WV Center on Budget & Policy Story Archives - West Virginia Public Broadcasting

Who Owns West Virginia? Part Two

According to a recent report, the top 25 landowners in West Virginia own about 20 percent of the surface in the state. And perhaps not surprisingly, most of those landowners live elsewhere. The report, released by the West Virginia Center on Budget and Policy, is the first to take a close look at land ownership since the 1970s and it’s created quite a stir.

Heartwood Forestland Fund. The Center on Budget and Policy’s report says the company is the largest surface owner in the state, holding deeds to more than half a million acres across 31 counties.

Well, the folks at Heartwood wouldn’t return phone calls to tell us about their business practices, but according to the web site, since the mid 1990s, the company is a “timberland investment management organization (TIMO) which emphasizes naturally regenerating hardwood and some softwood forests.” Heartwood currently manages more than 3.5 million acres in 25 U.S. states as well as in Belize, Canada, Costa Rica, and Panama. According to its web site, the company is interested in large tracts of land, 2,000 acres or more; looks for natural stands of hardwoods, mixed pine, and northern conifers; and, it likes the East Coast since it’s based in North Carolina.

FORESTLAND MANAGEMENT TFG believes in being a responsible steward of the land and follows the principles of sustainable forestry. Forestland management plans are designed on a tract-by-tract basis, paying careful attention to each property's unique biological habitat and diversity. The firm's goal is to seek competitive returns while maintaining the productive capacity of the forest. The firm's management practices encourage the natural regeneration of the forest; maintain soil productivity, water quality, species diversity, wildlife habitat, and sites with significant biological, historical or archaeological value. The goal is to employ forest stand improvement techniques increasing the viability of the residual forest and to maintain the ecological integrity of the forest ecosystem.

So investors potentially based anywhere around the world collectively own a lot of West Virginia, and appear to have a vested interest in leaving the land pretty well as is.

Of course, Heartwood isn’t alone its absentee status. The top 10 landowners in the state are all based out-of-state.

The age-old question is: Can we blame the pervasive poverty in West Virginia on absentee land ownership?

“I think that around the world where you have extractive industry, you often have very poor people,” says Beth Spence who works as a Coalfields Specialist for the American Friends Service Committee. Spence was also the primary writer for the recent land ownership report entitled, “Who Owns West Virginia in the 21st Century?”

“I think it’s particularly troubling that we have so many children living in poverty in the state,” she points out. “It’s something we really need to look at and address in terms of what kind of wealth do we have and what kind of needs do we have.”

Spence grew up in the southern coal fields in Logan County and worked on the Appalachian Land Study Task Force in the 70s researching land ownership across Appalachia. She says not a lot has changed since then. Or at least, like many, she was not surprised by findings that so much land is owned by outside developers.

“It’s a different kind of ownership. In the past, the owners were people who wanted to develop minerals. These guys manage investment funds. I think it’s going to be interesting to see what that means for West Virginia because it may mean something different.”

Spence says answering questions the report brings up regarding mineral ownership and taxation are important next-steps. She notes that transparency hasn’t quite been a state-wide priority in the past.

Consider this:

