Shale SUCCESS Stories

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1 Shale SUCCESS Stories Townships Rewrite Their Future with Impact Fee Funding BY JILL M. ERCOLINO / MANAGING EDITOR TO SAY THAT PENNSYLVANIA S NATURAL GAS IMPACT FEE is making a difference would be an understatement. Once cash-strapped townships some of which are receiving annual payments in excess of $900,000 are back on their feet after years of financial struggles and investing in projects that were unthinkable before Act 13 of 2012, the law that created the fee. As one township secretary puts it: Act 13 changed everything. 8 PA TownshipNews JANUARY 2016

2 NEW BRIDGE Cornplanter Township, Venango County NEW EXCAVATOR Jackson Township, Tioga County NEW DUMP TRUCK Morris Township, Greene County NEW FIRE TRUCK Athens Township, Bradford County PARK IMPROVEMENTS Summit Township, Crawford County JANUARY 2016 PA TownshipNews 9

3 ACT 13: HELP AND HOPE The mind-blowing natural gas deposits in the Marcellus Shale have transformed Pennsylvania into an energy powerhouse and turned it into one of the world s top 15 producers. But amid the hubbub about fracking, production totals, and major players arriving here to get their piece of the action, there s another story, one that s less frequently told. It s about the townships many of them small, rural, and unaccustomed to dramatic change or growth, for that matter that sit atop this renowned geologic wonder and are living with the side effects: bumper-to-bumper truck traffic, noise and lights, out-of-state workers jamming local hotels and bars, stressed police and fire services, housing shortages, skyrocketing rent, and an uptick in crime and traffic-related deaths. While township supervisors there curse the headaches, they re thankful, too. The Shale s development has given their regions an economic boost that has meant higher-paying jobs, along with business growth and development benefits that were unheard of before the industry s arrival. Still, local leaders worry that the one thing that has helped them survive the industry s onslaught, Pennsylvania s four-year-old natural gas impact fee, will be snatched away and replaced with something far less useful: a severance tax promised last year on the campaign trail to increase spending on education and replenish state coffers. Fran Vajda, secretary for Windham Township in Bradford County, one of those small, rural communities on the Shale s front lines, hopes never to see that day. We are a very small township of under 1,000 residents, and before Act 13, we were just making it, she says, recalling the arrival of drilling companies. In no time at all the roads were in horrible condition. Dust was something that couldn t be helped, and traffic to and from the well sites started before dawn and sometimes went on until two or three in the morning. That funding is there for the people like us who have been impacted, the secretary adds, and I pray with all my heart that it doesn t change. A godsend Created by Act 13 of 2012, the annual fee, as its names implies, helps counterbalance the industry s impacts. To date, the fee has generated an estimated $855 million in new revenues that benefit people and projects statewide. Each year, for instance, a portion Act 13 of 2012, which opened the door for a natural gas impact fee, has been called a godsend. Municipalities throughout Pennsylvania have used the funding for a number of community improvements. They include (this page, clockwise from top): Summit Township in Crawford County, which developed a master site plan for a popular park; Cornplanter Township in Venango County, which replaced a deteriorating bridge; and Morris Township in Greene County, which upgraded its community center to serve as a Red Cross shelter. of the funding is distributed to county conservation districts and several state agencies. Act 13 also established the Marcellus Shale Legacy Fund, which provides revenues to Pennsylvania s 67 counties and supports grants for local infrastructure and environmental initiatives. More than half of the funding, though, goes directly to municipalities and counties in the Shale region, which blazes an L-shaped trail from Greene County in the southwest to Wayne County in the northeast. In 2014 alone, these local governments shared more than $123 million. To say the impact fee is making a difference in these places would be an understatement. Once cash-strapped townships some of which are receiving annual payments in excess of $900,000 are back on their feet after years of financial struggles and investing in projects that were unthinkable before the law s passage. Many are rebuilding crumbling roads and bridges. Others are hiring police, helping local fire companies pay off equipment, and replacing antiquated, budget-draining equipment. 10 PA TownshipNews JANUARY 2016

