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Weekly UpdatesFAIRFIELD BAY'S Governing board knew its 2006 ban on natural gas drilling was a delaying tactic at best.
Now property owners in the planned community in the heart of the Fayetteville Shale Play are being asked to repeal the 2006 ballot initiative. In exchange, the Fairfield Bay Community Club would receive an infusion of cash that could revitalize the community in time to benefit from the retirement of the baby boomers.
Drilling for natural gas soon will begin, and the environmental bona fides of a 2005 Keep America Beautiful Community of the Year may come into question.
Community officials fear that natural gas drilling might spoil the environment many have sought out as a retirement or vacation spot. However, with Wyndham Resorts owning the majority of mineral rights to 4,600 acres beneath Fairfield Bay, the community has attempted to protect itself as best it can, officials say. Wyndham has signed a deal with Chesapeake Energy Corp. of Oklahoma for drilling rights on the property. Wyndham, which manages Fairfield Bay's timeshares, has agreed to share its spoils with the community club.
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In Arkansas, mineral rights trump surface rights. If a property owner owns land above minerals owned by someone else, there is little the property owner can do to prevent the extraction of the minerals.
The same holds true for Fairfield Bay. The community can do little to stop drilling. But the Fairfield Bay city council did what it could to protect the community, passing a drilling ordinance in December, which the city's code enforcement officers will enforce.
At the same time, the promise of money from drilling has many hoping to fund projects that have long rested on the backburner.
The money Wyndham is sharing from a signing bonus and royalties might allow the community club to develop a resort hotel in the area that will draw a greater number of visitors, and, it's hoped, eventually retirees.
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After more than a decade of decline, many buildings in the area have become rundown. The community club board recently upgraded tennis, swimming and dining facilities but hasn't been able to afford the more expansive, and expensive, improvements leaders believe are needed.
The New Development
Members of the Fairfield Bay community became wary of natural gas drilling shortly after it became known the hydrocarbon could be extracted from the shale formation across north-central Arkansas. Fairfield Bay sits atop prime territory in the Fayetteville Shale Play, an unconventional reservoir of natural gas.
In 2006, the Fairfield Bay Community Club board asked its 8,000-plus members to pass a resolution banning drilling in the area. The board is a combination homeowners association, city council and country club board of directors.
Fairfield Bay property owners pay monthly dues to the body, which oversees Indian Hills Country Club, the Fairfield Bay Marina and various other properties.
The referendum passed by members was basically a stalling tactic, John Sties, the community club's general manager, said.
"The board knew that at the time. It was merely an attempt to delay and not just let [drilling companies] run about and do what they want," he said.
The stall bought Fairfield Bay time to assess how it would handle natural gas drilling in the area, Carlene Barra, community club board president, said. The time allowed the Fairfield Bay city council to write an ordinance governing drilling in the area. The ordinance passed in December, and officials declare that it is "the most restrictive drilling ordinance in the state."
"We felt that Fairfield Bay is a very special place and that people had spent their hard-earned retirement money" to enjoy the area's natural beauty, Tom Schueren, Fairfield Bay's mayor, said about the ordinance. "Watching what was taking place in other [Arkansas] communities, we did not want our community to be decimated by gas wells and trucks."
The responsibilities of the community club board and city council overlap one another. However, the board governs all community club members and the council governs the municipality.
The 17-page ordinance outlines how drilling companies must operate in the area, mandating that residents within 500 feet of a well bore--where a drill enters the ground--must be notified by a drilling company. The ordinance also mandates that a drilling company produce plans of the drill site, list all public roads trucks will use to access the site and address environmental issues through a restoration plan, watershed protection plan and hazardous materials management plan. Gas companies were allowed to view and comment on the ordinance before its final draft, Schueren said.
"For us, it's the most restrictive ordinance in Arkansas, which is important for a community like Fairfield Bay," Mark Raines, a Chesapeake spokesman, said. "There are just a number of protections in place to ensure that we live up to our end of the bargain. Quite frankly, that is fine with us, because we have no intention of violating the ordinance."
Violations of the ordinance will bring fines between $500 and $1,000 for the first offense and $1,000 for each offense thereafter. The ordinance also bans the storage of waters used in the "fracing" process, which fractures the shale to release the trapped gas.
Redevelopment
The community's leadership has high hopes for what the money provided by drilling might bring. Wyndham agreed to provide the community with $1.5 million of the signing bonus it received from Chesapeake and 2 percent of royalty payments.
"The benefit, the huge benefit, is that we are going to receive a 2 percent royalty for the life of" the wells, Barra said. "We might as well take advantage of it, because we can't stop it."
The community club has dreamed for some time of building a resort on land it owns in Fairfield Bay. The resort will allow vacationers to visit the area, and Barra hopes to build on land directly behind the current country club--a peninsula overlooking Indian Hills' eighth hole and Greers Ferry. Few have been able to visit up to this point because condos and time shares are owned privately, Barra said, allowing only people with connections to a property owner to visit the community.
Fairfield Bay does not offer a location where potential retirees can vacation and inspect the area before buying a lot, Barra said. With baby boomers approaching retirement age, Barra hopes to lure many of them to Fairfield.
"I think we could be twice the size and never know it," Barra, 62, said about possible development. "We're saying that in the next five years that this baby boom generation is going to retire. I think they are going to want to go back to nature."
The club will use $500,000 of the initial signing bonus to pay debt service on the proposed hotel, which community club board members and management hope will resemble the Lodge at Mount Magazine near Paris (Logan County). The board members and club management are currently interviewing architects and construction companies, Barra said.
The proposed resort is a necessity for Fairfield Bay, said Sties, who became general manager about two years ago. Currently the club operates on $8 million a year, collected from monthly dues of $35 per lot and revenue collected from operating Indian Hills Country Club, the community's marina and several other small amenities. A resort would add another revenue source.
The club has not been able to accumulate reserve funds because it only manages to break even year after year, Sties said. The community has also suffered since Fairfield Communities Inc. filed for Chapter 11 bankruptcy in 1990. Fairfield Bay, under FCI's direction, was the first community to institute the timeshare business model. The area thrived while Fairfield Bay invested, but "it was survival after they left" due to bankruptcy, Barra said.
Barra said she and other community leaders are not unrealistic about natural gas drilling and expect problems to arise as roughnecks begin drilling in the area. But community leaders hope the drilling will allow Fairfield Bay to develop just as the dam that created Greers Ferry allowed the community to develop originally.
"I think about it in terms of imagining what it must have been like for Greers Ferry Lake," she said, talking about how communities and residents were uprooted and moved to clear way for the lake. "That all happened, and as we look back, we don't know any of those issue or disgruntlements. All we know is that we have one of the most pristine lakes."
She hopes that when residents of Fairfield Bay look back 40 years after the drilling began, they'll see a revived Fairfield Bay with great amenities and won't be talking about the headaches drilling will likely cause.
By Mark Hengel
mhengel@abpg.com
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