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Published: Friday, December 30, 1994
Page: P2A

In early January, the state Tax Department will begin using a new list of 125 recent coal sales to figure out what property taxes coal owners must pay next year.

The list will indirectly determine how much money public schools, libraries, ambulances and county sheriffs receive in property taxes.

This is the second list of coal sales the Tax Department produced this year. In August, Gov. Gaston Caperton ordered the department to prepare a new list after a series of articles published in The Charleston Gazette revealed the first list was riddled with mistakes.

The second list is filled with problems, too. Interestingly, the second list put nearly the same value on unmined coal as the first Coal sold for an average of $335 an acre, according to the first list. It sold for $357 an acre, according to the second one.

Controversy over taxing natural resources is growing. A loosely organized coalition of citizens, community groups and unions has hired Charleston lawyer James Lees to sue the Tax Department in early January. The suit will question the way the Tax Department creates its list of coal sales.

What makes the second list unusual?

Nearly 70 percent of the acreage on the second list comes from a single coal sale. At the same time, 70 percent of the 125 sales, or 87 sales, account for just 1 percent of the total acreage.

Thirteen sales on the second list involve 500 acres or more.

These deals comprise 96 percent of all acreage on the list.

Less than 20 percent of the 125 sales came from Southern West Virginia counties, where low-sulfur coal is becoming more and more valuable as tough federal air pollution standards take effect.

Pittsburgh-based Consolidation Coal Co. alone was involved in 47 of the 125 sales, in seven different counties.

Gov. Caperton defends the current system against critics who question whether coal is paying its fair share.

Critics include Secretary of State Ken Hechler, Attorney General Darrell McGraw and Treasurer Larrie Bailey.

The second list Nobody knows exactly how many acres or how many tracts of coal reserves there are in West Virginia. Land books in most coal-producing counties contain hundreds of coal tracts.

State officials can't look at every coal tract every year.

Obviously, they must depend on some standard, or measure, to set the value of all unmined coal in the state.

Most major coal tracts, moreover, are rarely sold. Companies such as Pocahontas Land Corp., Shonk Land Co. or Dingess-Rum Coal Co.

lease coal lands rather than sell them.

To determine the value of the state's coal reserves, tax officials have compiled a master list of 1,870 recent coal sales.

From this master list, they extract what they call representative, or typical, sales.

Prices on the master list vary from a few cents an acre to thousands of dollars an acre.

The master list, updated earlier this month, includes 240 deals involving 500 acres or more. Yet the Tax Department's new list of 125 sales includes just 12 of these.

State tax officials have yet to produce a detailed description of the process they use to select typical sales, and to reject others, from the master list.

Last week, Tax Commissioner James H. Paige III and his aides said they supervised those who created the new list, but are not themselves familiar with specific deeds.

The process of choosing typical sales lies at the heart of the current dispute about property taxes.

After Caperton ordered Tax Department officials to create a second list, they eliminated 855 sales from the first one, leaving only 73 of the original 928 sales.

Paige said his department added 52 sales to the new list by visiting courthouses and consulting county officials.

The new list includes the 1986 sale of 39,023 acres from Royal Land Co. to Pocahontas Land Corp. for $69.1 million. Robert Hoffman, interim deputy tax commissioner, said the department included that sale only because of a story in the Gazette.

Paige is confident the second list is a good one. "The individual responsible for the first list was taken out of the decision-making process for the new list. He was not involved," he said last week.

Paige was referring to Don Hebb, who had worked on coal property appraisals for years.

Paige said seven department lawyers, as well as field auditors and mappers, helped identify the 52 new sales and review the entire new list.

Jerry Knight, head of the property tax division, predicted the Tax Department will approve the new list, perhaps with modifications, in the next 10 days. Knight will then send new coal values to all county tax assessors who must use them to value all coal lands in their counties.

Unusual deals To be included on the new list, sales must have occurred since 1986 and involved willing buyers and willing sellers. Department researchers said they rejected sales that included royalty payments or active mines.

The second list contains numerous unusual deals, including: In Clay County, huge tracts of land changed hands in the past decade. Yet the new list includes only one sale from the county, which involved just 39 acres. Tax Department officials removed 23 Clay County sales from the old list, several of which involved major companies.

In Webster County, A.B. Andrews sold 79 acres of coal to the A.B. Andrews Trust in March 1993.

In Pocahontas County, Sen. Walter Helmick, D-Pocahontas, bought 480 acres in September 1990 for $100,000 from the estate of Cecil Nichols. Nine months earlier, Helmick had sold Nichols the same land for $100,000. Tax Department researchers were apparently unaware this sale also included up to $500,000 in royalty payments Hope Gas bought 5.8 acres of land to protect an underground gas line. Snakelike, this tract winds through land in Marion County In Monongalia County, Ralph Thomas sold 18th of an acre, under an abandoned schoolhouse, to Consolidation Coal for $1,000.

Another tiny Monongalia County deal transferred a 114 interest in 1.81 acres and a 196 interest in 0.42 acres. Eloise and Milner Williams sold this total of 0.13 acres to Consol for $200.

Braxton County, never a major coal producer, had 34 sales on the list - far more than any other county. Monongalia was second, with 15 sales. The Braxton County sales included: Bright Coal Corp. sold 419 acres to Prospect Land and Development Co. for $500 in December 1989, averaging $1.19 an acre.

The Tax Department's new list does not include another deed, involving the same property, filed in Clay and Nicholas counties on the same day. Tax officials may have excluded that tract because it included five small deep mines. At the time, William Bright said the sale was worth up to $41 million.

Three related Braxton County sales each involved about a quarter of an acre - including a 1588 interest in 50.73 acres and a 1294 interest in 50 acres.

Three other related sales, two for 18 of an acre and a third for 1.4 acres, conveyed fractional interests in 6 acres of coal Four related sales conveyed 0.99 acres each - a 160 interest in 6 acres; while six other related sales each sold 2.02 acres _ a 144 interest in 89 acres.

All coal property taxes paid next year will be based on the Tax Department's second list.

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