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Concerned about effects that are already being felt in the local real estate market, a Tompkins County group is urging State officials to address economic considerations related to natural gas drilling.

Representatives of the Tompkins County Workgroup on Assessment and Land Valuation (a subcommittee of the Tompkins County Council of Governments’ Gas Drilling Task Force) met with State officials in Albany, asking that the State implement requirements as part of gas drilling regulations to prevent unintended negative consequences on the real estate market and county assessment rolls.

The committee reports that lenders are reluctant to approve residential mortgages on the increasing number of properties where leases do not conform with regulations of the secondary mortgage market.  Minimum setback requirements of 100 feet between drill pads and dwellings are specified in current and proposed regulations before the Department of Environmental Conservation (DEC), compared with setbacks of 200 feet or more required by secondary lenders such as Fannie Mae, Freddie Mac, and SONYMA.

The group also reported that title insurance in New York State contains specific exclusions with the potential to void title insurance coverage when any common activity of commercial drilling, storage, or transmission of gas occurs on a residential property.  In addition, the group has concerns about how properties can be equitably appraised and about incomplete lease information that hinders processing of mortgage requests.

The working group, which includes municipal officials, the County’s Director of Assessment, realtors, representatives of local financial institutions, real estate attorneys, and interested citizens, was formed to assist Tompkins County and its municipalities to prepare for potential impacts if the State approves high-volume horizontal gas drilling.  “We started the work of this committee to look at potential future impacts of hydro-fracking— how might it impact our assessment rolls, the value of property in our community, and ultimately, the tax base.” says Tompkins County Legislator Carol Chock, who chairs the working group.

Chock explains, “The group has not taken a position on drilling itself and did not presume a negative outcome. Economic development is expected to be the upside of this activity; we've been told if we’re willing to take the risk, the reward for the County and our municipalities should be an enhanced tax base overall. Instead, we are finding a current negative impact on land values, real estate transactions, and our ability to perform appraisals.  We believe these issues need to be addressed before further permits are issued in New York State.”

While in Albany, representatives of the committee met with staff in the Governor’s office, members of the State Assembly and Senate, chairs and top staff from key committees, and have also talked with staff at both SONYMA and the DEC.  “They were receptive and interested in understanding the issues we found,” says Greg May, Tompkins Trust Company Vice President for Residential Mortgage Lending and one of the lenders working with the TCCOG committee. Chock emphasizes, “These are economic concerns that don’t represent issues raised from an environmental perspective. The solutions we propose as minimum standards would not satisfy many of the environmental impacts being examined by others.”

Among its requests, the committee asks that the State require drilling regulations to meet secondary mortgage market standards and title insurance requirements; apply setback requirements to other drilling related activities in addition to wells; and require timely recording by companies of full lease information (including renewals and memoranda) within 30 days.

“Assessment departments, lending institutions, appraisers, and realtors need to have access to lease information,” states Rosemary Rukavena, President of the Ithaca Board of Realtors, another member of the group.  “It is a problem that companies are no longer racing to the County Clerk’s office to record their leases as they did in the past.”

May notes that “the collaboration has focused on hearing and considering all stakeholder interests as we work together for the benefit of all the residents of Tompkins and surrounding counties. We are working together to help ensure a continued flow of competitive residential mortgage programs in the community.”

“I’m encouraged by the reception we have received,” Chock says.  “I’m also so impressed at the level of knowledge we are able to assemble here in Tompkins County and with the professionalism of the members of this committee.”

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