WEST VIRGINIA CODE §11-1C-14. Confidentiality and disclosure of return information to develop or maintain a mineral mapping or geographic information system; offenses; penalties. (a) All information provided by or on behalf of a natural resources property owner or by or on behalf of an owner of an interest in natural resources property to any state or county representative, including property tax returns, maps and geological information and property tax audit information provided to the West Virginia Department of Environmental Protection, Office of Oil and Gas, and the West Virginia Geological and Economic Survey, for use in the valuation or assessment of natural resources property or for use in the development or maintenance of a legislatively funded mineral mapping or geographic information system is confidential. The information is exempt from disclosure under section four, article one, chapter twenty-nine-b of this code, and shall be kept, held and maintained confidential except to the extent the information is needed by the State Tax Commissioner to defend an appraisal challenged by the owner or lessee of the natural resources property subject to the appraisal: Provided, That this section may not be construed to prohibit the publication or release of information generated as a part of the minerals mapping or geographic information system, whether in the form of aggregated statistics, maps, articles, reports, professional talks or otherwise, presented in accordance with generally accepted practices and in a manner so as to preclude the identification or determination of information about particular property owners: Provided, however, That effective the first day of July, two thousand six, the Tax Commissioner may disclose the following specified information obtained from the West Virginia oil and gas producer/operator return to the West Virginia Geological and Economic Survey and the West Virginia Department of Environmental Protection, Office of Oil and Gas: Provided further, That the West Virginia Geological and Economic Survey and the West Virginia Department of Environmental Protection, Office of Oil and Gas, may disclose the following specified information obtained from the West Virginia oil and gas producer/operator return. (1) The name and address of the owner of a working interest in the well for which the return is filed; (2) The county and district within the county wherein the oil or gas well is located and taxed for ad valorem taxation purposes; (3) The name, address and telephone number of the producer and the producer's agent; (4) The American Petroleum Institute number assigned to each well for which the return is filed; (5) The total barrels produced in the reporting period for each oil well for which the return is filed; and (6) The total mcf produced in the reporting period for each gas well for which the return is filed. (b) Any state or county representative or employee, or employee or representative of the West Virginia Geological and Economic Survey or the Department of Environmental Protection, who violates this section by disclosing confidential information is guilty of a misdemeanor and, upon conviction thereof, shall be fined not more than one thousand dollars or confined in jail for not more than one year, or both fined and confined, and shall be assessed the cost of prosecution. As used in this section, the term "state or county representative" includes any current or former state or county employee, officer, commission or board member and any state or county agency, institution, organization, contractor or subcontractor and any principal, officer, agent or employee thereof. Note: WV Code updated with legislation passed through the 2013 1st Special Session The WV Code Online is an unofficial copy of the annotated WV Code, provided as a convenience. It has NOT been edited for publication, and is not in any way official or authoritative.

“The West Virginia Constitution, the U.S. Constitution says that taxation must be uniform and equal,” says Jesse Richardson, the lead attorney for the Land Use and Sustainable Development Law Clinic at West Virginia University’s College of Law. He’s also an economist. He and students are often engaged in the tedious and difficult work of determining mineral rights for given properties.

“We do title work and it can be a bear to try to find out who owns the mineral rights.”

Richardson speculates that a significantly larger percentage of the state is owned by out of state interests since mineral rights are often severed from surface rights. But while we collectively wonder about ascertaining such information and about the implications, Richardson says he and several others at WVU are interested in brainstorming about how to cope with absentee ownership.

Take Wyoming County as an example. In the report “Who Owns West Virginia?” Wyoming County is highlighted as having the largest percent of land owned by outside interests. Christy Laxton, Executive Director of the Wyoming County Economic Development Authority corresponded through email on the subject:

“… around 85% of our county is owned by absentee landowners, those being Heartwood Forest, Norfolk Southern and Natural Resource Partners. These bring great challenges to development in our county. These owners have prime property in our county, and the property that is not owned by them is affected by them to some aspect with regards to right-of-ways, timber rights, etc. We currently have an industrial park that is full and we are in the process of building another one. The new Industrial Park is affected by Norfolk Southern with a rail right of way through the middle of the property. We are working with the company to convey an easement for use of the right-of-way, but this has been a very lengthy process. They have been very cooperative though. … It is a huge challenge in Wyoming County, but we do the best we can…”

So Richardson, back in the land use law clinic at WVU is wrapping his head around this conundrum. Aside from the obvious need to address transparency especially with regards to taxation, he mentions thing like improving liability statutes.

“West Virginia has, like most states, a recreational use statute. If you allow people on your property, and you don’t charge them a fee, then you’re not exposed to as much liability,” Richardson says. But, he adds that improving West Virginia’s statute is only a small step.

Richardson says other actions can be taken to lubricate the joints where out-of-state corporate headquarters interact with local interests. He’s an outspoken advocate of the Comprehensive Plan. Such plans allow counties to outline goals for how land will be used in the future.

