thebigp

Charles R. Babcock—WASH POST
August 15, 1992
Next month, Democratic vice p**********l nominee Albert Gore Jr. (D-Tenn.) will receive a $20,000 check for the mineral rights on his farm in Carthage, Tenn., just as he has almost every year since 1974.
The check is the product of an unusually valuable lease for zinc rights his father, Albert Gore Sr., negotiated with the late legendary oil man, Armand Hammer, and passed on to him. A review of candidate Gore's personal finances, based on his financial disclosure statements, land records and interviews, shows that the $330,000 he has collected from the lease over the years has been his most important source of income after his salary.
Gore is not particularly wealthy. He is paid $129,500 as a senator; his wife, Tipper, does not work outside the home. Besides the income he receives from the lease, Gore has supplemented his salary with money from paid speeches to special interest groups, nearly $70,000 in the past three years, and $100,000 in advance royalties in the last two years on his recent book on the environment, "Earth in the Balance: Ecology and the Human Spirit."
Like many couples, the Gores' largest asset is their house in Arlington, which is now valued at more than $600,000. They bought it in 1977 from Tipper's grandmother for $150,000 and took out a mortgage for $58,500. Gore said in an interview that he was not sure whether there was an unrecorded note from a family member that helped make up the remaining $91,500.
Besides the home and the 88-acre Tennessee farm, the Gores' assets include Tipper's interest in her father's wholesale plumbing business and trust funds for their four children.
Gore said trusts were created from the estate of his late sister. In addition, he said, "from time to time our families have helped with the childrens' tuition." It costs more than $40,000 a year to send a daughter to Harvard and three others to private schools in Washington.
While Gore has in the past routinely made his federal income tax returns public, aides have not made copies available despite several recent requests.
Gore's zinc lease is unusual in some respects. The $20,000 a year amounts to $227 an acre, much more than the $30 an acre Occidental Minerals, part of Hammer's oil company, paid the senior Gore and some neighbors a few years before the 1973 arrangement was made.
For the first 11 years, Occidental paid the younger Gore $190,000 for the lease without mining under the property because it never built a mine in the area. Zinc has been mined since the lease was sold to Union Zinc in 1985.
Gore Sr., a U.S. senator himself until 1971 and then an Occidental executive and board member for years, said in an interview that he prepared a statement about his arrangement with Hammer in June for aides to Democratic p**********l nominee Bill Clinton who were checking his son's background. He also told the story during a recent arbitration in a related mineral lease dispute with Union Zinc, which he won.
His lawyer wanted him to relate the Hammer story, he said, because he "felt this unusual amount {the $20,000 a year royalty}, unless explained, might appear to an arbitrator as questionable, or might arouse curiosity." Some leases in the area pay landowners 4 percent of the value of any zinc mined, but nothing in advance for surface rights.
The elder Gore, 84, said he had been friends with Hammer for years because of their mutual interest in breeding and raising Angus cattle. When zinc was discovered in Smith County, 50 miles east of Nashville, in the 1960s, mining companies rushed in to offer to buy farms or pay for mineral leases, at a few dollars an acre.
Gore, then in the Senate, said he mentioned the offers to Hammer in a telephone conversation one day and Hammer immediately sent two engineers to look at his property. Occidental offered him and some of his neighbors $7.50 an acre (per quarter), in addition to the usual 4 percent production royalty, for the mineral rights. They accepted in 1969.
Occidental and other companies also had their sights on the nearby farm belonging to Albert McDonald and his wife, Belle, because it was near a test mine shaft. Hammer flew to Tennessee to join the senior Gore in calling on the widow. This occurred sometime in 1969 or 1970 while he was still in the Senate, Gore recalled.
The widow McDonald mentioned she had been offered $10,000 a year for the lease. Hammer offered $20,000. She refused. Shortly after she died in early 1972, Hammer flew again to Tennessee to negotiate with Eugene Warren, a church official who was executor of the McDonald estate. Belle McDonald left her estate to the Cumberland Presbyterian Church.
Occidental offered the estate the $20,000-a-year lease, according to a letter provided by a Gore aide. Warren rejected the offer because the church wanted cash for a college endowment. So Occidental bought the property and mineral rights for $160,000 in September 1972, about twice the only other offer, Warren said.
That was the same month the elder Gore, who was defeated in 1970, became a member of the Occidental board of directors and chairman of its subsidiary, Island Creek Coal Co.
"Then Doctor Hammer said to me: 'Albert, why don't you take this little farm off my hands. We have no need for a farm; all we want is the right to mine it,' " Gore Sr. said in a June 16 statement.
" 'But, Doctor Hammer, you paid too much for it as farmland. I'll take it off your hands at $160,000 if you will give me the same for the lease as you offered Mrs. McDonald,' " the elder Gore recalled. Occidental deeded him the land in August 1973. He still serves on the Occidental board and holds stock in the firm valued at about $680,000.
The younger Gore was a newspaper reporter in Nashville making what he called "slightly above s***e wages" at the time Hammer dealt with his father. Gore Sr. told him about it one day when he was visiting his parents' farm near Carthage and expressed interest in buying the McDonald farm, candidate Gore recalled.
The size of the $20,000 a year lease was part of his "calculation, both in deciding to make the purchase and evaluating the risk it might be canceled," he said.
Land records show the younger Gore paid his father $140,000 for the property and the lease (his father keeping the first $20,000 lease payment), and took out a $100,000 mortgage. The down payment came from profits from two previous real estate investments, Gore Jr. said.
The younger Gore attributed the high price of the lease to the competition between Occidental and New Jersey Zinc at the time. "New Jersey was disconcerted to have someone else trampling in their daisies," he said.
He also noted that he will never receive more than the $20,000 a year until Union Zinc has mined enough zinc from his property to rec**p all the advanced royalties he has received.
The zinc concentrate recovered from the ore at the nearby mine is trucked 100 miles to Clarksville, where it is made into zinc metal. Zinc, which produces toxic byproducts when it is refined, is used primarily as a protective coating for machinery. Federal and state officials said Union Zinc has a good environmental record.
Paul Bailly, who was president of Occidental Minerals at the time, recalled Hammer's personal role in the McDonald t***saction. "My reaction {to the lease} would have been, it's high, but we can take it because it was a critical piece of property." He said his company was willing to pay extra for surface rights because it needed a place to sink its mine shaft.
David Rice, president of Union Zinc Inc. of Clarksville, which bought the Occidental leases, said his firm made "an economic decision" to keep the Gore lease. "If we decide the future value is not worth that, we'll drop those leases," he said.
Staff writers Stephanie Griffith and Albert B. Crenshaw and staff researcher Lucy Shackelford contributed to this report.