Well, that didn’t take long. On Tuesday, Dec. 3, the Colorado Oil and Gas Association (COGA) announced its intention to file lawsuits against Lafayette and Fort Collins over those cities’ election results regarding fracking. Once again, the oil and gas industry is willing to spend any amount of money to make sure that its profits come ahead of public health, property values — and democracy, for that matter.
In November, Lafayette citizens passed a ban on hydraulic fracturing within that town’s city limits, while Fort Collins residents voted for a five-year moratorium on the same.
Tisha Schuller, COGA’s president, made the lawsuit announcement with her usual litany of apologies about how COGA regrets having to take such action and how the whole affair is just so unfortunate. I can just imagine her sad frown and maybe just the glint of a tear in her eye as she struggles to tell 175,000 Coloradans that she had no choice but to sue their communities. It breaks my heart to think of how hard these suits are on poor Tisha and her organization.
Honestly, do these people have no shame? News flash, COGA: You didn’t have to sue anyone, anywhere. You have chosen to sue Lafayette, Fort Collins, and before them, Longmont, because you care about nothing but the oil and gas industry’s profits. But the world is changing. The truth is starting to come out. As Boulder Weekly will be reporting in the next few weeks, fracking’s impact on people, their pocketbooks and their communities is actually far more substantial than previously thought.
While COGA is suing our towns for the right to drill and frack wells in and under our neighborhoods and homes, it isn’t telling you what the new research is saying about what such drilling activity is doing to your real estate values.
For instance, did you know that banks are now starting to refuse to issue mortgages on homes that have oil and gas leases covering the mineral rights beneath them, something most homeowners have no control over? Some homeowners have even been turned down for refinancing simply because their homes are located next to a property that has a well.
A new study out of the University of Denver found that homes anywhere near a well are likely to lose 5 percent to 15 percent of their value because of concerns over fracking.
The study’s author, Ron Throupe, a professor in the Daniels College of Business at DU, recently told me that in Boulder County, where people are very environmentally conscious and concerned about fracking, a home near a well could easily lose 20 percent of its value. And it’s not just a matter of having a well in your backyard.
As Throupe points out, if the homes on one side of a housing addition lose a good deal of their value because of their proximity to a well, all the houses in that addition lose value because of the comparable sales considered in the appraisal process.
A home’s value is based upon what a buyer can and will pay. If banks are now refusing to give mortgage loans on homes because of fracking, it means that some properties are becoming nearly worthless because only cash buyers can acquire them.
Fracking is also starting to make it difficult for potential homeowners to get title insurance and even homeowners insurance, both of which are required by lenders before they will make a loan.
Fracking is not only changing the landscape and the environment, it is now threatening the American dream of homeownership for a rapidly increasing number of people. How rapidly? It is now estimated that 15.3 million people currently live within one mile of a well that has been drilled just since 2000. The shale gas boom is literally a potential game-changer for the U.S. real estate market, and not in a positive way.
The industry likes to talk about science. It likes to point out that you can’t prove that it did anything wrong at 8,000 feet down a hole. It likes to point out that while you may be able to light your water on fire, you still can’t prove that what the industry did across the street caused it.
Well, oil and gas industry, people don’t buy homes based on scientific proof. They buy homes based on perception. If they don’t think they can sell a house for what they paid for it later on because a well was drilled a half-mile away, they don’t buy that house. And therefore the value of that house decreases, and therefore it is the oil and gas industry’s fault for the homeowner’s loss.
This is where the fracking argument is headed over the next two years.
As it stands now, if Fannie Mae and Freddie Mac, which own 60 percent of all mortgages in this country, were currently enforcing their own mortgage rules regarding oil and gas drilling, severed minerals, oil and gas leases and hazardous substances, the entire mortgage market would already be in collapse due to fracking.
As a matter of perspective — while admittedly using very generalized figures based on the number of houses, average home prices and a 15 percent loss in real estate prices — this is what could happen around here.
Should COGA win its suits and overturn the bans and moratoriums in Longmont, Lafayette and Fort Collins, those three communities (if drilled and fracked similar to the way that Weld County communities such as Greeley, Frederick and Firestone have) could lose as much as $3,816,822,525 in real estate values. Yes, that’s $3.8 billion. And yes, that’s a hell of a lot more than those communities could ever economically benefit from oil and gas money from now until the end of time.
So go ahead and apologize, Tisha, for COGA’s lawsuits. But while you’re at it, apologize for what those suits will mean to homeowners all across this state should you win. And go ahead and add another tear to your eye for what your industry has done to us because it had the money and the political clout to buy its way out of the clean air and clean water regulations that were created specifically to protect us from dirty, dangerous industries like yours.
One of these days, when the laws finally catch up to your industry and you have to start calculating lost real estate values as a part of your surface damages, you can bet that the lawsuits will be going the other way, and not one tear will be shed by any of us.
Stay tuned, friends. We’ll be writing much more about this issue in the coming weeks.