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Has Your Community Been Impacted by Drilling?
Q1. How does my community get funding for affordable homes from the impact fees?
A1: There are two ways you can access funding to increase the availability of affordable homes under the Impact Fee Law (Act 13): the local share and the state Housing Trust Fund.
First, if your county enacts the fee, some of the money will come back to the county and the municipalities. This is known as the “local share”. The law provides that the local share may be used for “projects to increase the availability of safe and affordable housing to residents,” along with 12 other uses.
The local share is calculated after certain statewide initiatives are funded. 60% of the remaining funds (minus the amount going to the Housing Trust Fund) is then sent back to the counties and municipalities.
Second, before the local share is distributed to the counties and municipalities, $2.5 million in 2012 and $5 million thereafter is sent to the state Housing Trust Fund at the PA Housing Finance Agency (PHFA).
Q2. What is the Housing Trust Fund?
A2: The Housing Trust Fund was enacted in late 2010 to provide resources to bring more homes within reach of Pennsylvanians who cannot afford market rate homes. Unfortunately, no funding was provided at that time.
Q3. What can Housing Trust Fund money be used for?
A3: The Act 13 fees will be the first money in the Housing Trust Fund, and PHFA is in the process of getting the Fund up and running. The Agency has posted a draft plan implementing the Housing Trust Fund on its website.
Act 13 specifies that the money is to be used in counties with “producing unconventional [i.e., Shale] gas wells”, and that at least half of the funds go to 5th through 8th class counties. It may be used for:
(1) projects … that increase availability of quality, safe, affordable housing for low-income and moderate-income individuals or families, persons with disabilities or elderly persons; and
(2) rental assistance … to persons or families whose household income does not exceed the area median income.
In addition, the requirements of the Housing Trust Fund law will apply. That law has broad parameters for how the funds may be used, but it does specify that 30% of the money will benefit households below 50% of area median income.
Q4. How do my county and my town get some of the money?
A4: Act 13 is county-optional. Counties must impose a fee in order to get anything. Counties have until April 14, 2012, to adopt a fee for this year. Later action will delay receipt of funds until the following calendar year.
If the county fails to adopt a fee by April 14, 50% of the municipalities, or municipalities with 50% of the population, may enact the fee on all wells drilled in the county. They must act by June 13, 2012. Under this scenario, the municipalities that enact the fee will receive their share of the fees, but the county and other municipalities will not.
Q5. How much will my county get in its local share?
A5: The amount your county and your municipality could receive depends on a number of things and may change from year to year. The fees imposed vary according to the price of natural gas and the number of years since the well was drilled. Depending on the price of natural gas, the fee for the first year the well is drilled ranges from $40,000 - $60,000. The fees decline over time, and in years four through ten they would range from $10,000 - $20,000. For years eleven through fifteen the fees would be $5,000 - $10,000, again, depending on the price of gas.
Once the fees are collected, they are sent to the state which distributes the money. First funded are the state initiatives, then the Housing Trust Fund and local share are distributed. Of the local share, 36% goes to the counties, 37% to municipalities with wells, and 27% to municipalities without wells.
Attached is a chart prepared by the House Appropriations Committee (Democratic ) showing an estimate of what counties and municipalities (on average) could receive in the first year. The chart assumes that all counties opt in, and it is based on the number of wells drilled by the end of 2011 (from data provided by the Department of Environmental Protection website) and a fee of $50,000 per well. (For existing wells, 2012 is Year 1 for the fee, regardless of when the well was drilled.)
The county with the most wells and, therefore, the largest potential revenue is Bradford County. It could receive $9.5 million this year. The county with fewest wells is Wayne where revenue could be $7,535. These figures will change as more wells are drilled.
Q6. So my town will also receive some of the Impact Fee money?
A6: Yes. Assuming the county or the town has opted in, the town will receive a portion according to the formula above. But there is a limit. No municipality may receive more than the greater of $500,000 or ½ of its prior year’s budget. While that does mean that municipalities with a lot of wells will not be getting as much as they would have without the limit, the good news is that the excess goes into the state Housing Trust Fund.
Q7. Once my county or town starts receiving its local share, how does my organization receive funding?
A7: That’s up to you! No local government is required to support affordable homes; they are allowed to. Housing and service providers, and residents who have been pushed out of the local market, need to advocate with their county commissioners and town leaders to make sure some resources go toward addressing the shortage of affordable homes.
Q8. What does Local Impact Fee Distribution look like for Year 1?
A8: See CHART
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