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Port comes up short on gas lease

September 29, 2012

EAST LIVERPOOL - The Columbiana County Port Authority will receive about $19,000 less than originally anticipated for leasing some of its railroad property to Chesapeake Exploration.

Back in May, the port authority agreed to lease 44 acres for shale gas development to Chesapeake for $1,800 an acre and 15 percent royalties. This represented the portion of the 36-mile port authority railroad that lies in neighboring Beaver County, Pa.

At this week's meeting, the board approved a new lease for the same ground, except the acreage had been reduced to 40 acres and the lease payment to $1,500 per acre. Potential royalties will remain at 15 percent.

Following the meeting, Port Authority attorney Tim Brookes explained that after agreeing to the initial lease, Chesapeake took a second look at the acreage and determined the railroad property in Beaver County only totaled 40 acres.

"They didn't sign the initial lease because they didn't think we had the acreage" even though Chesapeake performed the deed research, Brookes said.

In the intervening period, Chesapeake also lowered its lease payment to $1,500 an acre, which means the port authority will receive about $60,000 instead of $79,000.

"Beaver County isn't paying the big money that Columbiana County was getting," Brookes said.

The port authority received $4,000 an acre when it signed a lease with Chesapeake in March for the 142 acres of railroad property that lies within Columbiana County.

In other action at the port authority meeting, the board approved amending a bond agreement with Apex Environmental, which operates a landfill near Amsterdam in Jefferson County. The bonds are in the amount of $19 million and will be used by Apex to acquire the MSW landfill in Harrison County.

The port authority agreed to serve as the government agency through which Apex can borrow solid waste industrial bonds to finance the landfill acquisition. The port authority has acted in this capacity several times since 2004 to fund expansion of Apex's Jefferson County landfill.

The port authority is not on the hook for the money. It only serves as the government agency through which Apex can obtain low-interest bonds.

The port authority also has a new employee, Jessica Shafer, who was added to the office staff by CEO Tracy Drake. Shafer worked in various clerical positions for Timet in Toronto before being laid off. She was hired this summer and retained on a full-time basis starting in September. Her pay is $10 an hour.

Shafer's hiring was not run through a board meeting, nor was it announced by the board or Drake. The port authority was recently cited by the state auditor's office for granting employee pay raises last year without formal board approval.



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