Since 1992, we have examined land-use issues in the coal-producing sections of the Southern Appalachian region for the impact of the Surface Mining Control and Reclamation Act (SMCRA) of 1977. Focusing tightly on Wise County, our home-county, we specifically studied the twin impacts of SMCRA and one of the region's first attempts to implement a comprehensive land-use zoning ordinance.
In 1994-5, we began to find and document evidence that showed, despite SMCRA and our attempt at zoning, Wise County, like other coal-producing counties, was experiencing a phenomenon which we call here "Derelict Landscapes" -- according to this phenomenon, surface disruption and long-term land destruction had not abated, as SMCRA intended, but was instead increasing and causing a property-ownership and taxation crisis for the county's residential-property owners and its officials.
In short, the provisions of SMCRA dealing with post-mined land use and reclamation bonds had created incentives for coal-mining companies to acquire deeds to surface lands-- departing from pre-1977 patterns wherein companies often leased surface lands from private owners who bore the burden of higher tax assessments and the concomitant regulatory neglect-- and to use their influence to keep assessments on those lands as low as possible. By following the minimal requirements for post-mined land use (i.e., unmanaged pasture or forest), these companies were creating substantial acreage that fit the state-of-Virginia's statutory definition for "blighted" lands. This trend was reinforced by the low tax assessments-- averaging slightly more than $200 per acre-- that ensured that the lands would REMAIN under-developed, sparsely-managed, and NOT on the market. To sell land would establish a market value so most large land-owners in the region now refuse to do so. Instead, companies have been known to make rare, paternalistic, and tightly-targetted donations, giving small-to-medium tracts of land to the state and/or county for such purposes as schools and prisons.
Despite our persistence, until 1997, we had failed to get the Wise Co. Board of Supervisors to examine the low rate at which coal bearing lands were assessed. We argued that the low rate of assessment was a disincentive for corporations to sell lands. It encouraged the corporate owners to look for schemes to increase corporate revenue, such as waste disposal, without engaging in land improvements. It created an artificial shortage of residential properties, driving up costs for home ownership and shifting the tax burden to home owners. And, given the artificial person status of the corporate entity and the pattern of "musical letterheads" in which energy interests operate, then the parties responsible for this blighted tax condition and under-reclaimed lands were difficult, if not impossible, to identify-- thus the term: "derelict landscapes."
A few supervisors began to hear us when a combination of higher budget requests from the County School Board and a botched fee program for the county's solid waste landfill made them fear that they would have to impose a property tax increase. Wise County had the second-to-lowest property tax rate in Southwest Virginia-- forty-seven (47) cents per $100 of property-value. We pointed out that our own land re-assessment showed our 3 acres of property to be worth $1,800 per acre but that the corporate-held land literally a few feet away, across a secondary road, was valued to be worth only $200 per acre. We began to focus attention on the revenues lost to the county because of the low assessments of coal properties. By then, however, the contract had already been awarded for a scheduled reassessment.
When reassessment notices were mailed in 1997, a significant number of citizens protested the higher assessments of their properties. In many cases, they successfully argued that serious inequalities occurred in the assessment of neighboring properties and demonstrated that the assessments contained errors of fact that were suspicious in that they suggested that on-site inspections of property were either done hurriedly or not at all. By joining our voices with theirs, we persuaded the Board of Supervisors to appoint an ad hoc advisory committee to study the assessment of Wise Co. properties.
Democratic Supervisor Randy Necessary first made a motion to appoint the committee in the Spring of 1997. The motion was opposed strongly by Republican Supervisors Virginia Meador, Doug Stallard and Democratic Supervisor Jack Kiser. The motion was tabled rather than defeated.
When the motion was taken off the table at the next meeting, Supervisor Meador took the position that the Board would first have to determine what expertise would qualify someone to sit on the committee. Rouse's suggestion of county citizenship was not taken. At one point during the discussion, Wilson shouted from the audience, "By qualifications, do you mean being a member of the stockholding class?" and we left the meeting (Meador is the widow of Harry Meador, a former CEO of Westmoreland Coal; Ms. Meador is also a stockholder in Westmoreland, Penn-Virginia, and railroad companies that operate in the region). At the next meeting, Meador announced that she would refrain from voting on the motion to appoint a committee.
