Belmont County commissioners Wednesday received a check for more than $3 million for leasing oil and natural gas rights on county-owned property and directed $2 million of the money to refinance past debt and borrow an additional $3 million for immediate infrastructure needs.
The check presented to commissioners by Rice Energy President Toby Rice was for just over $3,040,820. The funds represent Belmont County's signing bonus with the company, which is paying the county $7,500 an acre for rights to drill on just over 405 acres of county land.
Rice said his company is making a total investment of about $300 million in the county, where Rice Energy anticipates drilling 700 gas wells. He commended Belmont County leaders for creating an environment in the county that makes its suitable for investment, while others areas haven't been so accommodating to the natural gas industry.
Photo by Joselyn King
Belmont County Commission President Matt Coffland, left, listens as County Auditor Andy Sutak discusses the refinancing of the county’s high-interest debt.
"I feel comfortable operating here," Rice told commissioners. "Belmont (County) is a great place to drill in, and that's why Belmont is one of the most active counties right now. That says a lot. We're excited to be a part of it."
Commissioner Ginny Favede said commissioners had feared as recently as two years ago Belmont County may have missed its opportunity to attract oil and gas drilling.
But last year, initial negotiations with gas companies started at $100 an acre, Commission President Matt Coffland said. After a number of months, Rice Energy's offer of $7,500 proved to be the best.
Rice told commissioners he hoped the check presented Wednesday was "the smallest check I will be presenting to the county." In addition to the signing bonus, Belmont County also will receive a 20-percent royalty from gas production on county-owned property.
Also during Wednesday's meeting, commissioners addressed how best to deal with their new funds.
Coffland said Belmont County - which has an annual budget of about $17 million - carries about $30 million in debt.
"In order to move the county forward, we have to take care of the old debt," he said.
Commissioners unanimously voted to authorize the refinancing of bonds issued in 1992 and 1997 for waterline expansions and shorten the time of their duration.
The 1992 issue carried a 6.25-percent interest rate, and was slated to mature in 2032, according to County Auditor Andy Sutak. The 1997 issue, meanwhile, was set at 4.87 percent and was to be final in 2037.
Sutak said commissioners would use $2 million of the $3 million windfall to pay down and refinance the debt at a cost savings to taxpayers of $56,000 for 2014 and $55,000 for 2015. Such savings would continue for the next decade until the 1992 bond is paid off in 2022 and the 1997 bond in 2026.
The commissioners voted 2-1 to issue $3 million in one-year notes at 1.25 percent to pay for water well upgrades and waterline extensions in the county necessary for expected development. The savings from the refinanced loans could be used to pay off the notes, Sutak said, and the county has the option of paying it off in one year or extending the note.
Favede disagreed with the county borrowing more money
"We have another offer on land that could bring in another $3.2 million in the next couple of months," she said. "I'm not sure why we would borrow money, and not patiently wait on that money. I like to deal in cash ... I don't want to drive up the debt for the county. I love the idea that we were refinancing ... but going forward, there's no guarantee we're going to get that money."
The commissioners also plan to direct the remaining $1 million of the gas drilling lease money to the $1.9 million Interstate 70 connector road project in the Ohio Valley Plaza area. Commissioners already budgeted $900,000 for the project in 2014.
Now that the money for the construction is in place, Commissioner Mark Thomas called for commissioners to approve an inter-governmental agreement to extend its relationship with the Belmont County Transportation Improvement District that is working toward construction of the connector road.