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FISCAL
NOTE
WEST virginia Legislature
2017 regular session
By
[
to the Committee on Finance.
A BILL to amend and
reenact §11-1C-11b of the Code of West Virginia, 1931, as amended, relating generally to the
valuation of managed timberland and timberland that is not managed timberland
for ad valorem property tax purposes;
establishing a specific methodology for such valuations; providing remedies to
persons aggrieved by the valuations and for compliance inspections, notice of
revocation, appeals; and effective date.
Be it enacted by the
Legislature of West Virginia:
That §11-1C-11b of the
Code of West Virginia, 1931, as amended, be amended and reenacted to read as
follows:
ARTICLE 1C. FAIR AND
EQUITABLE PROPERTY VALUATION.
§11-1C-11b. Valuation; rulemaking;
aggrieved person and taxpayer protests; exhaustion of remedies; compliance
inspection; notice of revocation; appeal; effective date.
(a) The Tax Commissioner
shall establish by legislative rule two methodologies for determining the
appraised value of managed timberland, based upon the land's potential to produce future income according to its
use and productive potential as managed timberland and whether the property is
classified as Class II property or as Class III or IV property for property tax
purposes. These values shall be determined by discounting the potential future
net income of the timberland to its present value utilizing a discounted cash
flow model based upon whether the property is classified as Class II property
or as Class III or IV property for property tax purposes.
(b) The Tax Commissioner
shall also establish by legislative rule a method to determine the appraised
value of timberland that is not certified as managed timberland. All timberland
that is not certified as managed timberland shall be valued at its market
value, except for farm woodlots which shall be valued as part of the farm.
(c) Notwithstanding the
provisions of section five-a of this article, the legislative rules required by
subsections (a) and (b) of this section may be promulgated as emergency
legislative rules if they are filed in the state register on or before July 1,
1998.
(a)
The appraised value of managed timberland shall be determined by the State Tax
Commissioner on the basis of the potential of the land to produce future income
according to its use and productive potential.
Potential future net income is discounted to its present value utilizing
a discounted cash flow; this is the appraised value. The ability of a stand of timber to produce
wood products for sale or use depends primarily on the quality of the soil and
certain topographic and climatic features which can be expressed as a site
index. Site index is the principal
criterion influencing the appraised value of managed timberland. These factors shall be reviewed annually by
the Tax Commissioner for necessary updating of the method described in order to
properly reflect future changes in the values of managed timberland.
(b)
The appraised value of timberland consisting of woodland or wasteland which is
not managed timberland shall be determined on the basis of market comparable
derived through analysis of sales prices of comparable forested
properties. Timberland appraisal value
shall always be more than the appraised value of equivalent grades of properties
being classified as managed timberland in the county. The appraised value of
timberland shall be determined by the county assessor based upon the
classifications described in subsection (p) of this section.
(c)
The county assessor shall collect and analyze market data, including sales of
timberland, segregated into the classes described in subsection (p) of this
section. Based upon this market
analysis, the county assessor shall select the value for each class of
timberland that best reflects the market value of the property if exposed to
the market for sale as timberland. The
values by class thus selected shall be entered, by the assessor, into the
respective county land pricing tables and shall be used by the assessor to
estimate the appraised value of timberland for property tax purposes.
(d)
Definitions.
For
the purposes of this section, and unless the context clearly requires a
different meaning, the following terms shall have the following meanings:
(1)
"Capitalization rate" means the rate used to convert an estimate of
income into an estimate of present value.
Details of the procedure for determining the capitalization rate are
found in subsection (m) of this section.
(2)
"Certified managed timberland plan" means the managed timberland plan
that is certified by the landowner when the landowner certifies that the
property is maintained as managed timberland.
(3)
"Cost" means a component of management costs and property taxes.
(4)
"Dbh" means the diameter of trees at breast height, which is fifty-four
inches above ground level.
(5)
"Division of Forestry" means the West Virginia Bureau of Commerce,
Division of Forestry.
(6)
"Farm wood lot" means that portion of a farm in timber but may not
include land used primarily for the growing of timber for commercial purposes
except that Christmas trees, or nursery stock and woodland products, such as
nuts or fruits harvested for human consumption, shall be considered farm
products and not timber products.
(7)
"Harvest income per acre" means the expected after tax revenue and
accrued interest for each harvesting interval.
