Coal-bed methane development raises property tax questions

Posted: Friday, September 12, 2003

Coal-bed methane development has attracted considerable attention recently, as Kenai Peninsula and Mat-Su Valley residents discover the lands beneath their property have been quietly leased for this new wave of development. While citizens have raised various water quality, water quantity and property rights concerns, another issue has garnered less attention: property taxes.

For example, any access road or drill pad constructed on a property owner's land will likely constitute a new taxable "improvement." Under current rules, the surface estate owner not the drilling company will bear the burden of these tax increases. Significantly, no one has examined the effects on local property values or property taxes stemming from coal-bed methane development. House Bill 69, passed recently by the Alaska Legislature, compounds this issue by allowing the state to override local rules designed to protect private property owners. So even if a borough or municipal government passes a law requiring drilling companies to compensate property owners for increased taxes, an un-elected official in the Department of Natural Resources can simply override that decision.

Rep. Vic Kohring can boast of the virtues of HB 69, but private property owners hit with higher tax bills may well disagree.

Bob Shavelson, Cook Inlet Keeper , Homer



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