however, forest lands will be considered from 

 the standpoint of timber production being their 

 highest and best use. 



Effect of Timber Exemption Upon Land 



The exemption of timber as provided in the 

 State Constitution, Section 12 %, Article XIII, 

 indicates that, in the appraisal of forest land, 

 the value of timber of any ages ranging from 

 seedlings to trees of merchantable size, should 

 be excluded. As a result of the exemption, the 

 land should be considered as being devoid of 

 any timber stocking. The land is often referred 

 to as "bare land" in the attempt to ignore the 

 existence upon it of any stocking of coniferous 

 reproduction, saplings, or small poles, which are 

 considered to be exempt if Section 12 % is 

 applicable. 



Indicators of Land Value 



Courts of law favor evidences of market value 

 based upon current sales and compatability — 

 the market data approach to value. Of the total 

 number of sales of forest land that occur, only 

 a relatively few of them consist of bare land. 

 Some sales of "bare land", however, may be 

 found. As in any transaction, these sales should 

 be confirmed. A determination must be made 

 that the conditions of a market sale have been 

 met. If the appraiser determines that both buyer 

 and seller were willing to negotiate, that both 

 were aware of all uses to which the property 

 was adaptable, that neither took advantage of 

 the hardships of the other, the confirmed sale 

 may be used as an indication of market value. 



All forest land is not of the same quality. 

 Variations exist in the physical characteristics 

 of forest lands. Therefore, confirmed sales must 

 be analyzed from the standpoint of many fac- 

 tors. In making comparisons between tracts, 

 considerations must be given to site quality, 

 topography, access and location. Confirmed 

 bare-land sales classified according to site qual- 

 ity, topography, access and location form an ex- 

 cellent base upon which to develop a range of 

 values. 



Generally, however, prices paid are evidences 

 of the vaue of forest growth in addition to the 

 worth of the land itself. To derive a value for 

 sub-merchantable timber from sales of forest 

 land is difficult because reproduction and tim- 

 ber of less than merchantable size is seldom sold 

 except together with land. When forest lands 

 supporting no presently-merchantable stands of 

 timber are bought and sold, the degree, age, 

 and species composition of stocking of sub- 



merchantable timber is of importance to the 

 informed principals. It is the value of this 

 stocking that must be estimated if a residual 

 land value is to be derived from a total property 

 value. 



As has been suggested, by using a base value 

 derived from sales of bare land of given site 

 qualities, factored for other physical character- 

 istics, timber and land allocations may be made 

 from a total sale price. 



Soil rent theories have been advanced as a 

 means of deriving bare land value. Values de- 

 rived from solving these formulae are a pres- 

 ent worth of the sum of all costs incurred in 

 planting a forest crop and carrying that crop 

 to a given harvest age. These theories presume 

 that each acre of harvestable timber has been 

 started from bare soil, and has been nurtured 

 through the rotation to time of cutting. In Cali- 

 fornia, limited areas of forest land have been 

 developed in this manner; i.e., burned areas 

 have been planted, or clear-cut areas have been 

 burned and reseeded. This replacement cost 

 approach has been referred to earlier, and it 

 serves as another means of developing an indi- 

 cator of value. 



The third value indicator may be estimated 

 from capitalizing the net income expected to 

 be derived from the land. Net income for capi- 

 talization attributable to timber would be that 

 based upon the average net annual growth per 

 acre. This capitalized value is attributable to 

 land and timber, and a timber value must be 

 extracted to derive a bare land value. 



Timber 



The Inventory 



The first step towards arriving at fair market 

 value is the determination of an inventory of 

 standing timber. The various ways of arriving 

 at inventory figures are discussed in Chapter 

 VIII. 



Stumpage Value 



The second step is the determination of a 

 present value per thousand board feet by species 

 and area. In most cases, stumpage values will be 

 derived through use of value schedules prepared 

 by the county. Preparation of value schedules 

 will be discussed in a later section. Retail stump- 

 age values, used at this point in the appraisal, 

 process, disregard the time factor but reflect 

 differences in quality, location, log and lumber 

 haul, and other local factors affecting value. 



13 