While many cities and municipalities are developing or already have developed these plans, only a small fraction of West Virginia’s 55 counties have taken up the initiative. Richardson explains that without zoning or subdivision ordinances, largely rural counties don’t feel the need to take such actions, but it may be in their best interests—especially those counties interested in pursuing economic improvement grants.

Richardson also believes we can do more as individuals to claim ownership, regardless of land boundaries. He points to public participation saying it’s up to the citizens of West Virginia to decide how they want to deal with these issues.

In his practice at the WVU Law Clinic, Richardson all too often encounters neglect. He says without a will, for example, properties are bequeathed by default to people who have long since left the state and had expansive families elsewhere, all unaware or uninterested in their percentage of ownership. Land is left to invasive plants like Garlic Mustard and Multiflora Rose; properties abandoned and condemned because it was easier to buy a new plot than one owned by some 300 far flung individuals. Richardson says apathy and incognizance are areas we can address.

Who Owns West Virginia?

It could be argued that West Virginia has never been “owned” by her inhabitants. Before European settlement, of course, ideas of land ownership were not in vogue. Then King Charles II rewarded many loyal friends with large swaths of land and by 1730s, 800,000 acres in what would become West Virginia was owned by three land companies. For the most part, the same trend continues three hundred years later.

Some have argued absentee land ownership in West Virginia has been a major impediment to economic diversification for generations.

But who exactly owns what today, and to what extent? That’s the question Ted Boettner, executive director of the West Virginia Center on Budget and Policy, decided to pursue.

“What we tried to see is, ‘How has this changed over the last couple of decades?’ and ‘What’s different?’ and ‘How can we learn from it?’” says Bottner.

“It’s hard to think about economic diversity if we don’t know who owns a big portion of the private land in the state. It’s very difficult to move forward, especially in the southern coalfields which see very high concentrations of land ownership, if we can’t have a say in what the development is going to be because we don’t own the land,” Boettner explains.

“Who Owns West Virginia?” is the name of the report from the nonprofit think tank. It’s the first major investigation into land ownership since a couple reports in the 1970s definitively tackled the issue, identifying the major absentee corporations that held titles to huge land swaths—especially in southern West Virginia.

What’s Different?

“Over the last several decades land ownership has transitioned from energy companies like Consolidated Coal Company, to timber management companies whose major business interest is to manage money for investors,” Boettner says.

The report found that West Virginia’s largest landowner is North Carolina-based Heartwood Forest Land Fund, owning more than a half a million acres across 31 counties. There are several of these Timberland Investment Management Organizations (TIMOs) in the top 10 land owners in the state.

Boettner explains that TIMOs are a relatively new corporate invention forged when economic factors converged with changes in the natural resources business sectors in the 1980s. TIMOs manage industrial timber investments and/or institutional investment clients such as pension funds or endowments of foundations and universities. He says there’s been a major shift away from vertical integration business models toward these financial holding companies.

Boettner points to Consolidated Coal as an example of previous business models. In years gone by, the company owned land, mineral rights, coal mines, and produced a product. But he says times have changed.

Boettner’s report also highlights the regional differences in concentrated land ownership—some of which have changed over the last 30 years. But there are still large areas of concentrated absentee land ownership in the southern counties where the highest poverty levels in the state happen to exist, along with all the health disparities and daunting economic challenges that come with them.

What Can We Learn?

Boettner says his report only scratches the surface of the issue, literally and figuratively. He says mineral ownership still needs to be investigated as well as how many companies are leasing on the properties and how the population benefits from that business in the state.

Boettner adds that larger questions still remain to be answered—questions related to taxation of absentee landowners and whether or not they pay their fair share. He says more research and more transparency is needed so policy makers can do the important work of planning for the future.

