Drilling can dig into land value

Marcellus Shale region

Drilling can dig into land value


09:25 AM CDT on Saturday, September 18, 2010

DECATUR — One year to the day after a company set up its drilling rigs on their land in eastern Wise County, Tim and Christine Ruggiero confirmed the depth of their loss.

Originally on the 2010 tax rolls for $257,330, their home and 10-acre horse property are now worth $75,240.

The Wise County Central Appraisal District Appraisal Review Board — five community members with varying expertise in real estate — agreed that the drilling company’s use of the Ruggieros’ land warranted the extraordinary reduction.

“It’s the biggest cut I’ve ever seen,” said Bob Boughton, board chairman, at the conclusion of a nearly two-hour hearing Thursday afternoon.

It took the couple about 30 minutes to present all the significant events — from the day crews moved in without proper agreements to the recent installation of a “thermal oxidizer,” which continuously burns emissions — leading up to their 10-year-old daughter’s health problems.

The couple’s daughter has been having breathing difficulties for several months. After her latest trip to the emergency room, she was diagnosed with asthma, the couple testified. A neighbor’s child also had recently been diagnosed with asthma.

Some board members said they would neither be able to sell the property, nor even consider listing the property, after hearing the couple’s disclosures, including the fact that they had filed a lawsuit against the company for damages.

“I wouldn’t sell it for $78,000,” said Patsy Slimp, a board member and former real estate agent. “I could not sell this house in a clear conscience.”

Steve Goolsby, an independent appraiser based in Denton, valued the family’s home in December at $78,000 — after one large spill of drilling mud but before a litany of other environmental problems began. Among multiple complaints, inspectors with the Texas Commission on Environmental Quality singled out the diesel engines the company used in its drilling and work-over operations, recommending greater emissions controls.

Diesel particulate can easily become lodged in people’s lungs and is a known carcinogen.

Some Barnett Shale-area residents have become concerned about the long-term effect on property values when natural gas production comes close to homes.

In Corinth, where members of a gas well committee continue to review the city’s drilling ordinance, they considered a Colorado study from 2001, according to committee member Peggy Bush. The study showed that properties with coal-bed methane gas wells were valued 22 percent less than similar properties without wells.

The Corinth committee opted to not seek its own study of effects of the Barnett Shale on North Texas properties, Bush said, hoping they can use the results of a new property value study in Flower Mound when it becomes available.

DRC/David Minton

DRC/David Minton

Dish Mayor Calvin Tillman and his wife have put their home up for sale after their sons started having heavy nosebleeds at night. Their home is across the street from a collection tank battery and down the road from a compression complex on the southern end of Dish.

In Dish, Mayor Calvin Tillman and his wife, Tiffiney, put their family home up for sale a week ago, after their sons got heavy nosebleeds one night earlier this year. Their home is near a compression complex on the southern end of town.

The couple has listed the property, which includes a house and a barn on adjoining acreage, higher than what their real estate agent advised, Calvin Tillman said.

“I want to try to clear what we owe,” he said.

During the Ruggieros’ hearing Thursday afternoon in Decatur, appraisal district staff members told the board they have decreased values by 75 percent when a gas well sits on the land in such conditions.

Less common, however, was the need to reduce values of homes near operations, they said. District staff presented six properties comparable to the Ruggieros’ home, saying that recent sales showed the home values did not seem to be affected.

Christine Ruggiero rebutted the claim, providing additional information on those comparable properties showing that the homes were sold before the nearby wells went in.

Prior to the meeting, she said she resented having to spend several hours researching Texas Railroad Commission and property tax records in order to point out the gap in the information the appraisal district was providing to the board.

After hearing another hour’s worth of testimony from both the couple and district employees, the board agreed with Goolsby, when he said that “the external obsolescence of the land next to the home is relevant to the damage of the remainder.”

They voted to reduce the land value by 75 percent and the home value by 70 percent. They added the condition, however, that it be reviewed each year. It was possible, they said, that another operator could buy the gas leases and clean everything up.

After the meeting, Tim and Christine Ruggiero had tears in their eyes.

Christine Ruggiero said she knew the day the drilling rig arrived that their property was lost, so the acknowledgement by the appraisal review board was not happy news.

They know they need to move in order to protect their daughter’s health, Tim Ruggiero said, and that it’s possible their credit could be ruined.

“The bank could call the note on our home tomorrow,” he said, in which case he’d probably hand them the keys to the house.

The couple owes about $200,000 on the mortgage, he said, adding that he believes banks and underwriters need to take a closer look at the risk of financing Texas properties when the mineral estate has been split from the surface use.

PEGGY HEINKEL-WOLFE can be reached at 940-566-6881. Her e-mail address is pheinkel-wolfe@dentonrc.com.

 By Peggy Heinkel-Wolfe / Staff Writer

One thought on “Drilling can dig into land value”

  1. Just to be clear, this story is about Wise County Texas and Barnett Shale despite the map at the top right hand corner of this article. Barnett Shale is similar to Marcellus Shale. Barnett Shale it is Texas’ counterpart to Marcellus Shale both in form and in its impact on people and surface environment.

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