West Virginia state legislators have appropriated $1.1 million to restore this almost abandoned, turn-of-the-century logging town, 2,456 feet up Bald Knob in the heart of lush pine and spruce forests.

The $1.1 million will be used to modernize Cass' sewer and water lines and restore two homes, necessary steps in the overall plan to haul this once prosperous and lively logging town back to life as a West Virginia Williamsburg: an historically accurate but livable town that will serve as a recreational community for skiers at Snowshoe, six miles away, and mountain vacationers.

The scheme, which eventually will involve private real estate investment, is almost as wild, wonderful and mined with hard places as West Virginia's famed mountains.

Two and a half years ago the state, with the help of funds from the federal Bureau of Outdoor Recreation and the Appalachian Regional Commission, had $1.5 million to spend on Cass. They bought 102 of the town's houses, the defunct mill and other structures for $6969,000. They planned to pave the six mile logging track between Cass and Snowshoe Ski Resort, turn the old mill into a logging museum, run a train between the Cass Scenic Railway's right of way and Snowshoe's ski lifts, lay new water and sewer lines and restore two houses to their 1910 appearance.

Leases on the empty, unrestored houses would be auctioned off to the public. The state would retain title to the houses, but the leaseholders would be responsible for restoring the exteriors of the houses to their 1910 apperance.

While the acquisition of the town went smoothly, the rest of the money-$831,000 of it-was used to relocate the few families still living in the town and maintain the town and its existing structures. The empty houses, most of which have a living room, dining room and kitchen on the first floor and three to four bedrooms on the second floor, are made almost entirely of wood and are in sound, although seedy-looking, condition. Lattice work is falling, apart, porch railings are broken off, windows are broken, paint is peeling, and some of the roofs leak.

While these improvements will be made by those who invest in the leases, the other major restoration work-water and sewer, paving roads, restoring two homes as models-will be done by the state.

The state's Department of Natural Resources' Division of Parks and Recreation, which is overseeing the project, went to the state legislature last year and asked for money to get on with the job at Cass. With the coal strike on, neither the legislators nor Gov. Jay Rockefeller, who had been enthusiastic about the project, were amenable to funding a tourist project.

This year, though, the miners are back at work but, unfortunately, the $1.1 million appropriation is not be enough to complete the job here.

"The $1.1 million is for water, sewer and restoration work but we need $1.1 million for the sewer system, alone. We're looking at water and sewer projects to see if we can cut back and utilize the $1.1 million to develop both water and sewer and do some of the restoration work," Cordie Hudkins, assistant chief of the Division of Parks and Recreation, said.

"Hopefully," he added, "the houses will be ready for auction about a year from now."

Although the state is sure, at this point, that it will auction off 30-year leases and require exterior restoration to a 1910 apperance, little else about the leases has been decided."We haven't come up with specific arrangements for lease agreements. There's a question as to what type of restrictions we would place on subleasing and whether, after the lease is up, there'll be an automatic option to renew, but we're working on those questions now," Hudkins said.

The state plans to start auction bids at a minimum of $24,000 per house, with the hope that the leases will sell for $36,000 although "all this is subject to change," Hudkins said.

He estimated that it would cost an average of $7,500 per house to restore the exteriors to their 1910 appearance. "Well'll probably allow leasees to fix interiors as they see fit and, depending on whether the person wants air conditioning and carpeting, interior restoration should cost another $2,000 to $9,000," Hudkins added.

The rest of the Cass plan is up in the air. The Department of Highways has no immediate plans to upgrade the Cass-Snowshoe road, a six-mile long, worm-like dirt track that is passable only in summer. An engineer from the Department surveyed the road in Arpil for possible future improvement, but the road will not be included in the highway budget until at least 1981.

"Our first priority is restoring the town, then the museum comes next. The railroad is something for the future," Hudkins said. CAPTION: Picture, These two homes are to be restored to help bring Cass back to life. By Penelope Lemov for The Washington Post