Some say leasing deal at Warren's Avalon was rushed

By Ed Runyan


While community members in Youngstown have hotly debated the pros and cons recently of leasing public land to gas and oil drillers for horizontal fracturing, it’s been more than a year since Warren leased 150 acres at its Old Avalon Golf Course in Howland and Vienna townships to a well driller.

There were no public protests in city council chambers Sept. 7, 2011, on the day Warren City Council voted 9-0 to allow the city administration to enter into a contract with a gas and oil company, in part because the public didn’t know about it in advance.

Three council members did express reservations about moving forward without letting the public know in advance.

Councilman Eddie Colbert voted against suspending the rules requiring three readings for the ordinance, saying, “I just believe that more time could have been taken to hash out some of the details to council as well as the public.”

“I feel like Eddie Colbert, that we should have taken more time or we should have taken the time to have a meeting with the public present,” Councilwoman Helen Rucker said that night, according to meeting minutes.

“I too concur in that I wish the citizens of our community would have had more opportunity to voice their concerns or issues,” Councilwoman Cheryl Saffold added.

One week later, at the Sept. 14 council meeting, Dr. Larry Woods of Howland, a cardiologist and intensive-care physician, expressed his “grave concern about the environmental hazards that can occur” with what he called the “Marcellus drilling project.”

He called it that because, at the time, few people knew enough about the upcoming shale boom coming to Trumbull County to realize that the boom was going to occur in the Utica shale formation, not in the Marcellus formation that had been in the news in Pennsylvania for several years.

Dr. Woods, whose home is on Avalon Drive on the west side of the golf course, went on to tell council he’d done some reading on the chemicals used in gas and oil drilling and had some concerns about the negative health effects they can cause.

Dr. Woods did not return a phone call from The Vindicator last week.

Saffold, when contacted last week, said she believes now and believed then that the city rushed the deal.

“That was my main concern. I said, ‘Why are we rushing into this because maybe we could get more money.’”

This week, when asked about the lease, Colbert said, “I’m confident in what we did. Might we have gotten more money on the signing bonus? Of course.”

Colbert said pressure applied by Carrizo Oil and Gas Inc. officials may have caused city officials to act more quickly than they wanted, but added, “It doesn’t seem like our constituents have a problem with it. No one’s said a word about it.”

Michael O’Brien was mayor at the time council passed the ordinance, but on Jan. 19, when the city had finalized negotiations with Carrizo, Doug Franklin had become mayor, and he signed the lease, which called for the city to earn a signing bonus of $329,151, which was $2,200 an acre.

About three months later, 1,900 Trumbull County property owners representing 85,000 acres — about 20 percent of the county — leased their land to BP America for drilling at $3,900 per acre.

Warren decided to use its $329,151 as part of its $500,000 contribution toward the Trumbull County Land Bank’s $1.2 million demolition program that will demolish around 200 homes in Warren and a smaller number in Warren Township and other areas of the county.

Tom Angelo, Warren’s wastewater director, who has been researching the gas and oil industry for several years in connection with the Patriot Water Treatment Co. project in the city, says Warren may have gotten a smaller signing bonus than some other property owners, but it did what a city should do — take a conservative approach.

“It’s a speculative market,” he said of mineral-rights leasing.

“As a private entity, you could gamble more. Public officials are entrusted with investing the public’s money as wisely as possible, and that doesn’t include gambling.”

Law Director Greg Hicks said the city chose to sign with Carrizo because it was a smaller company that seemed “hungry” to drill as quickly as possible.

Carrizo offered a five-year lease, and Hicks said he believes that gives the city a good chance of receiving royalties within a few years rather than seeing the property sit idle a long time.

Other companies wanted a 10-year lease.

“The good thing is if they [Carrizo] don’t drill in a certain amount of time, we can lease to another entity,” Mayor Franklin said.

Hicks said he doesn’t believe the golf course mineral rights are part of the $43 million in mineral rights Carrizo recently sold to an unnamed buyer.

As for the golf course, Hicks said the lease does not prevent the company from putting a drilling pad on the property.

However, Carrizo would have to compensate the city for any negative financial impact the well would cause and repair any damage.

That should prevent the company from doing any harm to the course, Hicks said.

Darlene St. George, Howland Township administrator, said discussions she had with Mayor O’Brien at the time were that if any drilling took place on the Old Avalon property, it would occur on a section on the far eastern edge near Route 11 with no golf holes on it.

St. George said she spoke with a number of people from Dr. Woods’ neighborhood, Avalon Estates, who were concerned about drilling on the golf course. Avalon Estates is on the west side of the golf course.

The state will notify the township whenever any drilling applications are filed so that the township can notify nearby residents, St. George said.

Trumbull County Commissioner Frank Fuda said the commissioners have talked for several months with drilling companies about leasing the 2,000 acres of land the county owns, but nothing has been finalized.

There are also 1,200 ares of land at the Youngstown-Warren Regional Airport, Fuda said.

Todd Brewser, a Braceville Township trustee, said there was relatively little controversy when the township signed up to lease all of its 42 acres to BP America in March as part of the 85,000 acres “because the majority of the township signed up with the same company.”

Brewster said the township has not yet decided how it will spend the approximately $164,000 it will receive as its signing bonus, but the money will be used to offset the loss of state revenue.

Brewster said he expects the money to go toward some type of permanent capital improvement.

BP has paid out most of the signing-bonus money it owes to the 1,900 property owners it signed in March, but there was a slight delay in paying the township, and he doesn’t believe the township has received its money yet.

The delay had to do with additional paperwork the township had to give BP to clear up title issues, Brewster said.

The land the township leased includes about 17 acres on the west side of Braceville Robinson Road, including the township cemetery and the two buildings housing the township police, fire and road departments.

Also part of the lease was several more acres further north on Braceville Robinson, including the township park in the center of the township, the township hall and the former township fire department, which was destroyed in a fire.

The setback requirements in the lease would make it impossible for any gas or oil drilling to take place on any of those properties, Brewster said.

The only township land where oil rigs possibly would fit would be on about 12 acres of swampy, vacant land across from the police department, he said.

Johnston Township Trustee Dominic Marchese said that township also leased its land — about 28 acres — to BP as part of the 85,000 acres, producing a signing bonus of about $109,000 for the township.

Among the properties the township owns are park, cemetery, township building and fire station.

Marchese would like the money to go into an account to collect interest and remain available to offset any costs associated with drilling that takes place in the township, Marchese said.

For example, the township may incur costs if there are messes or accidents, he said.

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