Staff members of Ohio’s Muskingum Watershed Conservancy District (MWCD) plan to recommend on Friday that the board of directors reduce annual property tax assessments beginning in 2015, on the grounds that the district is bringing in more revenue from oil and gas leases in the Utica Shale.
MWCD officials said Wednesday that regardless of any action taken by the board on Friday, projects funded with assessment revenue that are either currently underway or are in the planning phase would not be eliminated, since the district would use any revenue from oil and gas leases to supplement the assessment fund at current levels.
"The MWCD board and staff have developed a very deliberate, pragmatic strategy for use of the funds from the oil and gas leases that allows the MWCD to invest in its public use facilities for long-needed upgrades and to consider a reduction in the annual assessment collection," said Executive Director John Hoopingarner. "It has been [our] goal from the onset of the Utica Shale development to use these dollars to maximize the benefits to the public we serve."
MWCD is a state government entity that controls an 8,000-square mile watershed, covering about one-fifth of Ohio.
According to the district, the board directed staff to review the annual assessments paid by property owners that collectively own nearly 500,000 parcels within the district's 18-county region of operations for any possible adjustments. Any changes must be approved by the board.
State officials commended MWCD on the proposed plan to lower assessments.
"Ohio's shale play and the growth of the oil and gas industry in the southeastern part of our state offer tremendous economic opportunity for the residents of that region, who now stand to benefit from increased revenue going to the Muskingum Watershed Conservancy District," said state Rep. David Hall (R-Millersburg). "I was pleased to learn that the increased revenue to the MWCD will translate to reduced property taxes for residents of that area... I commend its administrators' judicious use of oil and natural gas revenue to fund the district’s projects and priorities."
State Sen. Troy Balderson (R-Zanesville) added that oil and gas development has been a "strong source" of revenue for MWCD, allowing the district to move forward with plans to improve public recreational facilities.
"These are worthy projects, but it is time that the public that is served by the MWCD receive some of the benefits from the oil and gas dollars, too," Balderson said. "This is a wise step to show that there are public benefits available from this industry that extend beyond the properties where drilling activity is occurring."
To date, the district has signed three nondevelopmental leases with oil and gas companies.
In 2011, MWCD signed a nondevelopmental lease with Gulfport Energy Corp. and received a $15.6 million bonus plus royalties for 2,800 acres at Clendening Lake in Harrison County. The next year, the district received a $21.5 million bonus and royalties from Chesapeake Energy Corp. after signing a lease for 3,700 acres at Leesville Lake in Carroll County. MWCD signed a lease in February 2013 with Antero Resources for 6,553 acres under Seneca Lake in exchange for a bonus and royalties amounting to $40.6 million (see Shale Daily, Feb. 21, 2013).
MWCD has so far earned $77.8 million in signing bonuses and about $3 million in royalties from the three lease agreements. By comparison, it collects about $11 million annually in assessments from property owners in the watershed. Nearly 95% of all property owners subject to the assessment pay a minimum of $12.00 per year.
Antero is negotiating with MWCD for a fourth lease, this one for 6,700 acres at the Piedmont Reservoir in Belmont and Harrison counties (see Shale Daily,April 3). The board is expected to consider the lease at its meeting on Friday.
Hoopingarner said the district "finds itself in a different position today" than it did several years ago when it began property assessments. "We believe it is not only prudent, but a responsibility of the conservancy district to return some of the benefits the oil and gas leases have generated for the MWCD to the property owners in the form of a reduction in their annual assessments.”
A common pleas court judge in Ohio recently ruled that a couple who own property near Seneca Lake have legal standing in a lawsuit against Antero, the Ohio Department of Natural Resources and MWCD (see Shale Daily, April 14). The couple filed the lawsuit last October in an attempt to stop horizontal drilling under and around the lake.