THE NEFFS Fire Department is leaking oil. The department filed for Chapter 11 bankruptcy last month.
That is an unfortunate turn of events. But oil (and gas) is pumping new life into the 86-year-old company.
The Neffs Fire Department has agreed to a Utica Shale oil and natural gas lease worth about $7,000 per acre and 20 percent of production royalties. That leasing deal may go a long way in helping the volunteer group dig out from its debt.
Court documents show the Neffs Fire Department has current assets of about $755,500 and total liabilities of about $1.84 million. The department owes more than $800,000 to the Internal Revenue Service. It also owes smaller amounts of money to various agencies such as the Ohio Department of Taxation, the Ohio Department of Job & Family Services and the Ohio Bureau of Workers' Compensation.
The Neffs department signed an oil and natural gas lease in September for 56.4 acres of land. The company agreed to pay 20 percent of the royalties for the oil and gas it may pull from the department's property once drilling and fracking begins.
The department is slated to receive "nearly $400,000" in lease bonus payments via 56.4 acres. That amount will only be a piece-meal fix to the overall debt. Hopefully, royalty payments erase the remaining once they commence.
If and when the Neffs Fire Department exits Chapter 11, it must take stock in how it operates. Obviously, mismanagement is a major part of the problem.
The Neffs department in 2003 took over fire services for Bellaire when the village eliminated its department. The $70,000 deal with Bellaire appears to be a financial drain on the Neffs company's coffers.
Moreover, the department needs to clean up its book-keeping practices.
According to a former department chief, a department employee was supposed to send payments to the agencies in question, but instead placed the money back into the department's general fund. The gaffe yielded a host of financial issues.
Oil and gas money will be solid help to the Neffs Fire Department. However, for long-term viability, the department needs to get its house in order and demonstrate much-more effective leadership.