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Wednesday, May 9,2012

Landowners want minerals owner to pay more taxes

By Jim Phillips

The scramble to lease up mineral rights in Athens County for potential oil-and-gas drilling has inspired some landowners who don't own their minerals to try to get the company that does to pay a bigger chunk of their property tax bills.

A number of Athens County landowners have petitioned the county auditor's office to change their tax assessments, so that a coal company that owns the mineral rights under their properties will have to pay more of the tax bills on the land.

In early April, attorney Don Wirtshafter filed tax-valuation complaints on behalf of a number of landowners in the Guysville/Millfield area, all of whose mineral rights are held by the Athens-based Sugar Creek Coal and Mining Co. The properties in question account for over 9,000 acres.

In asking the county to jack up the portion of the tax bill paid by the coal company, Wirtshafter cited the fact that a hoped-for oil-and-gas drilling boom here is pushing up the value of ownership for such mineral rights.

"Other property owners are being offered oil leases with good royalties and bonus payments of up to $2,500 per acre," he wrote in one tax complaint. "As the mineral-rights owner, it is Sugar Creek who stands to make this money. Having mineral rights severed from the land has caused this neighborhood to decline in value."

He went on to argue that the current valuation of the properties for tax purposes unfairly puts more of the tax burden on the surface owner, and does not take into account the fact that Sugar Creek claims the right to mine or explore on the land at any time.

"Construction of pipelines common for gas extraction, for example, requires landowners to continue paying taxes for surface rights even though they can never build anything near the pipeline or its right-of-way," he maintained. "It is not equitable for the surface owner to bear the full burden of taxation without any differentiation between land where mineral rights remain intact or have been severed without taking such infringements and devaluation into account."

Athens accountant Don B. Cooley, who represents Sugar Creek, declined to comment on Wirtshafter's tax complaints Friday, or to say whether the company will contest them.

Wirtshafter said at least 39 landowners are involved in the tax-complaint effort. Of the acreage involved, he alleged, some 8,000 acres have their mineral rights taxed as having no value.

"There is no valuation at all (on those properties' mineral rights," he said. "It's evaluated at zero." In other cases, the valuation might be a nominal sum as small as $50; often, he said, this was set many years ago and never adjusted.

"In reality, mineral rights are currently worth more per acre than surface rights," he claimed in a tax complaint. "Properties with split minerals should be appraised at their true market value like any other property." If Sugar Creek continues to claim mineral rights ownership, he added, "they should be required to pay the bulk of the real estate taxes due."

After the auditor's office rules on the complaints, Cooley said, he believes Sugar Creek will have 30 days to respond.

Wirtshafter said he's not aware of any other organized effort being made to push more of the property tax burden on split-mineral properties onto the mineral owner.

"I've not heard of this being done by anyone else anywhere," he said. "The goal is to get (the minerals owner) to pay their fair share of the property taxes."

One of the property owners involved is Michelle Ajamian, a part owner of Shagbark Mill and Seed Co. who has a 25-acre farm.

"The coal company owns about 9,000 acres in terms of mineral rights," she said. "And I kind of feel like, man, if I had a bunch of money, and I owned a lot of land, and I didn't have to pay taxes on the minerals… I'd hang onto it and not do anything."

Though Ajamian said personally she doubts that horizontal "fracking" for oil and gas is ever going to happen here in a big way, she does feel the mineral rights owners have been getting too good a tax break for too long.

"It was just time to do it," she suggested.


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