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Published: Sunday, July 28, 1985
Page: P1C

A.=T. MASSEY Coal refuses to pay taxes on coal lands it bought for $29.8 million three years ago in rugged southwestern Webster County.

Webster County Sheriff Caroline S. Clayton wants to sell the property at public auction for back taxes.

Massey representatives say the company is not paying taxes because the company does not agree with the amount the county tax assessor says the company owes. The county assessed the land at half the sale price, or $14.9 million.

County tax Assessor Dana A. Lynch says the "basis of taxation in Webster County is fair market value of the land. All property owners are assessed according to the declaration of value on their deed." When former Sheriff Gary Payne attempted to auction off the property in November, Circuit Judge Danny O. Cline blocked the sale..

He said Massey could withhold all taxes until the dispute with the tax assessor is resolved.

The sheriff and assessor wonder whether Massey can legally refuse to pay its taxes. Normally, taxpayers must pay their taxes and then appeal. "Everybody has to pay their taxes, even if they don't like them," says Clayton. "A farmer is assessed the same way for his land. If he doesn't pay his taxes, we sell the land." "Everybody better get their eyes open," says Joe Adams of Cowen, president of the Webster County Commission.

"Out-of-state interests are buying everything around here. Then the land just sits there. You can't develop it. They're killing the community." Property taxes which Massey owes would help support the school system and other county services including public libraries, volunteer fire departments and senior citizens' programs. "This big coal company comes in and walks all over everyone," says Clayton, who took office in January. "They don't even need the money.

Our kids need the money." Clayton and her courthouse colleagues predict intensifying conflict between small homeowners and area business people, on the one hand, and large, out-of-state landowners, on the other.

Webster County will go bankrupt, says the sheriff, if big corporate landowners succeed in reducing their property taxes and if the courts should order the county to repay some taxes already collected.

This isolated and scenic county's 12,245 residents have the lowest per-capita income in the state - $5,547 in 1983, according to the U.S. Department of Commerce. More than 40 percent of Webster County's income of $68.4 million in 1983 came from "transfer payments," according to the state Department of Employment Security.

Transfer payments include income from sources such as social security, unemployment compensation, Workers' Compensation, public assistance and black lung benefits.

A.T. Massey is the sixth-largest coal producer in the United States. The company owns or leases coal lands in Mingo, McDowell, Logan, Wyoming, Boone, Lincoln, Wayne, Raleigh, Nicholas and Webster counties. The United Mine Workers has been striking Massey mines in Southern West Virginia and Eastern Kentucky for 10 months.

|MThe Massey holdings are extremely valuable mineral lands.

Eight coal seams lie beneath more than 7,200 acres, just north of Cowen between Birch River and Laurel Creek, according to the assessor's mineral maps.

Massey bought the land in July 1982, through its subsidiary East Kentucky Energy Corp., from Allegheny-Pittsburgh Coal, a subsidiary of the Allegheny Power System. Allegheny-Pittsburgh, which paid $24 million for the land in 1974, is also trying to get refunds on property taxes it paid.

Don Hebb, state Tax Department coal expert, says these sales appear "completely out of whack with others in the state. Most inactive coal tracts sell for between $100 and $500 per acre.

Massey paid more than $4,000 per acre." In February, Massey protested its tax assessments before the County Commission - acting as the Board of Equalization and Review.

A Massey geologist testified the land contains 32 million tons of recoverable, strippable coal.

At $25 a ton, that coal would sell for $800 million.

The mine would produce about a million tons a year. Stanley C. Suboleski, Massey vice president for planning and development, says his company has "been trying to sell that coal ever since we bought it. But we want to sign a long-term contract. The spot price for coal is so low, we would almost surely sell at a loss without a long-term contract." Massey's unpaid taxes in Webster County now total $685,350 _ $203,334 for 1982-83, $240,948 for 1983-84 and $241,068 for 1984-85, according to County Assessor Lynch. Area schools would get $250,000 of the delinquent taxes for the first two years, while $156,000 would go into the county's general fund.

Webster County spent $1,164 per pupil in 1983-84 - lowest in the state, according to West Virginia's Department of Education. In the last two years, one out of every three teachers left the county, the highest turnover rate in the state.

"An adverse verdict in this case would be devastating to a county this size," says James M. Durham, assistant schools superintendent. "If the company wins," he predicts, "it will have a domino effect throughout the state." |MA.T. Massey and Oneida Coal contend their Webster County coal lands are taxed at higher rates than comparable lands in the county. Both companies appealed and the circuit court consolidated their appeals.

Oneida, which paid its taxes and then appealed, purchased 13,384 acres for $10 million in 1977, at the juncture of Webster, Nicholas and Braxton counties.

W. Tracey Weber Jr., Oneida's lawyer, says more than 90 percent of all coal tracts in Webster County are assessed at less than $180 per acre, while his company's lands are assessed at $750 an acre.

Representing Massey, former State Bar President Dan O. Callaghan supported Weber's arguments. Callaghan added that Massey will pay whatever the courts ultimately order.

Webster County prosecutor Jack Alsop says the case "will end up in the Supreme Court, I'm sure. We're going to take the position that a bona fide sale of property is the best evidence of its value ." Since Massey paid $29.8 million for the land, Webster County officials feel their appraisal of $29.8 million is fair.

During the April hearing, Cline said that if a property has "a declared value on the deed of $20 or $20 million, it would seem that it shouldn't be assessed at considerably less than that." Yet Cline indicated he is likely to rule in favor of the companies, since the property of other Webster County corporate taxpayers is appraised at less than current market value. "If the declaration of value in a deed is used as a basis for some taxpayers,the statutes require that it be used for all taxpayers .

"The assessor has a duty and an obligation to apply that particular system to all of the similarly situated and like property," the judge continued. "In this particular instance, the assessor has applied the declared value as to those properties that were recently transferred. Over a period of years, there has been no assessment of properties that were not transferred at a like figure ." Cline noted that companies like Massey and Oneida can deduct county property taxes. "The individual does not receive the benefit of tax write-offs and the various devices that are available (to corporations) for the purposes of deciding tax benefits in state and federal income taxes." |MNew mineral appraisals now being completed by the state Tax Department might make matters worse for Webster County. The new appraisals of Massey's Webster County land, likely to go into effect in 1987, total $2,119,985, compared with the $29.8 million Massey paid for the land. The Tax Department values 6,700 surface acres at $1,143,700, 7,200 acres of coal reserves at $973,985 and 2,300 oil and gas acres at $2,300, assuming they remain inactive.

Since the new law requires counties to assess property at 60 percent of its appraised value, Webster County could be forced to cut its assessment on Massey's lands to $1.3 million from $14.9 million _ half the 1982 purchase price.

With taxes set at $1.62 for each $100 of assessed property value, Massey would pay $20,550 on its Webster County property annually, rather than the $241,068 it is required to pay this year John Melton, property tax division director, notes that "if property is not producing, the appraisal will only be several hundred dollars per acre. The value for producing acreage and active reserves will increase dramatically into the thousands."

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