By the end of summer, the motion to create the committee passed. Members of the committee are Joe Powers (representing Penn VA), Scott Dorton (a member of the County Planning Commission), Thelma Gilley, Dana Chisenhall, David Rouse, Steve Hensley, Audie Kennedy, Jim Manicure(a real estate broker), Dink Shackleford (representing the Virginia Mining Association), and Jim Justice. The Board of Supervisors charged the committee with answering the following questions:
The first meeting of the committee was held October 24, 1997, and it has met monthly since.
- How many residential properties were assessed and taxed in the last three assessments?
- Does the assessment and reassessments of all property reflect the true rate of inflation and recent market prices?
- Was the last reassessment conducted fairly and in the interest of the citizens of Wise County?
- Were physical inspections conducted on all properties being reassessed? If not, how, random sampling, etc?
- Was the assessment company a certified firm to be performing the reassessment?
- Did those citizens who asked for equalization services receive fair equalization treatment from the board?
- What is the history and rationale for the system (minerals lands under development and mineral lands not under development) currently used by the Commissioner of Revenue?
- Does the existing system take into account the existing comprehensive plan and zoning ordinance?
- Are residential property owners in one zone treated the same as property owners in other zoning districts? Are they treated differently? Why?
- Recommend to the Board of Supervisors the findings of the above and if legally feasible to recommend steps that the Board of Supervisors may take to insure that all taxpayers are being treated fairly
In the 1980 case study of Wise Co. by the Appalachian Land Ownership Task Force, it was noted,
Most of the individuals interviewed did not have a clear perception of who owns the land in the county. There was some awareness that coal companies and the forest service own a lot of land in the county, and many people could identify one or two of the largest landowners, but no one had much of an idea what proportion large and small landowners and the forest service own. For the most part, people thought that various local individuals own a lot more land than is the case.
Land scarcity was the most pervasive perception voiced by people interviewed about land use and ownership in the county. Although most of the time it seemed that scarcity was a term used not so much in the sense that there was not enough land to go around, but in the sense that land was expensive and hard to come by.*
In the seventeen years since that report, little changed. When we began showing a GIS-produced map of corporate holdings at supervisors' meetings and public hearings, people expressed shock at how little Wise Co. land was available for individual ownership. And while ownership is little understood, land taxation is even more confusing.
We found that Wise County had but two kinds of lands for the purposes of tax-assessment: "mineral lands under development" and "mineral lands not under development." All residential and commercial property in the county-- with the exception of currently-permitted strip mines-- are listed in the second category, "mineral lands not under development." When questioned, the county's Commissioner of Revenue indicated that this scheme for land differentiation had been in place since 1906 and that, no, during his tenure as Commissioner of Revenue, he had not entertained any thoughts of amending it. When asked if the land should be assessed according to its designation by the 1991 Zoning ordinance and official Zoning map for Wise County, he refused to comment further and we discontinued our interview. (NOTE: The 1991 Zoning Ordinance specifies a variety of zone categories: two thick-density levels of residential property, one commercial zone, three levels of manufacturing, and a broad zone ambiguously called A-RR which stands for Agricultural - Rural Residential but permits surface and underground mining without special permit.)
On December 16, the Real Estate Tax Study Committee met with Harold Wingate, whose firm conducted the 1996-97 reasssessment for Wise Co., and Thomas Morelli, Senior Property Appraisal Consultant, Department of Taxation, Commonwealth of Virginia. Mr. Morelli attended the meeting at the request of Wingate as an authority with whom he was acquainted but Mr. Morelli had little to offer in the way of substantive information concering Wise County and spoke mainly about state trends and general information concerning Virginia real estate property law. Wingate noted that the condition of the property maps in Wise Co. is a problem for assessors. Wise Co. was originally mapped in 1948. In many cases parcels are not mapped. The assessor may not know if there is a right of way to a given parcel. The only way to know the condition of a parcel is to look at it, and if the maps are not good, you don't know what you are looking at. He tends to give benefit of the doubt to the property owner in such cases. Morelli noted that maps are a key tool in producing equitable assessments.
