PHARE Funding, Marcellus Shale Development Patterns, Among Topics Discussed During Senate Hearing

HARRISBURG – The Senate Urban Affairs and Housing Committee held a public hearing in State College to seek further input on the impact the natural gas industry is having on housing in Pennsylvania, according to committee Chairman Senator Gene Yaw (R-Bradford, Lycoming, Sullivan, Susquehanna and Union counties).

Among those who testified were representatives from the Penn State Marcellus Center for Outreach and Research, The Center for the Study of Community and the Economy at Lycoming College, community action agencies, housing and redevelopment authorities and organizations from Northeastern and Southwestern Pennsylvania, and representatives from federal and state government. Yaw said the hearing was a follow-up to related hearings that were held over the past two years.

“One of the things that has happened since our very first public hearing to discuss the natural gas industry’s impact on housing was passage of the Pennsylvania Housing Affordability and Rehabilitation Enhancement Act also known as PHARE,” Yaw said in his opening statement. For the first time in two years, the PHARE fund now has a dedicated source of revenue with monies from Marcellus Shale development that will create, rehabilitate and preserve affordable housing across the state.”

Bryce Maretzki, who testified at the hearing on behalf of the Pennsylvania Housing Finance Agency (PHFA) said, “For the initial year of drilling operation (2011) there will be deposited $2.5 million and for 2012 and beyond there will be $5 million deposited annually into PHARE. In addition, PHARE will receive any excess spillover funds from local municipalities.”

Maretzki added that PHFA has established a goal for PHARE of returning to each county, and the most heavily impacted municipalities, the amount of funding that they have deposited into the PHARE program from the presence of active wells.

In addition to PHARE, the hearing highlighted workforce and development patterns of the natural gas industry.

“It’s important to understand that there are hot spot vs. overall development,” said Jim Ladlee, Associate Director of the Penn State Marcellus Center for Outreach and Research. “When we started shale here in Pennsylvania primarily, people were thinking that it was going to occur everywhere, all at once, at one time, and in fact that is not the case. Seventy-three percent of all wells spud, according to the (DEP) spud report from 2009 until today, have been in just six counties in Pennsylvania. Those counties are Washington and Greene in Southwestern Pennsylvania and of course Lycoming, Bradford, Tioga and Susquehanna in Northeastern and central Pennsylvania. There have been drilling in a variety of locations but the vast majority have occurred in those six counties specifically.”

Ladlee agreed that drilling for natural gas in Pennsylvania is likely to last for several generations. “There are several things that you can do to look at that particular concept of how long this drilling will last. We’re not just talking about Marcellus anymore, we’re talking about a variety of upper Devonian, were talking about the Ordovician Shales, with the Utica and the Point Pleasant. So we’re just talking about a lot more opportunities.”

A number of those testifying recommended that legislators and state officials work with financial institutions to provide financing for residential projects and housing development.

“The banks, being very conservative as they are, are reluctant to make investments until they know that the industry is here, is permanent and is going to have a local impact where they do their business,” said Perry O’Malley, Executive Director of the Housing and Redevelopment Authorities of the County of Butler. “The banks do need to loosen the credit and the feds need to loosen the restraints on them so they can do that and of course the community reinvestment act is the only thing that drives investment in low and moderate markets.”

“The Marcellus Shale industry has brought jobs and economic development to our area at a time when many communities are struggling,” Yaw said. “Our goal is to ensure that as the industry continues to grow, our municipalities can provide the resources and infrastructure needed to accommodate both current residents and new workers. Act 13 funding and PHARE funding will assist greatly with that effort.”

Contact: Nick Troutman
(717) 787-3280

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