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You obviously live a nice, comfortable existence in a nice town or city with a local economy and tax base that is nice and stable, and have zero clue what happens to private property owners in these boom towns.

First, the boom comes. People live in rented housing, then RV’s, then trailers, just as we’re seeing in the news here.

Then the debate starts about whether they’re going to build permanent housing or a man camp with single-wides and “haul-in housing.” When people start down the road of permanent housing, the taxpayers who were there previous to the boom and who will be there after the inevitable crash, are left holding the bill for:

1. Increased electrical infrastructure. Where we used to farm in central Nevada, we were paying $0.09/kWh for power. Sounds pretty high for a rural co-op, right? Well, in the early 70’s, before the gold mines moved in, started up and then went bust when the price of gold collapsed in the late 80’s, the price of power was $0.03/kWh. Why did the price triple?

Because the co-op had to recover their sunk costs for power lines, transformers and infrastructure going out to the mines that went belly-up.

30+ years after those mines closed up, people are STILL paying wicked high power costs to get the co-op’s books evened out.

2. When you have a big rush of housing that goes in, especially in these areas where there’s lots of oil/gas/coal under the ground, you end up with a bunch of bitching about the water quality, not to mention the lack of quantity. So the developers of housing and the mining companies (who are backing the development of housing so they can bring in employees) strong-arm the local government into putting in a water system, then a sewage system. These are incredibly expensive pieces of infrastructure to run on an ongoing basis, especially in many places in the west where the native water quality exceeds the limits for things like arsenic (10ppb) that was arbitrarily set by the Clinton administration on their way out of office.

As an example, in rural counties all over Nevada, Colorado, Wyoming and other western states, the arsenic levels used to be lower than 50ppb, but higher than 10ppb. Getting these systems into conformance with the Clean Water Act revisions left by Clinton costs millions upon millions of dollars... which could be spread over only a few hundred to a few thousand ratepayers, so the cost ends up getting pushed off on every taxpayer in the county and the county ends up with a big budget blowout for water system remediation or compliance for a new system with too few ratepayers.

3. Then you have the increase in crime that washes into these communities. Most of these resource boomtowns are nice to read about. They’re a whole different situation to actually *live* there. Suddenly you have drunks in fights in town, meth use (want to see a boom town that is known as the “Meth Capital of the US? Look at Rock Springs, Wyoming, an oil/gas boomtown that took off about eight years ago now) and general increases in property crime and damage. This requires a big, sudden increase in police, fire, etc forces... but the funny thing is, thanks to public employee unionization of these workforces, when the boom is over, these forces aren’t reduced until the town is nearly broke.

4. Then there’s the school issue. The “solution” to the problems in #3 are to bring in the women and families, or so all the social conservatives like to tell us. Well, this requires schools. Building schools costs HUGE money. When the population from the boom time leaves, you’re left with vastly over-built schools, which are often funded by only ad valorem taxation unless the state diverts monies from their mineral or oil/gas severance taxation stream to the schools in the boomtown areas.

Looking at North Dakota’s oil/gas severance taxation, it appears to me that they need to double it, and quickly, if they’re going to mitigate these types of issues.

So yes, I would reiterate my point: The local governments in these areas should do whatever they can to force up-front recovery of costs that will occur as a result of these boomtowns. That means impact fees, ferociously high fees for water, sewer hook-ups, building permits, etc. The people who were there before and who will be left after the boom is done shouldn’t have to clean up the economic mess these types of developments create. The cost of permanent housing should be made high enough to force the oil/gas companies to stick with the man camp until it becomes clear what level of permanent (> 10 year positions) these oilfields will generate.