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NatGas Impact Fee-Funded Pennsylvania Housing Program Could Be Expanded

A Pennsylvania program aimed at promoting housing affordability and rehabilitation that has relied for four years on state impact fees paid by unconventional natural gas producers is likely to be expanded with additional funding from the state's realty transfer tax.

Last week, the Pennsylvania Senate voted to send HB 792 to Gov. Tom Wolf for his signature. It would provide more funding for the Pennsylvania Housing Affordability and Rehabilitation Enhancement Fund (PHARE). Since 2012, PHARE has only received allocations from the impact fee, or about $34 million. As a result, only communities where shale drilling has taken place, or those in roughly seven counties, were eligible for the funds.

All of the state's 67 counties would be eligible to apply for PHARE funds if the governor signs the bill into law. Wolf’s administration has said he is reviewing the legislation. Passed in 2012, the impact fee is charged for all unconventional wells in the state during their first 15 years in operation, regardless of how much they produce (see Shale DailyFeb. 15, 2012). It is calculated with a multi-year schedule that is based on the average annual price of natural gas.

Since its inception, the state has collected nearly $856 million for distribution to communities impacted by drilling and state agencies (see Shale DailyJune 3). HB 792 would dedicate a portion of funds raised from the state's realty transfer tax to PHARE, expanding its financing and reach in the state.

In 2013, the latest year for which figures are available, shale drillers paid about $225.8 million in impact fees. But only about $200,000 of that went to housing at the county level and just $18,630 of it went to housing at the municipal level, according to the Pennsylvania Public Utility Commission. Most of the impact fee funds have historically been used for emergency preparedness and public infrastructure construction.

Allocations from the realty transfer tax would be capped at $25 million. Drilling impact fees would continue in their current state and provide additional money for PHARE.* PHARE and any new funds generated by HB 792 would continue to help cut into the state's estimated shortage of 266,000 rental homes for households earning $20,000 or less per year.

*Correction: In the original version of this story, NGI incorrectly stated that the combination of impact fees and revenue from the state's realty transfer tax would increase funding to $25 million annually for PHARE. Instead, allocations from the realty transfer tax would be capped at $25 million. NGI regrets the error.

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