How will the gas bonanza affect taxes?

New assessments will be left to the towns

By TOM KANE

UPPER DELAWARE REGION - Say you get lucky, gas drillers hit pay dirt on your property and you start receiving hefty checks in the mail as is happening to some in Washington County, PA, south of Pittsburg. How will that affect your taxes?

“In Pennsylvania, there would be no effect on your property assessment,” said John Nolan, Wayne County Chief Assessor. “The Commonwealth does not reassess minerals taken from the ground. Your income tax will go up, however.”

In one instance in Pennsylvania, the landowner will end up on the losing side, he said. “That will happen if the landowner is in the Clean and Green Program.”

Clean and Green is a state program designed to preserve agricultural and forest land. It provides a real estate tax benefit to landowners of 10 or more acres that assesses land on the basis of its use value, rather than on its market value.

Leasing for gas drilling or oil exploration on its own is not a breach of the Preferential Assessment (another name for Clean and Green) program. The actual drilling for gas or oil on a property under Preferential Assessment is considered a breach of the regulations, he said.

A memo released by Nolan on April 24 states what happens to a landowner.

The memo reads: “Before any drilling, the Preferential Assessment regulations require a 30-day notice in writing to the Wayne County Chief Assessor to avoid a $100 civil penalty. When drilling occurs, rollback taxes, plus penalty and interest, are due on all property recorded in the Preferential Assessment document. The roll-back taxes plus penalty and interest are for the time period the Preferential Assessment has been received not to exceed seven years.”

In other words, you’d have to pay all those taxes you avoided by belonging to Clean and Green, all the way back seven years.

The memo goes on: “The drilling area (five acres) will be changed to the land-use category of ineligible and assessed at normal value. The remaining Preferential Assessment land will remain as before.”

In other words, you’d still be in the Clean and Green program, except for the area where drilling took place. A revised Clean and Green document is needed for each drilling area.

When the drilling is done and the ineligible land has been returned to the Preferential Assessment land-use category, it may again receive a Preferential Assessment.

In New York, whether the receipt of hefty checks will affect your tax assessment, and thus your property taxes, will be determined by each town’s assessor, said Linda Levine, director of the Sullivan County Real Property Tax Service. “The county has no tax assessment office, only the towns do,” she said.

“We may give them some advice about how to compute the assessed value after gas is discovered, but in the final analysis, it is the job of each town’s assessors to determine what that value is,” said Joe Hesch, spokesman for the New York State Office of Real Property Services (ORPS).

“Property is to be assessed according to what its value is. So whatever makes the property more valuable, then it’s going to be assessed at that value. It’s that simple,” said Ira Cohen, Sullivan County Treasurer. Since the state ORPS doesn’t have a regulation on this, the town assessors have the freedom to compute a new assessment, he said.