FC Negotiates Contract to Allow Water Extraction

by Jonathan Weaver

Ford City Borough Council members have come to a consensus on financial considerations they expect for PennEnergy Resources to extract water from the Allegheny River on the vacant brownfields site.

After more than an hour of discussion and negotiation with PennEnergy Resources Land Manager Zach Dixon and Attorney Nathaniel Parker, the five Borough Council members agreed PennEnergy can utilize up to seven acres of the brownfields near the Ford City Veterans Bridge if Ford City is compensated $125,000 per year with a five-year agreement and then future extensions if both parties come to an mutual agreement.

“We want to strike a deal that works for all parties involved,” Dixon said.

Earlier in the negotiations, Dixon said $150,000 per year would be in-excess what PennEnergy “values” the potential site and he had managerial support to agree up to $50,000 per year.

Council Vice-President Tyson Klukan clarified that the six-figure compensation is more than double what PennEnergy first offered Ford City a few months ago – in $12,000 per year – and that land usage deals would be made every five years if necessary rather than every 10 years.

“(The public negotiation) was something (Council) thought was transparent, but also you’re putting the facts on the table and the numbers on the table,” Klukan said. “It was a long and healthy conversation.

“This could be good – there hasn’t been anything on that brownfield in over 20 years – so we shall see.”

Ford City Borough Council also agreed PennEnergy should pay more of a signing bonus for the land usage - $15,000 up from the proposed $10,000. Construction can take up to three years, but upfront bonus payments would continue.

Payments would cease after three years if the agreement is terminated.

For perspective, $15,000 equates to about half a mill of local real estate taxes.

Council President Carol Fenyes was still concerned what near-constant truck traffic along 2nd or 5th Avenues could mean for homeowners or infrastructure downtown. Parker estimated it could be upwards of 600 truck loads per day – due to four months PennEnergy does not extract water.

Fenyes said coal truck traffic can range from 5AM-10PM during summer months.

“I’m concerned about all the residents along 5th Avenue – that does considerable damage,” Fenyes said.

Dixon cautioned council members that whether Ford City Borough signed the agreement or not, truck traffic could come via the state highway from another gas well site or municipality.

“There’s no doubt it will be a lot of trucks,” Dixon said. “It’s not going to be constant – it’s going to be intermittent activity, increasing in intensity during certain times.”

In Ford City’s counter agreement, PennEnergy would also have to consent to monthly discussions, an indemnity agreement and increased ways to address safety concerns –including fencing and lighting the site and bonding roads.

“(Safety parameters) are agreeable to PennEnergy, largely in-line with our business practices already and we’re happy to accommodate all of those,” Dixon said.

Councilwoman Beth Bowser said she was comfortable negotiating with Dixon as well as with motioning for the agreement to be made.

“It’s just like any project or agreement – you can speculate until the cows come home, but until things get grooving and moving and put together, there are all those unknowns that come up,” Bowser said.

Dixon said any final agreement is based on the opinion on company President and Chief Operating Officer Greg Muse. PennEnergy hoped to begin operations next year.

Attorney Parker also proposed a per-gallon figure or a flat-rate, but Dixon was not receptive due to meter and filtration expenses.

“The preliminary numbers we’ve talked about is (withdrawing) one million gallons per day,” Parker said. “That seems like a fair amount of water, so we’re trying to find a number that would be fair compensation.

“Agreeing to a very-low figure for a very-long amount of time is a concern for (Borough Council) because they are worried that they might not feel comfortable that they might be good stewards of the public’s land.”

The Ford City Borough Planning Commission recommendation and subsequent Borough Council agreement to rezone the brownfield and riverfront property and have it become light-industrial/mixed use was not a contingency in the proposed agreement with PennEnergy.

The Borough would be able to terminate the deal should the land be sold.

Construction would not begin until roads are bonded.

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