surveyors associated with Kinder Morgan were charged by police for trespassing in Screven County.

Eminent Domain

The Savannah housing market may be affected in one other important, and very unique, way—through eminent domain.

Eminent domain is the process by which the government can seize private property to be used for the public good, though compensation must be payed to the private property owner. Even if all homeowners agree to the plan, the Blue Sky Preserve would require the use, as its conservation easement bans development, including for utilities.

Kinder Morgan initially stated it would not use eminent domain, but that “some landowners are not willing to enter into agreements for easements. Therefore, the use of eminent domain, although not preferable, may be necessary for this project.”

Kinder Morgan applied for a certificate of need from the Georgia DOT on Feb 13th, which will be decided on Tuesday. This is the first step in initiating eminent domain proceedings, after which they would need a permit from the Environmental Protection Division. These moves have also drawn some criticism, both from private owners of the Georgia homes along the proposed path and from environmentalists concerned with the Blue Sky Preserve and the Ogeechee River.

Conclusions

Although the Savannah housing market may take a hit in sale prices should the pipeline proceed, the exact extent is undeterminable. The future of the project, and the value of Georgia homes, is likely to change considerably as new information comes in regarding the project.