4 That funding is there for the people like us who have been impacted, and I pray with all my heart that it doesn t change. Act 13 has been a godsend, says Priscilla Keeney, secretary for Rome Township in Bradford County, one of the epicenters of Pennsylvania s natural gas boom. For years, small, rural townships like ours have been struggling. Now, we have some relief. If enacted, however, the severance tax would abolish the impact fee. While Gov. Tom Wolf has promised that municipalities in the Shale would receive funding under the proposed levy, he hasn t been specific about numbers and percentages. As a result, townships are skeptical and anxious. Lisa Everett, secretary of Covington Township in Tioga County, shakes her head at the thought of losing the impact fee. When she talks about the possibility, her voice softens and trembles. The impact fee funding has done so much good, she says. I wish I could take the governor back and show him what it was like in our county before Act 13. Then he could see how much better our municipalities are because of it. The same can be said for many other townships in Pennsylvania, where the natural gas impact fee has replaced financial despair with hope and led to all sorts of positive things. The proof is in their stories. Here they are: From Greene County: Gray and Morris Townships Over the past four years, Gray Township has received a little more than $130,000 in Act 13 funding, and secretary Janice Koss is thankful for every bit of it. It doesn t sound like a lot, she says, but to us, it is. With just 215 residents, the township has operated just barely on a $40,000 annual budget, but Koss says the impact fee revenues have given the community some financial freedom. Instead of worrying about the bills and stressing about possible tax increases, the township supervisors are focused instead on investing in the community. They ve donated to the local fire company and purchased some small pieces of equipment. Most of the funding, however, has gone back into their road improvements. When you have hundreds of tanker trucks going up and down your roads at all hours, you re going to see the impact and we have, Koss says. That money has really been a blessing. The impact fee revenues have been put to good use in neighboring Morris Township, too, which has 154 active wells and is one of the busiest hubs for natural gas production in the state. All Other townships that have benefited from the natural gas impact fee are (this page, clockwise from bottom right): Athens Township in Bradford County, which donated funding to the local fire department to purchase a ladder truck; Jackson Township in Tioga County, which purchased an excavator that was used recently to repair a flood-damaged road; and Covington Township, also in Tioga County, which replaced its former office, a dilapidated trailer, with a new municipal building. (Photos on both pages courtesy of the townships.) JANUARY 2016 PA TownshipNews 11

5 ACT 13: HELP AND HOPE Township officials serve on state s Pipeline Infrastructure Task Force PSATS Executive Board member Marvin Meteer, a supervisor for Wyalusing Township in Bradford County, is among the 48 members of the Pipeline Infrastructure Task Force, which is recommending policies and best practices to guide development. Recently, the task force released a draft of the report. It s currently reviewing the public comments received and will provide its final report to Gov. Tom Wolf in February. In addition to serving on the task force, Meteer chairs the Local Government Work Group, which has been developing recommendations regulating surface facilities, protecting local roads, and communicating with local government officials. The principal theme throughout all of our talks is that local officials need to be involved early and often in the pipeline development process, Meteer says. As the voice closest to the people, local officials will be able to provide the greatest insight on siting, safety, and community impacts. Township supervisors on the Local Government Work Group are: Pasquale Avolio, Pine Township, Allegheny County; Joseph Ferguson, Allegheny Township, Armstrong County; Mark Freed, Tredyffrin Township, Chester County; Laura Hough, West Pike Run Township, Cambria County; Bartley Millett, Durham Township, Bucks County; James Pennington, Lower Nazareth Township, Northampton County; Vincent Pompo, East Bradford Township, Chester County; and Keith Shaner, Penn Township, Lycoming County. Other supervisors are serving on the Emergency Preparedness Work Group and include: Paul Cook, Centre Township, Greene County; Lyle Hoovler, Sadsbury Township, Crawford County; immediate past PSATS President Les Houck, Salisbury Township, Lancaster County; Rebecca Miles, Conestoga Township, Lancaster County; and George Turner, West Whiteland Township, Chester County. of this activity has generated $2.4 million for the township and its 1,040 residents since Act 13 was enacted. I tell the guys all the time that the best thing is that I don t have to pick and choose what bills I have to pay anymore, secretary Judy Moninger says. Act 13 has allowed it to improve public safety and rebuild deteriorating roads. The township upgraded the community center to double as a Red Cross shelter during major disasters and hired a full-time police officer to provide 40 hours of coverage a week. The supervisors also helped the local fire company pay off a truck and improved the road department s equipment fleet. When I think about what it was like before Act 13 and the gas boom, it was hard for Morris Township, Moninger says. Overall, though, the county has done well. Our motels are full...our restaurants are full and I sure hope the impact fee continues. If it doesn t, we re all going to have to take a couple of steps back. From Crawford and Venango Counties: Summit and Cornplanter Townships Close enough but far enough away from the natural gas production occurring in the Marcellus Shale region, Crawford and Venango counties in the northwestern corner of Pennsylvania are nonetheless reaping the benefits. The state distributed nearly $84,000 to Crawford County and more than $52,000 to Venango County in 2013 through the Marcellus Shale Legacy Fund, which allocates a portion of the impact fee revenues to Pennsylvania s 67 counties. The funding, in turn, is often funneled to municipalities, like Summit Township in Crawford County and Cornplanter Township in Venango County. As a result, both were able to complete projects that have been on the back burner for years as the town- 12 PA TownshipNews JANUARY 2016

