Wednesday, December 28, 2011
Could Charging U.S. Silica a Per Ton Fee Cut Your Taxes?
The city of Sparta could charge U.S. Silica a per ton fee and collect more than a million dollars a year by doing so and still let U.S. Silica earn huge profits.
Tunnel City, in the town of Greenfield, will get $250,000 a year from the sand mine operating there. If a sparsely populated township where sand mine land sold for roughly half of what the Sparta land is selling for can make that kind of deal, surely Sparta can do the same--or much better.
US Silica take in between $72 million and $108 million annually on the sand it produces in its mine in Sparta. It plans to produce 1.8 million tons a year and says that it will get between $40 to $60 per ton. Some sources say that it costs about $10 a ton to produce and ship sand by rail, although this does vary by sand mine.
Even if production costs are triple that, U.S. Silica is looking at millions and perhaps billions of dollars of profits over the next 30 years. These profits will come at a cost to Sparta in the form of reduced property values, invasive dust, the possibility of silicosis and other problems.
On the property value front, three of the subdivisions adjacent to the sand mine had an assessed value of just over $17 million in January 2011. Since mines reduce property values by an average 15 to 30 percent, those properties will devalue by between a little over $2.5 million and $5 million. And that’s for just three subdivisions.
That is one reason most sand mines are in rural areas.That is one reason most sand mines are in rural areas--just look at La Salle County, where US Silica has another mine. A reporter for the paper there says that despite mining companies' best efforts, there is lots of dust. It invades homes and cars and that’s why a thousand people in La Salle County signed a petition opposing a new mine there.
At the very least, pervasive dust can make a sand mine a dirty nuisance. Could it mean that if you live near the sand mine you can’t have a cookout in your back yard or open your windows?
At the worst, it could be a health risk in the form of silicosis, which is deadly. Either way, the city of Sparta bears the brunt of that cost, not U.S. Silica, which will be making millions and possibly billions of dollars in profits, while Sparta residents loses millions in property that is devalued or impossible to sell.
If Sparta must have a sand mine, the city should at least charge a per ton fee as the town of Greenfield did. Greenfield, an unzoned township, had very little negotiating leverage--a small stretch of town road running through the sand mine’s property. Yet it was able to use that town road--which it handed over to the sand mine--to negotiate a 15 cents per ton fee. Once the mine is running, Greenfield will get $250,000 per year. Sparta has the power of a conditional use permit. The sand mine cannot operate without that CUP. That means the city of Sparta could negotiate for even more money. Consider this: a 50 cent per ton fee could mean $900,000 for Sparta each year the sand mine operates. Seventy-five cents would mean $1.35 million. What the heck, think big! Go for $1 per ton!
Afraid of scaring the sand mine away? Don't be. The hyrdo-fracking industry's demand for sand--for the most part found mainly here in Wisconsin--is voracious. Competition for the sand and the profits it brings is fierce. If U.S. Silica balks, it has many competitors who will leap in.
Think of what this could mean for the city of Sparta, for its much-desired swimming pool. Then, think of what it could mean for the taxes you pay.
There may well be unanticipated problems with the sand mine, both during its operations and after. Who is going to foot that bill? The taxpayers or U.S. Silica?
The Sparta City Council is considering an appeal on the sand mine Tueday night, Jan. 3. Call your aldermen to tell them what you think.
Mayor John Sund, Jr. - 269-6115; Jim Church, 269-7632; Ronald Button, 269-4307, firstname.lastname@example.org; Carlos Holcomb, 615-330-7288, email@example.com; Norman Stanek, 269-8527; Connie Anderson, 269-2801; Edward Lukasek, 269-2987; Dan Hellman, 269-8008; and Kevin Riley, 269-5636; firstname.lastname@example.org.