A little off the top

Commissioners: Law allows them to keep fees for mineral lease revenues

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In an effort to recoup expenses incurred by the implementation of an aggressive mineral lease negotiation policy, the Moffat County commissioners have found a state statute that permits the county to take administrative fees from mineral revenue before distributing it among tax districts.

Although the commissioners have made no formal decision, Commissioners Darryl Steele and Marianna Raftopoulos said they would be in support of exercising the statute, describing the move as a fair way to fund the mineral program.

"Then entities gaining money from that will be paying the time it takes. So it seems like a logical solution," Commissioner Darryl Steele said.

The commissioners have yet to set a date for a workshop to determine how much time and money is expended as county employees work on the mineral leases, but Steele estimated the cost at about $60,000.

As of Oct. 12, the mineral program had raised $614,148. The county received 34.7 percent of that, about $213,000. The majority of the funding went to Moffat County School District.

Because the county obtained the mineral rights in lieu of taxes during the Great Depression, revenue earned from the development of those rights must be treated as tax money and distributed to tax districts.

Those numbers are increasing significantly in comparison to previous years. The county credits the increase to new marketing strategies and aggressive negotiations for 16 percent royalties on producing wells and $50 per acre lease fees.

Steele has been the driving force behind the push to get the school to help fund the ramped-up mineral program. In August, Steele met with the school board to ask for financial assistance with the program.

But the school board has been reluctant to grant the request. Board members said they would need more information before making a decision.

In light of the county's new plans, John Wellman, school board president, said he guessed the program funding decision was out of the school board's hands.

"If it's legal, then I guess what else is there for us to say," Wellman said.

He didn't mind that the county was circumventing the funding discussion, but he said he'd keep a very close eye on how much the county takes for administrative fees.

"Our role is to make sure they don't take too much," Wellman said. The $60,000 figure sounded as if it was "a little on the high end," he said.

Moffat County rancher Wes McStay has criticized the county's program, saying it's not government's role to own or develop property. At McStay's request, the commissioners called a workshop in February to discuss surface owner rights in the county.

If this is the direction the county chooses to go, it shows the county's priorities are misguided, he said.

"If they go ahead and take that money off the top, it confirms their priority is natural resource development and not education," McStay said.

He disagreed that the county's increased marketing efforts have been bringing more gas development and money here, and argued that market demand has caused the increased activity.

"The county's trying to say it's because of extra effort it's getting this money, but it's market forces," McStay said.

Six county employees contribute to every mineral lease the county negotiates, said Jeff Comstock, Natural Resources Department director.

After the commissioners signed a small mineral lease with Julander Energy of Denver on Tuesday, Steele instructed Comstock to be sure to keep track of the time he spends on mineral leases.

Comstock said he spends about 7.5 hours on each lease, regardless of the size. He called that number very exact. Among other tasks, his time is spent talking with landmen from the energy industry, researching fair market values of mineral rights, incorporating language into leases to protect the greater sage grouse, and assuring surface owners of protection for their land.

Comstock didn't presume to state how many hours other employees spend working on leases, but he guessed Dan Davidson, director of the Museum of Northwest Colorado, puts in a substantial amount of time researching leases.

The county attorney reviews the leases before the commissioners sign them, the commissioners' assistant organizes lease data, the treasurer keeps track of bills, and an employee in the Assessor's Office maps the leases.

It's not unprecedented for the county to take a fee for services that financially assist other tax districts in the county, Commissioner Raftopoulos said. The Treasurer's Office charges a handling fee for the taxes that pass through that office.

The state sets the handling fees, Treasurer Robert Razzano said. Most tax districts are charged a fee of 1 percent. Schools are charged the lowest fee of 0.25 percent.

The lobbying group Colorado Counties Incorporated and the state Department of Local Affairs have each reviewed the statute and approved Moffat County's proposal to take administrative fees from the net proceeds of mineral lease revenue, Steele said.

County attorney Kathleen Taylor was in court Thursday and on vacation Friday and could not be reached to provide the statute the commissioners are citing.

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