6 ship supervisors juggled priorities and limited funding. In Cornplanter Township, for instance, roadmaster Tim Staub says Act 13 enabled the township to replace an aging bridge. Built in the 1850s, the structure had a three-ton weight limit that created inconveniences and a potentially dangerous situation for the two families that relied on it. Nothing heavier than a pickup truck could go over the bridge, Staub says. That meant the structure was off limits to a range of heavy vehicles, including fire and delivery trucks. Still, building a new bridge costs were estimated at $250,000 was out of the question for the township that is, until Act 13 came along, he says. After receiving a $75,000 county grant, the roadmaster worked with a local contractor who had developed a temporary bridge for use during other replacement projects. Building on that concept, the pair came up with a more permanent, yet affordable, structure that could be used in Cornplanter Township. To save additional money, the contractor installed the new prefabricated steel bridge on the existing stone parapets. The bridge replacement was completed in five days and cost $76,800. Staub says the project not only eliminated a safety concern but also serves as a model for upcoming bridge replacements in the township. Without Act 13, he says, I can t even guess how long it would have been until that bridge was replaced, and now we re looking at others. Over in Crawford County, Summit Township faced a similar dilemma at its local park. Built in the 1970s, the spot is a popular gathering place for families Like many other communities, Lawrence Township in Clearfield County has used a portion of its impact fee funding to support the local volunteer fire department, which recently purchased a new truck. Shown here, from left, are: township supervisor Dan Mitchell, firefighters Jeremy Ruffner and Barry Dimmick, fire chief Elliott Neeper, firefighter Kevin Graham, state Reps. Matt Gabler and Tommy Sankey, and supervisor Bill Lawhead. (Photo courtesy of Lawrence Township.) on picnics and school kids doing environmental projects at the pond, but its facilities have seen better days, secretary Cindy McCoy says. It really needs to be brought up to date, she says, but it s going to cost $40,000 to replace just one restroom. Lacking money in the general fund for the upgrades, the township turned to the county, which recently awarded it a $12,500 grant, made possible through Act 13. The funding helped the municipality develop a master site plan for the space that includes handicapped-accessible facilities, new playground equipment, and a larger pavilion. McCoy says the seed money from Act 13 is the lift the township needed. It allowed us to come up with a vision for our park. From Clearfield County: Goshen and Lawrence Townships It always seemed that the Lawrence Township supervisors had a to-do list they could never quite accomplish. Money was tight, and like a dump truck stuck in the mud, they kept spinning their wheels as they tried to get out of that financial hole. Then along came Act 13 and the natural gas impact fee, and things started to change for the better, supervisor and chairman Bill Lawhead says. A huge burden was taken off our shoulders, he says So far, the township has received in excess of $3 million through the fee, the highest municipal allocation in Clearfield County. This is due to the large number of wells on state game When you have hundreds of tanker trucks going up and down your roads at all hours, you re going to see the impact and we have. That money has really been a blessing. JANUARY 2016 PA TownshipNews 13

