Two deals that allowed Mylan NV's lead independent director to funnel land to the pharmaceutical giant for its headquarters through a business partner cost Canon-McMillan schools as much as $100,000 in taxes.

Washington developer Rodney Piatt, the drugmaker's vice chairman, sold the parcels in Southpointe II to business associate Andrew Miller for $11 combined. Miller sold Mylan the properties for $12 million total in separate deals years apart.

Why Piatt, 62, would sell valuable property for such a paltry amount is unclear, experts said.

“You don't just hand people $9 million,” said Haider Ala Hamoudi, a University of Pittsburgh law professor. “But I don't know what (Piatt) got out of it.”

Neither Piatt nor Miller responded to requests for comment.

The sales to Miller for sums well below escalating market rates and what Piatt paid for the land lowered property transfer taxes on the deals — $13,264 in transfer taxes for Pennsylvania, Cecil and Canon-McMillan. The taxes, which buyer and seller typically split, were low partly because county assessments lag by decades a building boom fueled by a surging oil and gas industry.

“We all know the assessments in Washington County are low,” said attorney Susan Key, who represents Canon-McMillan School District on property tax issues. “This real estate is at a 1981 value. We are losing out in that respect.”

Had Piatt sold the land in the now-sold-out development for the price that Mylan paid Miller, the deals would have generated more than $400,000 in taxes — with half going to the state and Canon-McMillan splitting half with Cecil.

Such a deal involving Southpointe land and Piatt isn't unprecedented. In 2006, Consol Energy Inc. bought 35 acres for its headquarters from the Washington County Authority for $3.9 million. Consol sold the land to Piatt for $3.9 million three months later. Both sales produced $78,000 in transfer taxes.

The three-way Mylan land deals prompted questions about whether the company skirted regulatory requirements to report business dealings involving board members. Mylan said it was not obligated to do so because it didn't pay Piatt, and he didn't benefit from the transactions.

The first deal

Piatt sold 7 acres to Miller in 2012 for $1. Miller sold the land the same day to Mylan for $2.9 million to build its corporate headquarters. County real estate records show that Piatt, in May 2007, paid nearly $900,000 for the land, part of a parcel he carved up in and around Southpointe Town Center.

Piatt's Horizon Properties Group owns the development — a nucleus of retail shops, restaurants, office space and apartments. Miller Capital of Chicago manages it.

The 2 percent property transfer tax when Piatt bought the land generated more than $17,700 shared by the state, Canon-McMillan and Cecil.

When Mylan bought its headquarters parcel from Miller, the taxing bodies received a combined $58,130. Yet, when Piatt sold the property to Miller moments earlier, transfer taxes were only $3,324, based on a fair market value for the land of $166,225 — a figure derived from a 1981 assessment of $34,442.

“The problem is the rates we are bound to assess by are 34 years old,” said Brad Boni, the county's chief assessor. “They are certainly not commensurate with what is being seen in that area on a day-to-day basis.”

Washington County last year began to reassess its roughly 116,000 properties and expects to update land values by 2017.

Since the last assessment, investors spent more than $700 million to redevelop vacant state property that once housed a mental hospital and farmland off Interstate 79. The Southpointe development started in 1993. In 2004, the Washington County Authority named Piatt lead developer of Southpointe II, a 217-acre offshoot.

The second deal

The second deal involved nearly 11 acres in Southpointe II that Piatt bought in May 2007 from the county authority for $1.36 million, a price that generated $27,100 in transfer taxes. In December, Piatt sold the property to Miller for $10, records show. Total transfer taxes, paid on the minimum assessed value of the land, amounted to less than $10,000, since the county's assessed value remained $54,200 on a fair market value of less than $500,000.

In May, Mylan paid Miller $9.2 million for the land. The state, municipality and schools split $184,280 in transfer taxes.

Had Piatt sold the properties to Miller for the price Mylan paid, the deals would have generated $413,000 more in transfer taxes.

Piatt became a non-executive director of Mylan in 2004. He is now the board's vice chairman. Had Piatt sold his properties directly to the company, Mylan would have had to report the deals to the Securities and Exchange Commission.

‘Other consideration'

Selling properties for $1 or $10 isn't unusual, real estate lawyers said. Someone might do so to give a family member real estate, or as part of a larger business deal involving other property.

“There has to be consideration of value for it to be a valid transaction,” said Maximilian F. Beier, an attorney and partner in Downtown law firm Beier, Beier & Beier. “Typically, whenever property is transferred (for $1), taxes are paid at the assessed value or actual consideration.”

For example, Piatt sold a hotel in Southpointe II to RockBridge Capital of Columbus, Ohio, in December 2011 for $10 and “other good and valuable consideration,” according to the deed. An attached transfer tax document reported that RockBridge actually paid $14.8 million. The state received $148,000 in transfer taxes; Cecil and Canon-McMillan each got $74,060.

The deeds between Piatt and Miller for property Mylan eventually purchased include the language “other good and valuable consideration,” but nothing in county real estate records shows any other amount was paid.

“It's very common language,” Hamoudi said. “The mere fact that language is there is not an indication there was an additional consideration. In fact, often there is not.”

Piatt probably didn't get a tax write-off from the deals with Miller, experts said. The IRS would look closely when a $1 sale generates a loss of more than $1 million, said Joe Nicola, a Certified Public Accountant at Sisterson & Co., Downtown.

“The IRS is going to ask, ‘Would a reasonable person sell a million-dollar property for $1?' ” Nicola said.

Jason Cato and Alex Nixon are Trib Total Media staff writers.

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