Interest is assumed to accrue at the rate of return from the period of
harvest to the end of the eighty-year rotation cycle.
(8)
“Integrated Moisture Index” means soil moisture data derived from a methodology
described in “A GIS-Derived Integrated Moisture Index”; by Louis R. Iverson and
Anantha M. Prasad; USDA Forest Service, Northeastern Research Station,
Delaware, Ohio; 43015, as the same is refined and applied, from time to time, by
subsequent professional studies conducted, or contracted for, by the Division
of Forestry to determine current measures of the same.
(9)
"MBF" means thousand board feet.
(10)
"Management cost" means the cost determined tri-annually by the Tax
Commissioner to be the average annual cost of maintaining and protecting a
producing forest. Maintenance costs may
include costs of inventory, boundary survey, security, maps, and any other
items as can be shown to have been necessary.
Protection may include costs of protection against forest fires; harmful
insect and tree diseases; costs of repair and replacement resulting from
damages reported to appropriate police agencies, including all-terrain vehicles
and other vehicular damages, and costs of replacing and replanting forest
production and/or plantations destroyed or injured by deer or other wild
animals whose populations exceed the maximum carrying capacity of the
site. Management costs shall be
determined as an average for the entire state or by regions, by Managed
Timberlands Productivity Grades or by parcel acreage and shall be deducted from
gross annual income per acre to obtain net annual income per acre.
(11)
“Managed Timberland" means surface real property, except farm woodlots, of
not less than ten contiguous acres which is devoted primarily to forest use and
which, in consideration of their size, has sufficient numbers of commercially
valuable species of trees to constitute at least forty percent normal stocking
of forest trees which are well distributed over the growing site, and that it
is managed pursuant to a managed timberland plan.
(12)
"Managed Timberland Plan" means the planned timberland management
program that conforms to the following standards established by the Division of
Forestry in the plan:
(A)
Includes the owner's multipurpose objectives for the property;
(B)
Provides for the land:
(i)
To remain in at least forty percent or greater forest cover of well distributed
commercially important trees,
(ii)
To produce continuous crops of timber according to the site's productivity,
and,
(iii)
To be monitored for and action taken against threats from injurious agencies;
(C)
Ensures that harvesting will be done in a manner that assures regeneration of
the landowner's preferred species; and
(D)
Assures sustainability of forest resources and compliance with the Logging
Sediment Control Act, in article one-b, chapter nineteen of this code.
(13)
"Managed Timberland Productivity Grades" means timberland classified
as Grade One (excellent to very good), Grade Two (good to fair), or Grade Three
(poor), according to the table in subsection (s) of this section.
(14)
"Owner of surface less timber" means any person who owns an interest
in the surface where the timber rights have been sold to someone else.
(15)
"Owner of Timber" means any person who owns an interest in timber,
including a lessor or sublessor and an owner of a contract right to cut
timber. The owner of timber must have a
right to cut timber for sale on his or her own account for use in his or her
trade or business in order to have property rights that are subject to ad
valorem property taxes.
(16)
"Site Index" means a method of measuring the potential of a site to
grow trees to the height of upland oaks at fifty years of age. The site index
will be determined using the applicable Integrated Moisture Index.
(17)
"Stumpage Price" means the market value of standing trees (on the
stump) prior to felling and removal, and is expressed in dollars per unit of
volume whether expressed as thousand board feet or as cords. For appraisal purposes, real stumpage price
will be adjusted to real price changes over various harvest periods, being
thirty-five, forty-five, fifty-five or eighty years during the eighty-year
rotation cycle. The real price change
shall be determined using historical West Virginia saw timber and pulpwood
prices based upon sixteen inch (dbh) logs provided by the West Virginia
Division of Forestry from data for the last twenty years or more depending on
availability. Stumpage price projections
over various harvest periods shall be calculated using the real price change
derived from historical saw timber and pulpwood prices in West Virginia. Thus, since stumpage prices provided by the
Division of Forestry are in nominal terms, those prices shall be converted to
real dollars (i.e. real terms) before stumpage projections are calculated. A five-year weighted moving average shall be
computed in order to minimize the effects of short-term fluctuations. Stumpage prices shall be computed for each stumpage
price region in order to reflect regional differences in markets, topography
and accessibility.
