TODAY   |  October 18, 2012

City mulls controversial fracking to raise money

Critics say that “fracking” – pumping water and chemicals into the ground to release oil and gas –  is a risky business that can cause water contamination. But cash-strapped cities like Youngstown, Ohio, are contemplating selling mineral rights to allow energy companies to drill and frack. NBC’s Phil LeBeau reports.

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>>> across the country, cash-strapped cities are turning to a new and controversial way to raise money .

>> that's right. allowing oil and gas companies to drill on public land hoping natural gas will bring in some much-needed cash. cnbc's phil lebeau is in youngstown , ohio . good morning.

>> reporter: good morning, al and natalie. right behind me, the city crew is getting ready to tear down this abandoned home. youngstown has more abandoned homes than it can afford to tear down. so the city is looking to cash in by saying yes to fracking for natural gas . in youngstown , ohio , where a rebound in manufacturing has sparked a resurgence, the mayor is frustrated. he sees a city in decline desperately in need of money to tear down abandoned buildings .

>> if you wanted to renovate or tear down this building, how much would it cost?

>> about $1 million to tear it down.

>> to tear it down is $1 million.

>> and on the other side, you see it's grass or a parking lot.

>> reporter: tearing down 1,100 abandoned homes will cost youngstown at least $4 million, money youngstown doesn't have. so the city may sell its mineral rights and allow energy companies to drill and frac on city land. to force release of oil and gas is filled with unknown risks, like the possibility of causing earthquakes and ground water contamination.

>> are you that crazy for money?

>> i guarantee you, we will organize under the first amendment, everybody in here and bring the wrath of god into this chamber and power back to the people.

>> other cities have already sold their mineral rights . in ohio , the money from drilling will pay for new sidewalks, water treatment , and perhaps give the small town a shot in the arm.

>> a few years ago, every store front just about was empty. now, there's new business coming in.

>> as cities struggle with tighter budgets, a potential windfall of millions of dollars trapped under public land is a tempting answer to their cash crunch.

>> this could be something that could help the area not only now, but ten, 20, 50 years from now. just like when the steel mills came here.

>> reporter: back live in youngstown , ohio . and yes, they have actually started the demolition of this house. guys, one update on this story, last night the city council approved fracking on public land . they're hoping that perhaps there are millions of dollars of natural gas trapped under those lands that would help the city pay for tearing down abandoned homes like this.

>> thank you so much. you can watch special coverage of "invest in america" all day today on cnbc.

>>> up next, kathie lee and hoda and 50 of the hottest bachelors in the country. but first, your local news and