HomeMy WebLinkAboutSS6 - Subsurface Pass-Through AgreementsSUBSURFACE
PASS - THROUGH
AGREEMENTS
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Easements are for oil- drilling, pass -
through and production
• 146 agreements, most date from 1981
None have been renegotiated
City pays a percentage of the oil revenues
to the parcel owners on a semi - annual
basis for the easement.
Properties are located in West Newport
ABOUT THE AGREEMENTS
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City must twice yearly pay the Grantor a
proportionate share (based on the ratio of
Grantor's property to the total square
footage of the properties) of 3.275% of
the market value of all oil, gas and other
hydrocarbon substances produced by the
oil wells described in the Agreements.
Easement Payments
In 2009:
City made semiannual payments in amounts,
which ranged approximately from $18.38 to
$221.28 per payment, per parcel.
City paid a total of $39,627.23 (but this amount
includes some retroactive payments).
City paid an average of $111.63 per parcel.
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What That Means
Easement payments run with the land,
but under the terms of the agreements,
City is obligated to pay the grantors
named under the easement agreements,
unless notified otherwise.
Who City Should Pay
City is not obligated to pay the new owners
unless notified - a rare occurrence
Some parcels have been subdivided, creating
confusion about payments
Some owners claim they reserved their easement
rights
New owners want payments retroactive to date of
ownership from City
Easement Agreement Issues
Although not obligated to, City has tried
to recover, with some success, payment
made to previous owners on behalf of
current owners
City continues to analyze the reservation
of easement rights to determine whether
they are appropriate
Resolutions to Current Issues
192 parcels:
1 owner granted a permanent easement to the City
upon a one -time payment
38 owners who are party to the original easement
agreements are still the parcel owners
108 owners are paid by City even though they do
not have easement agreements because they are
current parcel owners and the previous owners did
not properly reserve the easement rights
Parcel Owners
18 current
parcel owners
must
pursue
payments
from previous
parcel
owners
1 previous owner no longer owns the property
but is still receiving payments because they
may have properly reserved their easement
rights
4 other previous owners claim to have reserved
their easement rights, and City is currently
reviewing their claims
Parcel Owners
City will attempt to negotiate the outright
purchase of the easements
alleviate the administrative issues
minimize potential future liability
- clean the title record and City
maintains City's rights to the
easements
How We Proceed
City shall hire an appraiser to evaluate the
easement values
City shall return to Council for direction on
the easement purchase negotiations once
the easement values have been
determined
Purchase Agreements for those willing to
sell
Update Agreements for those not willing
to sell
How We Proceed