(18)
"Stumpage Price Region" means a geographical region of the state,
usually consisting of several counties, in which conditions of the timber,
timber markets, topography, and accessibility are sufficiently similar to
result in similar stumpage prices at any given time. The counties involved in each stumpage price
region have been identified by the Division of Forestry and are found in
subsection (r) of this section.
(19)
"Timber" means trees of any marketable species, whether planted or of
natural growth, standing or down, located on public or privately owned land,
which are suitable for commercial or industrial use.
(20)
"Timberland (Woodland/Wasteland)" means any surface real property,
except managed timberland and farm woodlots of not less than ten contiguous
acres, which is primarily in forest and which has, in consideration of their
size, sufficient numbers of commercially-valuable species of trees to
constitute at least forty percent normal stocking of forest trees, as provided
in subsection (q) of this section, which are well distributed over the growing
site. Additionally, land that has been
recently harvested of merchantable timber and is growing into or being planted
as a new forest may be classified as timberland.
(e)
Classification of Timberland and Managed Timberland.
(1)
Managed Timberland. -- For property to qualify for managed
timberland valuation, the owner of the surface real property identified on the
county tax mapping system shall annually certify in writing to the Division of
Forestry that the property satisfies the requirements of managed timberland, as
defined in this section and enter into a contract with the Division of Forestry
to use the real estate in a planned program of multiple purpose forest
management, including erosion control during timbering operations, as specified
in the West Virginia Forest Practices Standards and the West Virginia
Silvicultural Nonpoint Source Management Program, and as provided in subsection
(n) of this section. Multipurpose forest
management contemplates the periodic selection of timber on the property for
harvesting as an integral part of silvicultural management practices. The silvicultural manipulation subjects the
property to periodic commercial use that may have an effect on the property's
classification for property tax purposes.
Therefore, in recognition of the silvicultural manipulation, the following
guidelines shall be observed by the Division of Forestry when classifying
managed timberland for property tax purposes.
(A)
Property containing managed timberland, which may have been properly taxed as
Class II property prior to the managed timberland application, shall remain as
Class II property unless there is some other event or change in the use of the
property that disqualifies it from being taxed as Class II property.
(B)
Property containing managed timberland, which may have been properly taxed as
Class III or Class IV property prior to the managed timberland application,
shall be taxed as Class III or Class IV property depending upon location.
(2)
Timberland. -- Timberland shall be taxed
as Class II, Class III, or Class IV property in accordance with provisions of
section five, article eight of this chapter.
In order for timberland to be taxed as Class II property, the timberland
shall be used and occupied by the owner exclusively for residential purposes.
(3)
Surface less timber -- Property where the owner of the surface does not include
the timber rights is not eligible for managed timberland classification and
shall be valued by the assessor.
(4)
Timber -- Property where the owner of the timber rights does not include the
surface, is not eligible for managed timberland classification and shall be
valued by the assessor.
(f)
Farm wood lots shall be included in the valuation of farm property under
section ten, article one-a of this chapter except when the farm wood lot is a
separate parcel or tract entered in the land books, and/or except when the
primary use of the farm wood lot is in commercial forestry or in a managed
timberland contract.
(g)
Improvements such as roads and service buildings that are a required (usual)
part of timber management operations are not subject to an additional market
value appraisal over and above the appraisal of the managed timberland. Improvements that are not a necessary part of
the timber management operations, such as dwellings, cottages, hunting camps,
other recreational facilities, and associated real estate are subject to
additional market value appraisals.
Additionally, haul roads, strip and/or mountaintop removal mines, plant
facilities, powerline and gas/oil pipeline rights-of-way, and gas/oil well pads
shall not be valued as managed timberland.
(h)
The appraised value per acre of timberland shall be determined based upon
market comparables and shall be estimated by the county assessor. There are at least five various timberland
rates based on the classifications described in subsection (p) of this
section. assessors shall tri-annually
review and grade these nonmanaged timberland properties in order to assign the
proper rate per acre to the property.
The rate per acre shall be established by the assessor in conformity
with requirements of subsection (b) of this section.
(i)
A parcel, or contiguous parcels, of timberland totaling less than ten acres shall
not be considered for classification as managed timberland and shall be valued
by the county assessor based upon market comparables.
