Susquehanna County Blog

Just one this time, but it is big.   

 The gas leases which are being written on many parcels in Our Fair County.  A lot of questions and a few thoughts have been generated.  Here are a few.

 Are landowners considering what these leases will do to their property in terms of value and marketability? 

If a landowner agrees to lease his/her mineral rights to one of the companies running around the county presently, won’t that affect the value of the property?  That is to say that if a property is being sold - and the seller is retaining the lease, the remaining value of the real estate should be diminished.  Put another way, because a seller is selling less than the entire bundle of rights, which comprise ownership of real property, the value is reduced. 

In terms of marketability, is a buyer willing to purchase a larger parcel (say 50 acres), if there is even a possibility of drilling on the property, especially if the lease is NOT included in the sale?  At least at present, this is another uncertainty a typical buyer could be faced in these uncertain economic (read real estate).   

The possibility of building a (or even buying an existing) home where a gas well could be drilled and operate fairly near that home; thus creating a commercial operation, certainly looms large these days.  To make matters more interesting, if the lease were NOT included with the sale, the buyer would have this encumbrance on his property with  NO benefit to him.

A significant number of these properties (over 10 acres) are enrolled in the Clean and Green program.  Currently, research is being done to determine if a gas well on the property would be a violation of the program, thus triggering a rollback.  What is Clean and Green?  What is a rollback?  Read on. 

For those who don’t know, the Clean and Green program was set up almost 20 years ago to encourage larger (generally 10 acres and above) parcels in some form of agricultural use.  The benefit to the landowner was a lowered assessment based on the soils type, slope and several other factors.  The reduction in assessment is on the land portion of the assessment only.  

To accommodate the Bluestone industry, permitted quarry areas could be excepted from the larger parcel and taxed at a higher rate without disturbing the remaining acreage.  So, if a landowner has a 100 acre parcel for example, of which has a permitted quarry on 5 acres; 95 acres is under Clean and Green assessment, while the remaining acreage is under a mineral assessment (higher than Clean and Green assessment).

When a violation of the C&G program occurs, things get interesting.  A violation, for example, could be taking the 95 acres in the example above and changing the use to commercial from agriculture.  There are many other ways to violate the program, but let’s stay with this example.  The landowner decides that he wants to put up a fast food restaurant on the property, without subdividing off a 2 or less or 10 or more acre parcel (a whole separate discussion).  Thus, a violation has occurred. 

Now it’s time to pay.  It is this writer’s understanding that what is owed a rollback tax.  This is the difference between the C&G assessment and the Fair Market assessment for as long as the property has been enrolled in the program (up to 7 years), plus 6% simple interest per year.  

 So the big question here is this: Is signing a gas lease on the entire parcel creating a commercial use of the property, thus creating a violation of C&G and triggering a rollback?  This is still being researched in other county assessment offices throughout the Commonwealth.

A number of owners of non-commercial parcels not eligible for C&G are unhappy that owners of C&G approved parcels can have a commercial use to their property, in effect double dipping.  First by getting the tax benefits of C&G and secondly by having a commercial use on that parcel.  This is the kind of stuff that could lead to a class action lawsuit due to inequitable assessing. 

Another question.  If a parcel is mortgaged and a lease is signed, COULD that trigger the “Due on Sale” clause written into all mortgages?  Or, could/should the bank ask for a significant portion of the Lease payment to be applied to the mortgage?  As we think a little deeper, maybe a lease could  actually hinder the mortgage process.

There are many other issues regarding gas leases which need to be discussed.

If a well is drilled on a leased property, should that property and all surrounding properties who benefit be subject to a “depletion tax”?  Does one even exist?  If so, this could trigger a significant amount of revenue to the County.  Also, do the school districts get in on the action?

A landowner signs up with Company A.  Company B actually does the drilling on an adjacent parcel, where does that leave the landowner?  Out in the cold I suspect, unless Company A SELLS the lease to Company B.  if that happens, you can be sure A will make a profit on the transaction, but will the landowner??

Once a well is drilled and capable of production, how do they get the gas to a transmission line.  Of course, by pipeline.  The potential problem here is that if other landowners don’t want a pipeline across their property how will this be resolved? 

Just some thoughts and questions that anyone who signs up their property should be considering.  A lot of material here for sure, but I believe valid questions. 

Please note here that this writer is absolutely NOT opposed to an individual leasing a portion or all of their land. Absolutely NOT.  This is a relatively poor county, and this may be a resident to make a few bucks from a hole in the ground.  The real concern here is that a landowner could subject himself to a lease which could possibly make a lot of money for the gas company, which could cause him to lose significant monetary value of the land.

