A consultant hired to negotiate Erie\u2019s multimillion-dollar deal with oil and gas operator SM Energy Company has submitted his invoice \u2014 and is asking the town to consider paying him about $30 million. Residents have begun circulating a petition that has the potential to overturn the deal entirely.<\/p>\n
Matt Owens of Alameda Mineral Advisors sent the invoice June 26, shortly after the Erie Town Council approved a sale of town-owned mineral rights<\/a> within the drilling area for SM Energy\u2019s planned Draco well pad<\/a>.<\/p>\n Under the agreement with SM Energy, Erie would receive a $4.5 million cash payment; a 3% share of production revenue for\u00a0the Draco project, which town officials estimated could generate more than $19 million for Erie over the next two decades; about 160 acres of land on County Line Road valued at roughly $14 million; and the plugging and abandonment of 17 wells.\n<\/p>\n According to Erie\u2019s contract with Alameda approved in December, the consultant would only be paid if a mineral rights deal went through \u2014 receiving 7.5% of any agreement\u2019s value, and capped at $4.5 million unless the Town Council approves a higher payment.<\/p>\n In a letter accompanying his invoice for $4.5 million, Owens says the approved deal\u2019s maximum value could exceed $401 million and suggests the town increase payment above the contract\u2019s cap due to what he called the \u201cextraordinary and unexpected results\u201d of his negotiation with SM Energy. Owens\u2019 letter says that 7.5% of $401 million would settle his consulting fee at just above $30 million.<\/p>\n That valuation, according to the invoice, includes envisioned development on the County Line Road land and purported future tax revenue that the town has not confirmed to the Daily Camera. His estimate for the deal has been disputed<\/a> as \u201cexaggerated\u201d and \u201cgrossly inflated\u201d by some town leaders.<\/p>\n Town spokesperson Gabi Rae in June said Owens\u2019 earlier estimate that the deal could have a value of $465 million relied on assumptions about future development that remain uncertain.<\/p>\n \u201cAt this point, the number is not something we would use as an accurate estimation for budgeting,\u201d Rae previously told the Camera.<\/p>\n Town officials continue to evaluate the land included in the agreement with SM Energy and \u201cwill share the results of that due diligence when it is completed,\u201d Rae said in an email last week.<\/p>\n Owens\u2019 letter adds that he would \u201chonor and accept\u201d a decision by the town to pay him the minimum amount of $4.5 million within the contract\u2019s \u201cmandated 30-day period\u201d after his invoice for that amount\u00a0was submitted. That deadline would hit at the end of this week, on Sunday.<\/p>\n But Rae said Erie\u2019s contract with the consultant stipulates that \u201cno payment is made until the Town receives value from the agreement\u201d with SM Energy. Town legal counsel has been meeting individually with council members to \u201cdiscuss what the contract outlines with regard to payment to Alameda Minerals,\u201d\u00a0Rae said.<\/p>\n \u201cIf the Council wanted to hold a vote to go outside the bounds of those contractual stipulations, that would be a discussion and decision for Council to make as the policy makers for the Town\u2019s budget,\u201d Rae added.\t\t\t\t<\/p>\n Resident-led petition circulates \u201cThis petition will bring the Town Council\u2019s recent sale of the town-owned mineral rights to a public vote. By putting this issue on the ballot, every voter in Erie will have a voice in the decision of whether to sell Erie\u2019s minerals,\u201d resident Emily Brecht said during a Town Council meeting last week.<\/p>\n \u201cPeople have asked me why this issue was not put to a public vote to begin with, and that\u2019s a really good question,\u201d added Brecht, who identified herself as a \u201crepresentative for the referendum petition currently circulating in Erie.\u201d<\/p>\n As of Monday afternoon, it was unclear how many residents have signed the petition thus far, or at what stage in the process the referendum currently sits.<\/p>\n If organizers gather signatures from 5% of the town\u2019s registered electors \u2014 for example, about 1,480 signatures based on January data, according to a town document<\/a> \u2014 the referendum could go to voters for a decision, likely through a special election in December.<\/p>\n \u201cIf all the requirements are met for the referendum, we expect that the Town would need to hold a Special Election in December for this topic,\u201d Rae said. \u201cThere is a very, very slim possibility all of the pieces and parts could be completed in time to sit on the regular election, but that is not likely.\u201d<\/p>\n Under the town charter, the Town Council\u2019s ordinance approving the mineral rights deal remains in effect during the referendum process, unless the council suspends it or a court overturns it. If voters reject the ordinance through an election, the agreement with SM Energy would be \u201cnullified,\u201d Rae said.<\/p>\n For many residents, opposition to the deal has been aimed at how the mineral rights deal was negotiated, including discussion Owens and town leaders had in executive session, a type of meeting closed to the public that can be used by town officials to discuss legal matters.<\/p>\n
\nErie residents opposed to the SM Energy deal have begun circulating a petition to give voters a chance to overturn it.<\/p>\n