(j)
Harvest Volumes per acre shall be based on site index and the ability of the
site to yield timber measured in thousands of board feet per acre, based on the
Scribner rule, or cords per acre with harvest intervals at thirty-five,
fifty-five and eighty years for Grade One and Grade Two soils, and at
forty-five and eighty years for Grade Three soil.
(k)
The appraised value per acre of managed timberland is the present worth of an
infinite periodic net income from the land less a property tax adjustment for
Class II, and a blend of Class III and Class IV tax rates for Class III and
Class IV properties. However, subject to
the provisions of subsection (b) of this section, the appraised value per acre
for any grade of managed timberland in any county will not be less than eighty percent
of the value per acre of the comparable
grade of managed timberland in the immediately preceding tax year in that same
county. The appraised value is the net
present worth of all revenues and costs associated with growing timber on the
land in perpetuity. Net income is the
difference between projected revenues, for example, harvest revenues in years
thirty-five, fifty-five and eighty and projected costs, including for example
management costs.
(l)
The following is a step-by-step procedure for determining the appraised value
per acre of managed timberland.
(1)
The Tax Commissioner shall enter the surface ownership maps (typically one inch
equals four hundred feet or one inch equals eight hundred feet) into a
Geographic Information System. The
Geographic Information System shall be used to register the surface ownership
parcels to the same geographic coordinate system and scale as that of the
Integrated Moisture Index. This process
allows the calculation of the area of each soil productivity grade in each
parcel.
(2)
Average stumpage price (five year weighted moving average) is determined by the
State Tax Commissioner, based on stumpage price reports from the Division of
Forestry and other available sources.
(3)
Total harvest income per acre over a rotation cycle of thirty-five years,
fifty-five years and eighty years for grade one and two soils, and forty-five
years and eighty years for grade three soils shall be compounded at the end of
the rotation being the harvest income value at year eighty less applicable
state and federal severance tax payments, if any.
(4)
End of eighty-year rotation total management costs per acre shall be determined
by compounding the annual management costs at the end of the rotation being the
management cost value in year eighty using the after severance-tax management
costs and accrued interest on those costs.
(5)
Appraised value per acre for managed timberland shall be determined by first
deducting the cumulative end of rotation total management costs from the
cumulative end of rotation total harvest income per acre as defined in this
section; second, calculating the present worth of that difference, assuming an
infinite periodic income from the managed timberland; and third, adjusting that
value by the annual ad valorem property tax rate (either Class II or a blended
Class III/IV).
(6)
The Geographic Information System shall be used to calculate the appraised
value of managed timberland property on an annual basis. The appraised value of each managed
timberland property shall be calculated using the formula provided in subsection
(v) of this section. Those acreages involved in a managed timberland
application where the use of the property is not for managed timberland
purposes such as a homesite, for pasture, or tillable farmland, for recreation
or for a strip mine, for example, may not be classified as managed timberland
and shall be appraised by the county assessor.
(m)
The average statewide capitalization rate, based on a five-year weighted moving
average of various components, for managed timberland shall be determined
annually by the Tax Commissioner through the use of generally accepted methods
of determining those rates. The rate
shall be based on the assumption of a discounted cash flow model based upon
harvest intervals provided in
subsection (s) of this section. The
capitalization rate used to value managed timberland shall be developed
considering the following:
(1)
Discount Component. -- The summation
technique shall be used in developing a discount component of the
capitalization rate. The five
subcomponents of the discount component are:
(A) Safe Rate.
-- The safe rate shall reflect a rate of return that an investor could expect
on an investment of minimal risk. This
rate shall be developed through weighted averages of interest rates offered on
five-year United States Treasury Bills for the five years immediately preceding
the appraisal date.
(B)
Nonliquidity Premium. -- The
nonliquidity premium rate shall be developed through an annual review to
determine a reasonable estimate of time that timberland, when exposed for sale,
remains on the market before being sold.
The time thus determined shall be used to identify United States
Treasury Bills with similar time differentials in excess of thirteen-week treasury
bills. The interest differential between
these securities shall be used to represent the nonliquidity rate. For example, if it is determined that a tract
of timberland remains on the market for an average of thirty-nine weeks before
being sold, the nonliquidity rate shall be derived by subtracting the rate on
thirteen-week treasury bills from the rate on one year treasury bills. This review shall consider the weighted
average of these differences for a five year period immediately preceding the
appraisal date.
