If Washington County had a “shaleonaire” equivalent of the Forbes 500, Chartiers Township would be the Bill Gates of the list. With nearly $1.87 million collected over three years, Chartiers received the largest allocation in the county from Pennsylvania’s impact fee, which is paid annually by natural gas developers in lieu of a tax.
Chartiers officials plan to spend their money more hastily next year, while other municipalities hope to make it last. Gov. Tom Wolf is pushing forward with his plan to replace the impact fee with a 5 percent severance tax, prompting some township officials to reconsider their future spending plans.
The impact fee, which was established under Act 13 of 2012, has been a boon for struggling communities. Washington County and 66 municipalities within it raked in $40.5 million between 2011 and 2013, and Greene County and its 26 municipalities received $25.4 million during the same time period, according to an Observer-Reporter analysis based on information provided by the state Public Utility Commission.
Chartiers Township used 80 percent of its impact fee money to pay for road projects, including a costly investment in Allison Hollow Road repairs. Township Manager Jodi Noble said the township took out a loan to gradually pay off the debt, but plans to increase payments to $500,000 next year.
“We made a long-term borrowing (plan) based on using (impact fee) money to pay it back, so now we’ve upped our debt principal payment for the next year to start to pay that debt down in fear of the Act 13 money going away,” Noble said. “Here we thought we were being responsible and thinking long-term.”
With 63 wells, a cryogenic plant and gas meter station within its borders, Chartiers isn’t exactly turning a profit from the impact fee. The township decided to ramp up its emergency response measures after residents were evacuated twice in a seven-month span in 2014 due to a gas leak and fire at two natural gas facilities on Western Avenue.
Noble said those accidents prompted officials to use impact fee funds to purchase three emergency generators to place inside the fire department, police department and emergency evacuation center, which will soon be located in the community center.
“A lot of what we’ve used our money for is really mitigating the impacts of the industry that we felt,” Noble said.
Impact fee’s future uncertain
Mt. Pleasant Township’s municipal authority is moving forward with plans to use impact fee money to construct a sewage plant that would service about 650 homes. Township supervisors pledged to give the authority at least 50 percent of the Act 13 funds each year, unless they receive less than $50,000 in any given year.
The township, which received the third-largest slice of the impact fee pie in Washington County, contributed $1.1 million to the project so far. Assuming that the impact fee is eliminated, allocations over the next year or two could be just enough to cover the cost of project designs, authority Chairman Paul Batista said.
“If there’s one portion out of the Act 13 legislation that was correct, it was the impact fees that go to the impacted communities,” Batista said. “… Everyone across the state gets a portion of it, but the people who were impacted the most get the bigger portion. It couldn’t be any fairer.”
Wolf estimated a severance tax would generate up to $1 billion a year, and while most of the funds would go toward public education, he said some of the money would be used to maintain payments to municipalities affected by drilling.
The impact fee is distributed by the PUC, which uses a formula based on the number of wells, population and highway mileage in a county or municipality. Robin Tilley, spokeswoman for the PUC, said Wolf could theoretically create a bifurcated system in which the Department of Revenue would impose a severance tax while the PUC would continue to handle impact fees.
“The tax would be based on actual production, while the impact fees are based on the number of wells (determined by a number of factors like average natural gas price, vertical versus horizontal wells).” Tilley said in an email. “Again, we’re not sure what his plans are, and it could go either way.”
Making the difficult decisions
Many communities use impact fee money to fix run-down roads, but it’s far from the only option. West Finley Township took a unique approach, and some of its impact fee money is going back into residents’ pockets this year. Officials voted to use the funds to lower taxes by one mill for 2015, which cuts taxes by about $7,500 across the township.
David Martin, chairman of the board of supervisors, said residents might not notice the tax reduction. Nonetheless, Martin said supervisors felt it was important to keep taxes among the lowest in Washington County, and he said they plan to continue lowering taxes as long as the impact fee keeps flowing.
Supervisors also were able to upgrade several pieces of township equipment – “projects that we probably would have had to do over five, six, seven years, as opposed to being able to do them over a two-year period,” Martin said.
Townships that receive larger impact fee payments often face even tougher decisions. Members of the Slovan Volunteer Fire Department attended a recent Smith Township board meeting and took officials to task for giving them less money than the police department. More than $55,000 of the impact fee has been used for public safety and police department purchases in recent years, but the fire department has not received any money.
“In three years, Smith Township got almost $700,000 (from the impact fee). The fire department saw zero,” said fire Capt. A.J. Mondin.
“I don’t want you to think we’re being greedy here,” said fire Chief Brandon Kriznik, “but all these wells went in, and we take the brunt of it. We get called out with the wires down, the wrecks with these guys … those three years, we got nothing.”
After a lengthy and heated discussion, the township passed a motion to give the fire department $60,000 this year instead of the $25,000 that was originally pledged. Going forward, the board may implement a percentage-based allocation for the fire and police departments to make the distributions more equitable.
Drill-free, but feeling the impacts
Green Hills Borough doesn’t fit neatly into this discussion. In fact, Washington County’s least populous municipality is also dead last on the list of local impact fee recipients; the borough added just slightly more than $750 to its coffers between 2011 and 2013.
The borough sits on less than a square-mile of land, and it has only one road that stretches for about one-third of a mile. But it’s also surrounded by South Franklin and Buffalo townships, which have experienced a considerable amount of drilling.
“I think that the impact fee should be spread out a little more equally,” Mayor Terry George said. “We have no roads other than the one little road, but don’t our residents use Route 18? Don’t they use Mounts Road? And those roads are all impacted.”
George said there is no drilling in the borough, but he has a feeling that it may happen in the near future.
“I think there will be drilling soon under the golf course and the surrounding properties,” he said. “The wells are all around us now. I can look out my living room window, which overlooks the back nine of the (Lone Pine) Golf Club, and I can see two active wells from there.”
About 20 miles northeast of Green Hills, Peters Township is a different story. The township, which has a population of more than 20,000, is in the top 10 list of Washington County municipalities that received the largest share of the impact fee.
Like Green Hills, there are no wells within its borders, but officials say they are still feeling the impacts. Most of the impact fee money is being reinvested into damaged roads, which is the largest effect the industry has on Peters, township Manager Michael Silvestri said.
He said the township also underwent two “major rounds” of seismic testing studies, and there’s a facility in the township that stores trucks for the gas industry. Some horizontal drilling is conducted under Peters land, including the Trax Farms site in Union Township. Silvestri said Peters residents have complained about noise from that well site, which is a 24/7 operation.
In Greene County, Waynesburg Borough also has used most of its impact fee money – more than $140,000 a year – to repair damaged roads. The borough has not had any drilling activity.
“These trucks going through town are tearing up our streets,” borough manager Mike Simms said.
Though the trucks mainly drive on state roads, they also have used borough streets, such as East Street, to reach well sites outside of the borough, Simms said.
Heavy trucks also have damaged numerous curbs, which they regularly drive over attempting to make turns, Simms said. They have knocked down road signs and recently damaged a traffic light at the corner of Morgan and Greene streets.
The increased truck traffic has had an impact on the quality of life for some residents.
“We’ve had complaints about the noise,” Simms said, “the vibrations caused by trucks passing by, speeding and trucks running red lights.”
Staff writer Bob Niedbala contributed to this report.