Pennsylvania Marcellus Shale Development and Housing Funds

Eagle Ford Consortium ConferenceApril 22, 2014

Bryce Maretzki, PHFA

Source: Pennsylvania Department of Environmental Protection

The Shale Gas Boom

Stages of Shale Gas Development Relating to the Local Housing Market

Initial influx of energy industry workers

• Effects:

Increases county population and demand for temporary housing (mostly hotels if available)

Full-scale drilling

operations begin

• Effects:

Further increases population and demand shifts to include medium-term rental housing

Mature well field

management and

maintenance

• Effects:

Demand shifts to include long-term residential housing for energy industry workers moving their families to the area in addition to potential new housing demand from the now-established local workforce

Source: Ohio State University, Michael Farren

Source: U.S. Census Bureau, 2000 Decennial Census and 2011 American Community Survey 5-Year Estimates.

Analysis Region

Results Summary

1) A 1% increase in shale development employment share is associated with a 0.5% increase in county population.

2) The number of single-unit residential building permits approved showed strong and consistent correlations across all specifications.• Each shale gas well drilled was associated with

~2.5 additional housing permits approved. Source: Ohio State University, Michael Farren

Act 13 (2012) – How it Works

• “Impact Fee” on natural gas wells– $224 million in 2014 - $630 million since 2012

• Levied on price of gas (on market exchange) and age of well - 15yrs

• Revenue shared – counties, municipalities, state agencies– 60% for Counties – many uses including affordable

housing– 40% Marcellus Shale Legacy Fund

Funds for Housing

• Comes from “Impact Fee” (Act 13, 2012)– $8.7 million (2013), $7.9 million (2012)– Base allocation: $5 million annually– Surplus Allocation from six counties

• Address housing needs in impacted counties• Deposited into Pennsylvania Housing

Affordability and Rehabilitation Enhancement (PHARE) Fund – aka “State Housing Trust Fund”

• At least 50% of funds must go to “rural” counties

State Housing Trust Fund

Pennsylvania Housing Affordability and Rehabilitation Enhancement (PHARE) Fund

• Act 105, 2010• No funding stream• Requires at least 30% of funds for households

below 50% of median area income• Wide range of housing activities• Annual plan and reporting

Principles of Investment

• Maximize resource leveraging• Address greatest need• Foster partnerships• Effective and efficient • Equitable and Transparent• Comprehensive Approach

Impact

• 59 projects funded (78 applied)• $16.7 Million awarded ($32M requested)• $160 Million in leveraged funds• 484 new rental units• 490 rehab, repair homes• 518 households w/rental assistance• 272 homes for future development

(acquisition/demolition)• 42 new single family homes