State's gas impact fee means windfall for some

Posted March 11, 2012

By Christie Campbell, Barbara S. Miller and Tara Kinsell 
Observer-Reporter

In times of belt-tightening, a windfall to local and county governments is almost unheard of.

But that's exactly what is coming to local officials because of state legislation, signed into law just last month, that establishes a new natural gas impact fee. Washington County commissioners voted March 1 to implement the fee, and their Greene County counterparts are expected to do so later this month.

Now county and municipal officials have to determine what the money should be used for.

Washington County Commission Vice Chairwoman Diana Irey Vaughan said how to be "stewards of this revenue" is the foremost challenge the windfall presents. The approximately $4 million Washington County expects to see in November is about 6.39 percent of its $68.8 million annual budget.

"I've had a few people mention things out in the public, just ideas at this point, which is good. We welcome the community input," she said.

"We're a little overwhelmed just thinking about it," said Hopewell Township Supervisor Nancy Brandenburg upon learning of industry estimates that the township would receive about $500,000 this year, which is more than its annual budget.

She said the township, with a population of 992, has old road equipment in need of replacing and predicted some of the impact fee would go toward road repairs and upgrades.

In all, Washington County municipalities will split about $7.4 million and Greene communities more than $5 million, according to gas industry estimates. Washington County itself will get about $4.4 million, while Greene will take in about $3 million.

The money is doled out according to a formula that takes into account the number of wells drilled, the number of miles of roads and the population of each municipality. This year's amounts will be higher than in future years, as wells drilled prior to 2011 are included in this year's calculations. In future years, the fee will be based on the number of wells drilled annually.

In Chartiers Township, where 61 natural gas wells had been drilled by 2009, the township is expecting to receive $627,682, an amount higher than its annual road department budget, said township supervisors Chairman Richard Metzler.

With more than 50 miles of road in need of repairs, he expects that will be the township's first focus, but he said the fee could also add to the parks budget.

"It's going to be a big help to us," he said.

Amwell Township, which has a budget of $1 million and a real estate tax of 7 mills, is also slated to receive $500,000.

Supervisors Chairman Larry Headley was taking a cautious approach, saying officials weren't planning on discussing the windfall until receiving formal notification from Harrisburg.

Also taking a wait-and-see approach was Chairman Tom Jennings of the Independence Township Board of Supervisors.

The township owes debt service on its new municipal building, and there are road equipment needs, too, but Jennings hopes supervisors first have a meeting with residents to get an idea of what projects interest people the most.

"I think it's a good problem for all the townships," he said. "This is just the little bit they need to balance budgets or make some improvements."

In Mt. Pleasant Township, where supervisors voted to join other municipalities weighing a legal challenge to Act 13 because it supercedes local zoning regulations, the impact fee would exceed $679,000.

But Chairman Larry Grimm said there are other ways the township could use the fee, such as reimbursing its clerical staff and township manager for the "hundreds of hours" they have devoted to gas-related issues over the past few years.

One permitted use in the act is for water, stormwater and sanitary sewer projects. South Franklin Township's manager, Tyler Linck, expects officials will set aside some money for their Act 537 sewerage plan.

"We haven't sat down and hashed out how we're going to use the money yet. We're still trying to decide what we can and can't use the money for," said Linck.

In addition to drilling by Range Resources, CNX now has five drill sites in South Franklin.

Matt Pitzarella, a Range spokesman, said his company will continue to repair roads it has impacted.

"Everyone was adamant about that because the townships were very pleased with how we were repairing roads," he said.

He also pointed out that municipalities where drilling is not taking place will still receive impact fees, such as the $93,132 fee for Canonsburg Borough.

"We think this is a good system that makes sense, and I think a lot of communities are going to benefit," Pitzarella said. "Even for the county, as you head into property tax reassessment, this should give people reason to remain hopeful that taxes can remain low. That's a significant amount going back into county coffers."

Ask each Washington County commissioner individually what they'd like to see the impact fee used for, and the term "infrastructure" tends to come to the fore.

When learning within the last six months how much money could be coming the county's way, Irey Vaughan recalled her reaction as, "I thought this could be a great opportunity for Washington County to continue to improve our infrastructure and put more into economic development."

Infrastructure can mean many things. Irey Vaughan noted it can encompass enhancement of emergency communications, repair of the county's bridges, roads, water lines and sewer lines and ready development of the county's industrial parks.

Commissioner Harlan Shober said the gas industry impacts county government in ways that people may not have realized: the courts, because of litigation, the recorder of deeds, because of title searches, and related information technology needs.

While adding some of the windfall to the general fund budget for gas-related expenditures, Shober said he wants to focus on both extending water and sewer lines and human services.

"lf you have your infrastructure in place, you can develop industrial sites, commercial sites and housing," he said. "Without that, you do not create growth within the county. Growth only comes when you take one step at a time to develop and, at the same time, protect our agriculture areas."

Bridge replacement, runway and safety-related work at the Washington County Airport, water and sewer lines and what he called a "legacy fund for the environment," as proposed late last year by Commissioner Bracken Burns before he left office, were all possibilities that commission Chairman Larry Maggi raised.

"We have no shortage of projects to use that money for, but we need to prioritize them now," he said.

Some have suggested that the county should use the windfall to pay for a property reassessment, the cost of which has been pegged at about $8 million.

"As you know, we are fighting the reassessment," Irey Vaughan said. "At this point, we have no intention of moving forward with the reassessment."

Maggi's comment on financing a reassessment with the impact fee? " I'm not sure we'd be allowed," he said.

In Greene County, Commissioner Pam Snyder said officials were projecting the county's share would be about $2 million, so she was pleasantly surprised to see estimates that the impact fee would top $3 million, the sixth-largest total statewide.

However, she noted that $3 million does not go very far when projects such as bridge replacement can run well above the million-dollar mark.

"We will be holding a workshop next week with the townships to kick around ideas," Snyder said.

Click here to see Greene County impact fees.

Click here to see Washington County impact fees.

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