Implications and Recommendations from the report:

The state’s leaders should be committed to establishing fair corporate tax rates that produce sufficient revenue for education and structural infrastructure required to encourage entrepreneurship, tourism, and business development.
There should be greater transparency in our public records, making it easier for citizens to investigate land and mineral ownership as well as tax rates on such holdings.
West Virginia’s development dollars should be spent wisely and creatively to promote job growth and build a diverse economy for the future.
The establishment of a Future Fund (or permanent mineral trust) should not be delayed.
As West Virginia considers its future, comprehending the role that various patterns of land ownership have played in facilitating some kinds of development and impeding others will be critical in formulating policies that will lead the Mountain State in the direction its citizens want to go.

Report: Fiscal notes for W.Va. legislation flawed

A new report says the Legislature should change the way fiscal notes are prepared for legislation.

     The report from the West Virginia Center on Budget and Policy says fiscal notes are generally inaccurate, often biased, inconsistent and lacking in details.

     Fiscal notes are estimates of the costs of legislation. They are prepared by the state agencies that the legislation would affect.

     Forty-three of the Legislature’s 134 members responded to a survey for the report. Thirty-seven percent of the respondents said fiscal notes accurately determine the costs of legislation less than half the time.

     The report recommends that a neutral and independent entity review and finalize fiscal notes. It also recommends establishing and enforcing criteria and standards that fiscal notes must meet.

Innovators, entrepreneurs, policy experts meet at economic conference

With coal industry jobs dwindling and many young people leaving the state to find work, speakers at the Bright Economic Future for the Mountain State Conference in Charleston outlined many of the challenges for the state’s economy. Even despite these obstacles, many entrepreneurs, policy experts and grassroots organizations who gathered at the conference said they see plenty of opportunity.

“What I’m learning is that people really, really are interested in having this conversation about what our future looks like. I think that people—I think we see really strong support for the idea of diversifying our economy,” said Jeremy Richardson, a Fellow with the Union of Concerned Scientists.

Although his organization usually focuses on issues related to climate change and renewable energy, Richardson noticed the need to apply those issues to the state’s economy and helped organize the Bright Economic Future Conference.

West Virginia Center on Budget & Policy Executive Director Ted Boettner says a diverse, healthy economy ultimately comes down to a healthy and financially stable workforce. But, he said, the state has struggled with that in recent decades.

The graph shows the average wages for West Virginia workers from 1969 to 2011.

“Back in the late ‘70s there was a time when middle-class families were fairing pretty well. Our wages were a little higher, more people had benefits, you could raise a family on one income. Those times have dramatically changed,” Boettner said.

“Now you need both people in the workforce, you’re making less, and you’re working more hours. At the same time you are unable to afford some pretty basic expenses like healthcare.”

During a panel focused on the potential of moving the economy forward, Kent Spellman of the West Virginia Community Development Hub noted that his organization believes that working directly with people in small communities is the key to improving the economic picture.

“We really believe, frankly, that economic transition—this is a great group of people—but, for it to work, we have to get out in our communities and we have to listen. The Hub and the work we do with smaller, rural communities—and we mostly work with smaller, rural communities—focuses on wealth creation, not job creation. We want to see communities create opportunities—economic opportunities—that are locally based, that are placed based, that keep the wealth in the community,” Spellman said.

Both Richardson and Boettner echoed Spellman’s call for a grassroots-oriented, localized push for the diversification of the state’s economy. Richardson said that means it’s up to each community to play a part in deciding how they can contribute to the state’s economic future.

“I think it depends on where you are. We were just listening to one of the commissioners of Fayette County who was talking about all of the wonderful opportunities they have taken advantage of there,” he said.

Richardson also pointed to business projects in unlikely places, such as Sustainable Williamson in Mingo County—right in the heart of an area known as the Billion Dollar Coalfield.

“I think it depends on your location to some extent. The message that I’m trying to get out there is that we need to expand peoples’ idea of what’s even possible,” he explained.

Other presentations at the conference included Richardson’s discussion of sustainable economic development, a lecture from Boettner on the proposed state Future Fund, and a screening and discussion of the interactive film Hollow, directed by McDowell County native filmmaker Elaine McMillion.