Oh yes, as a matter of negotiation, are the royalties based on net or gross profits of the company?  I suspect the net, but someone will let us all know I am sure. 

By the way, the Choconut Township website  http://www.stny.rr.com/choconut/  has some interesting information on the subject if you go to the “links” at the bottom of the page.

Your thoughts?

According to published reports in the Scranton Times (2-22-2008) and other sources, Corey Gesford, an English teacher in Mt. View School District, was arrested yesterday, charged with forgery, making unsworn falsifications to authorities and illegal use of a professional title.  These sources stated the criminal complaint indicated among other things that he copied a legitimate teaching certificate and changed it to include his personal information, falsely claimed to be certified to teach high school English and Social Studies.  Additionally, the sources said that on applications to the school district in 2004 and 2006, he falsely claimed to have earned a bachelor’s degree from Penn State. 

Of course, if found guilty, one could and should be very unhappy with Mr. Gesford’s actions.  According to the report he could face years in prison and a hefty fine. 

Presuming Mr. Gesford is innocent until proven otherwise is a critically important matter for everyone to remember, as this is what our country is built on.  One would hope that this is all just a very bad mistake or mixup of paperwork and that things would get straightened out in due course.

However, either way, there are several questions the community should rightfully ask the Mountain View School Board - Why did it take so long to find this out?  If an application was made to the School District in 2004, why wasn’t this checked out then?  Certainly, if it was missed then, shouldn’t the 2006 application been checked out?    Wasn’t the name at least checked against a state registry by school officials?  What about the references and background check?  What plan of correction is being put in place to assure this will not happen again? 

That this could possibly occur here in our little corner of the world is very disturbing at best, to realize that it could be happening right now anywhere else and many times over is absolutely chilling.  For how do we know that someone else, somewhere else hasn’t faked credentials to have improper access to our children? 

This matter is an outrage.  If it did occur, it never should have.  Basic checks and balances MUST be in place to protect our children.

In this week’s  (2-20-2008) Susquehanna County Transcript, there was an interesting Letter to the Editor from a resident of Our Fair County.  The Letter primarily deals with economic development, notes some lost opportunities, several concerns, a few questions and more, all couched in some pretty dry humor. 

Although SusqcoBlog.com is not in the business of selling newspapers, this writer believes it would be worth your while to read this Letter to the Editor.  The letter writer “gets it” as I suspect a large percentage of the readers of this Blog and others do as well. 

 Your thoughts?

Some of the basic highlights of the February 13, 2008 commissioners’ meeting. 

Rick Kamansky was made the Chief Assessor (again).  Laura Watts is now the Voter Registrar.  Kathy Aldrich is the Deputy Chief Clerk.

 By a vote of 2-1 with Commissioners Warren and Allen voting for and Commissioner Giangrieco voting against - Central Bradford Progress Authority’s contract was approved retroactively to January 1, 2008.  It is the understanding of this writer that Our Fair County will pay this agency roughly $43,335 of our local tax dollars.  Additionally, they will receive the proceeds of a $15,000 USDA Rural Development Grant and LEDA (Local Economic Development) funds of roughly another $15,000. 

This amounts to roughly $73,000 plus dollars and there isn’t even an economic development office located IN Susquehanna County.  Could the county hire an individual with benefits and a secretary for less than that?  You betcha. 

By a vote of 2 to 1 (Commissioner Giangrieco voting against) the revisited and revised budget for 2008 was passed.

 Finally, there was an allegation made about yet another potential violation of the Sunshine Act. 

Here we go again!  It appears as if the honeymoon is over - already. Oy Vey!

Your thoughts? 

The last time Susquehanna County was reassessed was 1993, which was 15 years ago.  Given the obvious changes in value of real estate and construction costs in general since then, the amount of new construction throughout the county, and questionable software currently used in determining assessed value of your property and mine, isn’t it time to begin the process once again?  Remember, when most people think of reassessment, they think of higher taxes.  This is not correct.  The purpose of a reassesment is to create a uniform situation, where all property owners are taxed using the same and correct criteria. 

Our neighbors to our South, Lackawanna and Luzerne counties are currently in the midst of reassessing.  The last time Lackawanna County was reassessed was in 1970.  Luzerne County was even longer ago than that. 

The last time Our Fair County was reassessed, it is this writer’s recollection that a class action suit had been filed.  The commissioners quickly decided it was time.  Similar, certainly not identical conditions exist today. 

The reassessment process takes at least a couple of years to complete, possibly longer depending on how long it would take to select a reassesment firm.

One last thought here.  This is NOT an attack on the personnel in the assessment office. 

Question: Is it time for the Commissioners to start the reassesment process again, after the office of Chief Assesor is settled?