When asked about the large number of properties in the county assessed for $200 or less per acre, Wingate replied that an assessor must set a minimum value on property based on sales. Rouse pointed out that such properties rarely sell. Wingate assured the committee that he has established a minimum value based on sales, but he would have to be paid an additional amount over and above his contract to re-identify those properties. Rouse then posed a regulatory dilemma, if post-mined lands turned out to be inherently less-valuable than pre-mined lands, as Wingate had been advised (a position claimed publicly at that same meeting by Virginia Mining Association director Dink Shackelford), does this constitute a violation of the reclamation standard stated in Title V of SMCRA, e.g., that land be reclaimed to equal land-use capacity or to "higher and better uses." Wingate and Morelli both appeared to be unfamiliar with SMCRA and left the meeting without addressing the question.
*Appalachian Land Ownership Task Force. Appalachian Land Ownership Study: Volume VI: Virginia. Lexington: University of Kentucky, 1980, p. 196-97.
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A legitimate problem in assessing Wise Co. lands and minerals is the number of unmapped properties. This study shows that, of the 24,713 properties recorded in the Wise Co. Land Book, 1,354, or 5.4%, are unmapped. Total acreage recorded in the Land Book is 352,709 (surface and mineral). Unmapped acreage is 141,833, or 40.2% of the total.
Ashland KY based Addington Inc. has made recent purchases in Wise Co. The land book list 41 parcels. Ten of those, totaling 3,488 acres, are not mapped and there is no surface assessment. The total acreage mapped is 628. It is assessed for a value of $200,900, for an average assessment of $319.99 per acre.
Most of the Addington property is from the purchase of the Fleming Kinship Land on June 20, 1991. Total consideration for that purchase was $470,000. The only other Addington property is 122.8 acres from the Pounding Mill Land Corp., purchased June 20, 1991, for $30,000.
The Addington properties are one case where assessed value and market value are proximate.
Blackwood Operating Co.
Blackwood Operating Co. is a surface owner, while Blackwood Land Co. is a mineral owner. Blackwood Operating owns 1,639.6 acres. The total assessment is $557,000 for an average assessment of $351.91 per acre.
Blackwood has been designated, by zoning ordinance and by investment of tax revenues for infrastructure-improvements, as the county's prime area for heavy industrial development. The assessment fails to reflect this designation.
CCCF Enterprises' mailing address is c/o Glamorgan Coal. Six properties, totally 582.62 acres are listed in their name. The total assessment is $136,300 for an average assessment of $233.94 per acre.
The locally owned Bolling Co. holds lands primarily in the Hurricane and Indian Creek sections of the county. It owns 445.237 acres. The total assessment is $158,100, for an average assessment of $355.09 per acre.
Six of its 21 properties are in the same area where VICC has recently made extensive purchases.
Clinchfield Coal is a subsidiary of Pittston. It holds many properties jointly with Pittston subsidiaries Pegasus and Pyxis. Total assessed acreage is 6,111.7 acres. The total assessment is $1,315,400, for an average assessment of $215.23 per acre.
Sixty-eight of the 122 properties do not have an assessed surface value. These may be minerals severed from the surface.
Of the 122 properties listed, 72 are not mapped.
The only "market" exchange recorded in the property histories of the Land Book is the sale of 1.543 acres on January 16, 1991, for $1500. That averages $972 per acre.
Portions of seven strip-mined properties were transferred by Pittston to the Virginia Department of Corrections for the construction of Red Onion State Prison. All the properties retained by Clinchfield Coal, each bordering the state prison site, were reassessed at $200 per acre. Pittston retained the mineral rights to this property and anticipates that future underground mining may occur at the site. Athough Pittston officials were unable to assure the state that such future mining would not cause subsidence damage to the prison, once built, the state accepted the land-contribution and proceeded to pay in excess of $3 million dollars for site soil-compaction to stabilize the ground prior to construction.
Glamorgan Coal Corp
Glamorgan Coal Corp. has a total assessed acreage of 504.481 acres, assessed for $435,300, for an average assessment of $862.87 per acre.
