EAST LIVERPOOL - The city stands to realize nearly $1.7 million from a mineral rights lease signed Tuesday with Chesapeake Energy, which equates to $5,800 per acre for slightly less than 300 acres of property inside city limits.
Service-Safety Director Ryan Estell made the announcement at a streets/land & buildings committee meeting last night, saying the lease encompasses all city-owned property and its portion of Spring Grove Cemetery but not land included in Thompson Park "at this time."
The lease has a non-surface clause, meaning nothing can actually be placed on city property, such as wells or drilling rigs. It also includes a provision for the city to realize 18 percent in royalties, should gas be found under its property.
Estell said some discussion was held regarding the possibility of renegotiating on some areas that could be considered for installation of wells at some point.
The property earmarked in the least includes the so-called Dissette property in East End and the Riverview Florist property that have been annexed into the city.
About 145 acres encompassing Thompson Park were not included in the lease at this time due to some unresolved questions about its status as bequeathed land and because 20 acres already have an existing well that is still producing but minimally, Estell said. That well dates to the 1920s and the park does get some revenue from it, so those acres cannot be included in any new lease.
The park board meets at 4 p.m. today but whether or not the topic of gas leases is on the agenda was not immediately known.
Estell has been working on a plan for spending the lease money "so it's not squandered," and said, "This is one-time money. It's not going to be used to bring in (new) employees."
One priority he will recommend it replacing old windows in City Hall, which he estimated will cost between $50,000 and $75,000, which would be a drastic savings in energy costs.
Estell conceded that some of the lease money will "most likely" be used to bring the city budget into the black, as well as provide retirement buy-outs for police Chief Mike McVay, firefighter Bill Miller and a set-aside for some anticipated future retirements, "so that doesn't affect our budget again."
The money will also provide an opportunity to purchase some sorely-needed police cruisers, as well as the means to upgrade its radio system which Estell said will become illegal after this year and must be replaced at an estimated cost of more than $100,000.
"These are things the city needed to do for a long time," he emphasized, adding that, as much as city officials realize streets need attention, he does not anticipate any of the windfall being used for street paving.
Of the $1.66 million, nearly $350,000 is earmarked up front for specific purposes, since it entails property "owned" by specific city departments.
Estell explained that slightly less than $50,000 must be used for cemetery purposes since it will be generated from property encompassing Spring Grove Cemetery; another $123,000 will come from property on which the water and sewer plants and water storage tanks are located; and $175,000 will come from property overseen by the Community Improvement Corporation currently used as soccer fields, which Estell said he hopes can be earmarked for economic development.
Estell negotiated the lease through DPS Penn with the approval of council and support of Mayor Jim Swoger.
Ultimately, it is council's decision where to appropriate the money, but Estell said he took on the task of trying to determine the best use for the money because he oversees the general operations of the city, but that he sought suggestions from other officials and department heads.