1. Using GIS Technology for Natural Resource Mass Appraisals Tyler P. Bragg, GISP WV Property Tax Division Mined Minerals GIS Section

3. What do you call a map of outhouses in the woods?

4. A shaded relief map!!!

5. What kind of maps do spiders make?

6. Web-based maps!

7. What do you call a map guide to Alcatraz?

8. A con-tour map!

9. Discussion Items  Background Information  Components  Factors and Variables  GIS Analysis  Valuation Map Courtesy of the West Virginia Geological and Economic Survey, www.wvgs.wvnet.edu

10. Background Information  Valuation of Reserve Coal is outlined in WV Legislative Rule §110-1I  West Virginia is estimated to have between 18-52 billion tons of reserve coal. 1 What is Reserve Coal or “Reserves”? ○ “those beds of coal, or portions of the beds, which contain mineable coal, but are not active acres on an active mining property.” 2  Reserve coal owners are required to file a listing of their properties on an annual basis to the State Tax Commissioner

11. Background Information  All coal ownership in West Virginia is to be valued and taxed. 2  State Tax Department responsibilities Calculating the appraised value Providing values to the counties  State “Infers” Coal 3 mile buffer from known location ○ USGS Standard (circular 891)

12. GIS Components  Coal Bed Mapping WV Geological and Economic Survey  Parcel Mapping Mineral Mapping ○ State Mappers, Vendors, PTD Surface Mapping ○ Key component to mapping Minerals  Factor Mapping

13. How Much is My Coal Worth?  Factors are the characteristics of a given area that have a direct effect on the value of coal in that area and determine the time mining is expected to commence  Variables are information that constantly changes and has a direct effect on the value of coal. This information must be recalculated every year to maintain currency

14. How Much Is My Coal Worth?  Factors Market Interest Market Mine-Ability Conflicts Volatility Environmental Seam/Prime Seam T Factor ○ Every factor has scale - 20, 40, 80 (Some can = 0)  Variables Coal Prices Royalty Rates Capitalization Rate Discount Rate Criteria for Factors

15. Factors  Market Interest Density of coal related transactions within 5 miles of property (sales, leases, permit applications, prospecting, etc)

16. Factors  Market Mine-Ability Density of mines (historic and current) within 5 miles of property Surface, Deep, Boom, Historic, Current Mines (as defined in the Rule)

17. Factors  Conflict (Wells) Density of Oil and Gas wells on property

18. Factors  Volatility The measure of the coal’s ability to vaporize ○ Ignition, burn rate, and energy emission ○ Higher volatility = increased value ○ Criteria based on characteristics of Steam Coal Blue = LowRed = High

19. Factors  Environmental Reflects environmental restrictions in an area that affects mine-ability and coal value Data from a variety of sources

20. Factors  Prime Seam Assignment (Based on Coal Bed Mapping) “thickest, previously mined, stratigraphically- highest coal bed in the area, with sufficient mineable tons to sustain mining for two (2) years…” 2  T Factor Reflects the amount of time that mining operations are projected to commence on a given property Values - 20, 40, 80 (years) The result of combination of all other factors

21. Factors  (Trans + Mine + Well +Volatility + Environmental + Prime Seam)/3 = T (Time) Factor  20 – Projected mining in 20 yrs – Higher Values  40 – mining in 40 yrs – Lower Values  80 – mining in 80 yrs – Lowest Values

22. Variables  Royalty Rate Average income collected by a landowner for active mining operations ○ Surface vs. Deep ○ Metallurgical vs. Steam Higher Royalty = More Valuable Coal V aggr = (C$ ave )(ROY ave ) ( PROD ave )/Cap Rate

23. Variables  Average Coal Prices Forward Weighted Average – 3 Year Metallurgical vs. Steam  Discount Rate Rate used to calculate present value of a coal property based on the time expected before mining takes place Present value of future income (determined by T-Factor)  Capitalization Rate Used along with discount rate in determining present value of coal properties Three year running average Combines Safe Rate, Risk Rate, Non-liquidity Rate, Management Rate, and subtracts Inflation Rate

24. Variables  Factor Criteria To be evaluated biannually based on geo- statistical analysis of data ○ Market Interest (Transactions) ○ Market Mineability (Mines) ○ Use Conflict (Wells) ○ Environmental

25. Analysis – Coal Mapping  Core drilling data Point location ○ Coal elevation, thickness, additional coal  Key to GIS analysis Attribute properties with coal information Mineable/un- mineable acreages for every parcel, per coal seam

26. Analysis – Coal Mapping  Raster Grid (Thickness) created from points  Run 3-mile buffer on all points (inferred coal)

27. Analysis – Coal Mapping  Elevation Grid created from drill data Subtracted from Statewide DEM to locate absent coal Result – Elevation Cutter ○ Cut out areas that have been eroded (rivers/streams) = - DEM Elevation Grid Elevation Cutter

28. Analysis – Coal Mapping  Eroded areas are removed from thickness grid For every coal seam  Grid is trimmed to 3-mile radius of points

29. Analysis – Coal Mapping  Contours are generated.5 foot intervals  Mined out areas are removed/cut out  All steps completed for each coal seam (93 total) Contours Mineable/Un-mineable

30. Analysis – Other Factors  BTU Contour Map  Sulfur Contour Map BTUSulfur

31. Analysis – Other Factors  Production

32. Analysis – Parcel Mapping  Surface Parcels provide a reference for mineral parcel boundaries  Accurate surface parcel mapping is beneficial Mineral parcels are only as accurate as the surface parcels  WVDTR has field mappers that research deeds and land books in counties to locate unmapped mineral parcels  County GIS contribution More up-to-date, accurate surface data = better mineral data

33. Analysis –Parcel Mapping  MMD (Mined Minerals Dataset) Mineral Parcel Boundaries ○ Includes Surface Parcels with Mineral Rights  All factors and variables are compared to mineral parcels for each seam on property  Pertinent info recorded in attribute table

34. Valuation  Once all information has been associated with each parcel (per coal seam present), values can be determined  Coal values are based on an INCOME approach Simply put—based on future royalties, discounted by calculated Time Factor  RCVM (Reserve Coal Valuation Model) $/ac/bed=($/mmBTU)X(Roy)X[1±(  BTU+  S)]X[(1/(1+I) (t+0.5) )x(1/10 6 )]X(BTU)X(2000)X(1800)X(RR)X(Thk)

35. Challenges  Completion of Coal Bed Mapping  Completion of Surface and Mineral Mapping Until then—Geocoding ○ 4-Mapped Parcel ○ 3-Within a tax index map ○ 2-within a quad 9 th ○ 1-within a district ○ 0-within a county Anything less than Geocode 4 is valued based on its respective location (county, district, etc.)  Validating tax returns vs. coal mapping

37. Tyler P. Bragg, GISP WV State Tax Department Property Tax Division Mined Minerals GIS Section Phone: (304) 558-4925 Email: Tyler.P.Bragg@wv.gov Thank You!

38. References  1 Taxing West Virginia’s Coal Reserves: A Primer, West Virginia Center on Budget & Policy, May 2009. ( http://www.wvpolicy.org/downloads/CoalReserveTaxationPrimer- FINAL-5-19-09%20-%20FINAL.pdf ) http://www.wvpolicy.org/downloads/CoalReserveTaxationPrimer- FINAL-5-19-09%20-%20FINAL.pdf  2 Title 110, West Virginia Legislative Rule, Series 1l, Valuation of Active and Reserve Coal Property for Ad Valorem Property Tax Purposes, May 1, 2006.