There was one "market" exchange, for 30.12 acres on May 21, 1991. Consideration was $75,000, or $2,490 per acre. The assessment is $6,500 or $215.80 per acre.
Glamorgan Coal Lands
Glamorgan Coal Lands has a total assessed acreage of 1,852.469 acres, assessed for $1,087,600, for and average assessment of $587.11 per acre. The property histories record no considerations.
The Hagan Estate has a total assessed acreage of 667.24. The total assessment on those acres is $253,800, for an average assessment of $380.37.
However, the Land Book lists 6278.66 acres with $0.00 surface assessment. The mineral assessment on those acres is $870,028, for a per acre assessment of $138.57.
Paramont Coal and Paramont Minerals Corporation (now subsidiaries of Pittston) together are recorded as owning 1,270.8 acres of Wise Co. land. The total assessment is $1,025,300, for an average assessment of $806.77 per acre.
There is one property out of 48 where the land book records consideration. On April 12, 1991, Paramont Coal purchased 51.8 acres from Martha Hubbard for $250,000, an average of $ 4,826.25 per acre. On March 20, 1992, Paramont Coal transferred 6.713 acres of that same property to Ray Hubbard for $5,000, an average of $744.82 per acre. The remaining 45.087 acres are assessed at $18,000, an average of $399.23 per acre.
Pegasus Resources is another subsidiary of Pittston. It has a total assessed acreage of 10,712.762, assessed at $2,817,500, for an average assessment of $263.00 per acre.
Of the 271 properties listed to Pegasus, only one transfer seems to be a market transaction. On May 31, 1991, Pegasus purchased 26 acres from Nora Rose for a consideration of $125,000, an average of $4807.69 per acre. Those 26 acres are currently assessed at $10,400, an average of $400 per acre.
Penn Virginia Resources is the largest single property owner in Wise Co., with 55.574.56 assessed surface acres. The total assessed value on those lands is $13,266,600, an average of $238.72 per acre.
Pyxis Resources is another Pittston subsidiary. Only six properties in Wise Co. are listed under its name, totaling 33.918 acres. Total assessment is $14,900 for an average assessment of $439.29 per acre.
Rapoca Energy Co.
Rapoca has seven surface properties assessed. Total acreage is 249.36. Total assessment is $88,400, for an average assessment of $354.51 per acre.
Red River Coal
Red River Coal has 51 properties totaling 1287.858 acres. Total assessment is $313,100, for an average assessment of $243.12 per acre.
There are two transactions recorded in the Land Book which could establish a fair market value. Three properties, totaling 5.8 acres were purchased on November 24, 1993 for $45,000. That is an average of $7,758.62 per acre. A 4 acre tract is assessed at $6800, or $1700 per acre; a 0.7 acre tract is assessed at $500, or $714.28 per acre; and 1.1 acre tract is assessed at $1300, or $1181.81 per acre.
On March 25, 1992, fifty acres were purchased for a consideration of $87,000, and average of $1740 per acre. The property is assessed at $10,000, or $200 per acre, the assessor's minimum value for Wise Co. land.
Virginia Iron Coal and Coke, a subsidiary of Coastal Corp of Houston TX, is the second largest surface owner in Wise Co. It holds 21,725.57 acres of assessed land. The assessed value is $5,697,300, for an average assessment of $262.24 per acre.
VICC has recently acquired significant lands in the Hurricane and Crane's Nest areas of the county. The assessed and purchase values of these lands are charted. The discrepancies between the assessed values and the consideration paid for the land seriously call into question adequacy of the assessments.
While corporately held coal bearing lands are not sold with great frequency, there have been sufficient transfers in Wise Co. between the 1991 and 1997 assessments to establish a fair market value considerably higher than that set by Wingate Associates. The lowest value of $200 per acre has no justification in the records examined. Only in the case of the Addington properties can a value as low as $300 per acre be argued for. A minimum value of $500 per acre would come much closer to the values of the actual market. Where lands have actually sold, assessments should reflect 90-100% of the consideration given.
Average assessments on taxed surface lands (Both on one page)
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Assessed value vs consideration paid on VICC surface lands