34 



Mr. Hamburg. Second, a lot has been made of this appraisal 

 being dated to the current stumpage value of redwood, and that be- 

 cause of the inflation and the cost of redwood, that we would have 

 to figure in an additional 10 percent, 15 percent, what have you. 



My understanding, however, is that the appraisal itself does take 

 into account the fact that any harvest of this property would take 

 place over many years. It does not assume that we would have a 

 cut of 44,000 — 4,400 acres in a day and would realize value there- 

 from; isn't that correct? 



Mr. Leonard. That is correct. Let me ask our Chief Appraiser 

 to address that. 



Mr. Hamburg. Thank you. 



Mr. TiTTMAN. My name is Paul Tittman. I am Chief Appraiser 

 of the Forest Service. 



The premise upon which the value was rendered, Mr. Hamburg, 

 is that the timeframe that would be anticipated by a potential 

 buyer of that property is considered and reflected in the $499 mil- 

 lion value. Increases that occurred subsequent to the date of value, 

 which is the key, would be reflected in an update that might occur 

 at a later date, because the vast majority, the value is reflected by 

 the commercial stumpage, a 15-percent increase could — I am out on 

 a limb because I didn't write this report, and I am not going to try 

 to rewrite it now — could result in a proportional increase in total 

 value. 



The standards that you referred to earlier concerning the set- 

 aside were provided by the California Department of Forestry. 



Mr. Hamburg. Without consultation with the Fish and Wildlife 

 Service, I understand. 



Mr. Tittman. They were provided directly from CDF to the ap- 

 praiser and through whatever route they developed for the stand- 

 ards; we generally don't second-guess the licensing authority for 

 that type of thing. 



Mr. Hamburg. And I am sure you are aware — I am sure you 

 have read this report in detail, and on page 5 where it says, the 

 appraiser note that is "The desirability of a reliable supply of high 

 quality, old growth redwood and Douglas-fir timber, and the antici- 

 pation of future price increases, among other things, tend to offset 

 the effects of time on the overall value." 



Could you explain what that means? It seems to me that what 

 that said is that the inflation in price over a period of years has 

 already been offset in this appraisal; is that correct? 



Mr. Tittman. No. I think that basically what he is tr3dng to sug- 

 gest here is that the values are generally stable because there has 

 been an ongoing appreciation in redwood, the more recent time- 

 frame; and I think part of the problem is, the span of time that you 

 look at the value of this stumpage, the longer the timeframe, the 

 more moderate the increase is. 



If you look at the more recent timeframe, 10 months had oc- 

 curred since the date of value, the increase is more trackable. It is 

 sharply upward and it goes to the limited supply. 



They are referring more to the stability of the estimate. Some 

 species are quite volatile on the market, and they do go up and 

 down depending on a lot of factors. Douglas-fir, for instance, is key 



