On May 5th Gov. Cecil Underwood announced the state has reached an agreement in principle to buy 177 acres in Blackwater Canyon from Allegheny Wood Products for $1.2 million. The land would be added to nearby Blackwater Falls State Park, increasing its acreage by more than 10 percent.

A Kanawha County candidate for the House of Delegates is questioning the tax implications of the state’s proposed purchase of 177 acres in the Blackwater Canyon, pointing out that the way the deal is structured, land owner John Crites could be able to write off millions in taxes -- more than he paid for the entire canyon property.

"That's just money that you and I will end up paying," said Democrat Jon Cain Sr., a 32nd District House candidate who’s also a tax accountant and former IRS agent.

Under the deal announced Friday, the state would get those 55 acres for the $250,000 and also would get an additional 122 acres of property, to the northwest of the park, for about $1 million.

However, the deal is structured so that the state actually is paying the $1.25 million for some small parcels of property.

In the first part of the deal, the state will pay $250,000 for a five-acre parcel that includes Lindy Point. The other 50 acres in the deal will be a "gift" from Crites.

In the second part of the deal, the state will pay about $1 million for a 20- acre parcel. The other 102 acres will again be donated by Crites as a gift to the state.

House of Delegates candidate Cain says that means Crites actually will be able to claim fair-market value of about $50,000 an acre for the donated land. That compares to the roughly $1,000 an acre Crites paid for the land, and the roughly $7,000 per acre the state will pay him under the deal announced Friday.

Setting a fair-market value of $50,000 an acre, Cain says, will add up to a huge tax break for Crites. "The total tax break on the 152 acres of donated land could easily top $6 million," Cain said.

Crites paid about $5 million for the entire 3,000 acre canyon tract in 1997.

"Not bad, eh?" Cain said.

The deal is structured so that Crites would turn over the 55 acres around Lindy Point immediately. He would also give the state 36 acres of the new 122-acre tract. The state would then get 57 more acres in 2001, and the final 29 in 2002.

Crites has agreed not to timber any of the property he would eventually turn over to the state, which led some to question why he didn’t give the entire tract to the state at once. Cain said the split is likely to maximize the potential tax writeoffs.