7 ACT 13: HELP AND HOPE lands that cover nearly half the township. Appreciative of the new revenues, the supervisors are using the funding to build a strong foundation for the future. The township has invested more than $1 million in road paving, hired parttime police to provide round-the-clock coverage for residents, and donated funds to the fire company, which paid off three trucks. Finally, he says with a sigh, we re not so cash-strapped. To get to Lawrence Township, natural gas producers need to wind their way through neighboring Goshen Township, population 435, which has received nearly $160,000 from the impact fee. Secretary Terri Cunkle says the township has updated its equipment, which included a 30-year-old, budgetdraining tractor, improved roads, and paid off all of its loans. The supervisors, looking toward the future, have even put some of the funding into a reserve account. We were struggling before, Cunkle says, but now we have better roads, equipment, and a small nest egg. The impact fee has been a great thing for our township, but we also realize it could be here today and gone tomorrow. Still, she doesn t understand why a severance tax is even being considered. It s called an impact fee for a reason, Cunkle says. Our residents are the ones being impacted. They ve had to put up with the garbage, the speeding, and the nonstop traffic. Why shouldn t they reap some benefits? With all the unfunded mandates that are passed down to the little guy, she adds, we d still be struggling financially without it, and like everyone else, we d have old equipment or a ton of debt. Lawhead agrees, saying the fee is fair because natural gas producers, not Pennsylvania s taxpayers, are paying for the industry s impacts. Everyone has gotten a little something from the impact fee, even Clearfield, which doesn t have any wells, he says. It s working. It s helping. Harrisburg should just leave it alone. From Tioga County: Covington and Jackson Townships Between them, Covington and Jackson townships have received more than $3 million in natural gas impact fees since It s a staggering amount for two small, rural townships that had spent years scrimping and scraping for money. Covington Township secretary Lisa Everett remembers not so fondly the municipality s former office, a dilapidated trailer that doubled as a meeting space for the supervisors. One day, I walked into the trailer, and my foot went through the floor, she says. It was falling apart, but we couldn t do anything about it. We needed to use the general fund for more 14 PA TownshipNews JANUARY 2016

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9 ACT 13: HELP AND HOPE important things like our roads. In the not too distant past, cutting corners, taking on debt, and even raising taxes to provide services were the norm in both townships. Back in 2007, we had a significant tax increase so we could pay our loans, Jackson Township secretary Mary Cogswell recalls. It was bad. As they say, though, that was then, and this is now. Impact fee funding is allowing the townships to move forward with projects that were unthinkable in the past. Covington Township is constructing a new municipal building with a meeting room, offices for the secretary, zoning officer, and roadmaster, and a locked file room. The supervisors have also bought two new dump trucks and are saving a portion of each year s allocation. Jackson Township has made similar strides by undertaking road improvements, upgrading its equipment fleet, renovating the garage, donating to the local volunteer fire departments, and subsidizing the costs of the annual spring cleanup. Now, Cogswell says, residents can discard bulky items like old refrigerators and stoves at the local dump for free. Our roads are in great shape, and we re improving services for residents, she says. The money is being used for a good cause. I wish Harrisburg could see that. From Bradford County: Athens, Rome, and Stevens Townships No municipality wants to do it, but Athens Township was running out of options. We were on the verge of a major tax increase, secretary Robin Smith says. Our roads were falling apart, we had stretched the budget as far as we could, and then voila! Act 13 came along. Clearly, the legislation couldn t have come at a better time for Athens Township and other Bradford County municipalities, many of which have received more than $1 million since the law was enacted. With our small population of only 437, our tax base is small and thus our revenue base is small, says Brenda Ferguson, secretary-treasurer for Stevens Township. For years, we simply had to take the Band-Aid approach to fixing our roads, especially if we had a hard winter. On top of that, our equipment was outdated, and repairs were nickel and diming us to death. Ancient equipment was a problem for Rome Township, too, secretary Priscilla Keeney says. What little money we had was going into our equipment so that meant there wasn t much left for the roads, she says. Act 13 changed everything. We know we re never going to have enough money to do all we want, but the impact fee funding sure has taken the pressure off and given us the freedom to plan ahead. In addition to investing in new equipment and infrastructure, the trio has helped out their local volunteer fire companies, and in the case of Athens Township, put more police on the streets. Our township benefited and so has our local economy since we re using impact fee money to purchase road materials, equipment, etc., from local businesses, Ferguson says. It s really a win-win situation. The impact fee is a fair tax, which is rare, and it s an economic stimulus, which is also rare for a tax, she says. I can only hope that common sense prevails, and they don t take it away. 16 PA TownshipNews JANUARY 2016 Annual Act 13 reports due to the PUC in March and April Municipalities and counties that receive money from Act 13 s Unconventional Gas Well Fund, which distributes revenues to local governments directly impacted by Marcellus Shale production, must submit the following reports: The Municipality Approved Budget Report, due March 1; and The Unconventional Gas Well Fund Usage Report, due April 15. Townships can download the forms by going to scrolling down to the Natural Gas section, clicking on Act 13 (Impact Fee), and going to the Important Deadlines section. For more information, contact the PUC at ra-act13@pa.gov or (717)

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