Garfield County commissioner hopefuls have differing views on impact fees
GLENWOOD SPRINGS, Colorado – Two Garfield County commissioner candidates have come out in support of implementing impact fees for each new drilled well in Garfield County. Their support comes about two months after Rio Blanco County began charging natural gas companies between $10,000 to $18,000 for every new well they punch in the ground.Stephen Bershenyi and Steve Carter, Democratic candidates in this year’s two county commissioner races, say those fees could help to pay for infrastructure costs associated with the continuing surge of drilling activity in the county.But their Republican opponents, incumbent John Martin and Mike Samson, say implementing those impact fees may lead to less cooperation from natural gas companies that already contribute significant sums of money to improve area roads battered by energy development.If just one of those Democratic commissioner candidates wins, he would join a commission where Commissioner Trési Houpt, a Democrat who is not up for re-election, supports the concept of per-well impact fees.”I do think it is important that any industry pays its way,” Houpt said. “In Garfield County, we have had some success in working with companies by having them pay for their impacts. But it is not all of the companies. “Even those companies who have stepped forward and put millions of dollars into paying for impacts are saying, ‘An impact fee might be a good thing because then we can get these other guys to pay, too.'”The debate over per-well impact fees comes at a time when Garfield County and other local governments of northwest Colorado struggle to find ways to pay for improvements to local infrastructure, which can face significant stress because of large-scale natural gas drilling development in the area.
Bershenyi, a Democrat who is running against Martin in the District 2 commissioner race, said if he were elected he would work hard to institute a $15,000 impact fee for each well. He said such a fee would level the playing field because companies like Williams Production RMT and EnCana Oil and Gas (USA) are putting up most of the money to complete road improvement projects in the west end of the county.”Those funds will be dedicated strictly to address the impacts that are being created by industry in the west end of the county,” said Bershenyi. He added such a fee could allow the county to use any funds it might receive in severance taxes on other projects. The state recently cut the county a $2.13 million check in severance tax money after natural gas companies produced about 438.7 billion cubic feet of natural gas from 5,012 wells in the county last year. Carter, who is running in the District 3 commissioner race against Samson, said most communities in Colorado charge impact fees for development, but that the county has chosen not to go down that road. That’s because of a philosophical decision by Martin, who is running for re-election, and Commissioner Larry McCown, a Republican who decided not to run for re-election this year, he said.”That, in my mind, does not make sense,” Carter said. “How else are you going to pay for the impacts that will happen?”However, he said the county can’t just pick an impact fee “out of the air.””There has to be a logical relationship to the damage done,” Carter said.A Garfield County Master Transportation Plan from about three years ago recommended a per-well impact fee of about $1,577 – which was based on “the proportion of pavement life used by heavy vehicle activity associated with each well.” Carter said since that report was drafted there have been thousands of wells drilled and more roads damaged. He called for an updated review of how much the county could receive in impact fees for each new well.
Carter and Bershenyi’s Republican opponents said imposing such an impact fee on each new well could pose problems. Martin said he is opposed to the idea because the amount the county could receive in impact fees would be less than the $3 million to $5 million companies already give to the county to improve area roads each year. By imposing an impact fee, those company contributions could end, he said.Martin buttressed his argument against impact fees by pointing to the county Master Transportation Plan. Barroom math shows that the county would receive about $1.578 million if the county charged what the Master Transportation Plan recommended.The calculation of how much the county might receive in per-well fees is based on an Associated Governments of Northwest Colorado report released in April. It showed there were about 1,000 wells drilled in the county last year.”All people hear is that (energy companies) need to pay their fair share and this is how much Rio Blanco does so we need to the same thing,” Martin said.He said it would be better to work with the companies rather than impose impact fees because it is more beneficial to the county.As an example, Martin pointed to an agreement the county reached with Chevron earlier this year in which the company will contribute $25 million to improve County Road 204 – a road that leads to the company’s operations in the area. That agreement centered on the county supporting Chevron’s request to apply for severance tax credits – which can significantly reduce a company’s severance tax bill – for that project. The company is going to complete that project even if it doesn’t receive severance tax credits, Martin said.Mike Samson, a Republican who is running against Carter, echoed Martin’s thoughts. He also said it was better to have a working relationship with energy gas companies in the area than it is to impose impact fees. He cited examples like Williams and EnCana, who both contributed millions of dollars to help build the Colorado Mountain College campus in Rifle.”I think that is a great example of private industry’s ability to get those things done,” Samson said.
Rio Blanco’s impact fee program, which affects all new development in the county, requires energy companies to pay a fee of $17,891 for each new well that goes deeper than 5,500 feet. Any new wells that are drilled less than that depth face a $10,581 fee, according to county documents. Those fees are the result of a resolution Rio Blanco county commissioners passed in June. The fees became effective July 14.The county recently completed budget projections for next year, which found those impact fees would bring in about $5 million, said Jeff Madison, natural resource specialist for Rio Blanco County. About 98 percent of the money collected from those well impact fees will be directed toward road and bridge upgrades, he said.The county has already begun spending some of the money collected from the county’s impact fees on environmental and engineering studies for improving County Road 5, which is the main road used by industry in the area. It is estimated that rebuilding the road will cost about $100 million, Madison said.A natural gas company must pay the impact fee before any new well is drilled in the unincorporated areas of the county. All fees collected are placed into a separate account and can be used on only new capital improvements that would be needed because of new development in the county.
Doug Hock, a spokesman for EnCana Oil and Gas (USA), said at a time when the energy industry is facing a complete rewrite of the state’s oil and gas rules and a possible severance tax increase, the imposition of a per-well impact fee in Garfield County would not be “appealing to us for obvious reasons.”He added that the company contributes about $200,000 per year for maintenance of Garfield County roads, and has given about $500,000 for Airport Road.”We’ve worked hard with stakeholders on impacts to roads, we have worked a lot with the county,” Hock said. “We have worked diligently with landowners on those issues. To slap an impact fee on top of it when we are already facing a (possible) tax increase and a rule rewrite just doesn’t seem advisable.”Ken Wonstolen, an attorney with Fulbright & Jaworski and legal counsel for the Colorado Oil and Gas Association, said the group would prefer local funding needs in the county be addressed through local taxes and severance taxes. He also said there are legal issues associated with any impact fee the county might implement.”Essentially, (industry) probably pays the biggest chunk of Garfield County’s property taxes and at some point you have to say how much is enough,” he said.
The question of how Garfield County and other regions of northwest Colorado will pay for infrastructure is not expected to go away anytime soon.The Associated Governments of Northwest Colorado report shows that there will be about 1,000 wells drilled a year in the county until about 2015 when drilling activity is expected to shift north to Rio Blanco County. Projections show that there will be about 100 wells drilled in Garfield County in 2025, while Rio Blanco will see about 1,300 new wells, according to the report.Contact Phillip Yates: email@example.com
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