(C)
Default Risk Premium – The premium
added to the safe rate to compensate for the chance that the obligor will
default on a loan, is the difference between the rate on a United States
Treasury Bond and the average rate on investment grade corporate bonds, being
the rate on triple A, double A, A and triple B rated bonds of equal maturity
and marketability. The default risk premium
will take into account the weighted average of these differences for a
five-year period immediately preceding the appraisal date.
(D)
Management Rate. -- Represents the
cost of managing the investment, not the cost of managing the timberland. Historically, the management rate has been
one half of one percent; therefore, this rate shall be considered the industry
standard for current applications.
(E) Discount
Component. -- In determining the discount component of the capitalization
rate, the Tax Commissioner shall take the sum of the safe rate, the
nonliquidity rate, the default risk rate, and the management rate. The resulting discount rate is a nominal
discount rate.
(2)
Property Tax Component. -- The property
tax component shall be derived by multiplying the assessment rate by the
statewide five year weighted average of tax rates on Class II and on a blended
rate for Class III and Class IV properties.
The discounted property tax rates shall be deducted from the discounted
difference between total cumulative harvest income and end of rotation
management costs.
(n)
In order to qualify, under the provisions of this rule, for managed timberland
valuation purposes, the owner of the timberland shall, before September 1,
enter into a contract with the Division of Forestry. The contract shall state that the real estate
is being used in a planned program of timber management and erosion control
practices intended to enhance the growth of commercially desirable species
through generally accepted silvicultural practices and the use of Best
Management Practices as specified in the West Virginia Forest Practice
Standards and the West Virginia Nonpoint Source Management Program. The
contract shall be assignable with the sale of the land when the land is sold to
be used for managed timberland purposes.
Annually, before September 1, the owner shall file an
application for certification as managed timberland with the Division of
Forestry. The application shall include
either a commitment to maintain and protect timberland certified as managed
timberland by demonstrating land-use objectives to include resource management
and soil and water protection; or a written plan prepared by a professional
forester. Falsification of certification or failure to follow a professionally
prepared plan shall result in loss of valuation as managed timberland. In any event, the following information shall
be provided:
(1)
The county, district, map, parcel number, deed book surface acreage and actual
surveyed surface acreage, if available, for each parcel that is to be valued as
managed timberland;
(A)
The amount of acreage in each parcel that should be classified as managed
timberland. For those properties where
managed timberland acreage is different than deed acreage, information
identifying the use of the nonmanaged acreage is required;
(B)
The signature of owner, including all fractional interests, acknowledging that
the contract with the Division of Forestry has been annually reviewed and
approved and that the property is being managed in accordance with the Best
Management Practices for forestry as outlined in the West Virginia Forest
Practice Standards and the Best Management Practices for water quality as
outlined in the West Virginia Nonpoint Source Management Program. If a written plan is provided in accordance
with this subsection, that plan shall be approved and signed by a registered
timber management forester.
(2)
The Division of Forestry shall, on October 1, of each year, provide to the
State Tax Commissioner a copy of the certifications and a list of those
properties certified as managed timberland and those denied certification. Thereafter, the Division of Forestry has
until January 15, of the next calendar year to review any applications
questioned by the State Tax Commissioner or county officials.
(3)
Any property owner whose managed timberland application was denied or who has
been refused certification pending demonstration of specific facts may, on November 1, of the assessment year, file an
appeal of the denial or file the requested data with the Director of the
Division of Forestry. On December 1, the Division of Forestry shall
advise the Tax Commissioner of any changes of application denials.
(o)
The appraised value of property categorized as managed timberland shall be
determined by use of the formula provided in subsection (t) in the case of
Class II parcels and in subsection (u) in the case of Class III and IV parcels.
(p)
For purposes of this section, timberland shall be classified as follows:
(1)
Class "A" is land adaptable for use as forest property. It may be adaptable to other profitable
uses. There is a stand of trees of
commercial species, the size being from fourteen to twenty inches dbh, and
above.
(2)
Class "B" is land also adaptable for use as forest property. It may be adaptable for other profitable
uses. There is a stand of trees of
commercial species, the size being from ten to fourteen inches dbh.
(3)
Class "C" is land adaptable for use as forest property and there is a
stand of trees of commercial species on it of a size being from six to ten
inches dbh.
(4)
Class "D" is land adaptable for use as forest property and there is a
stand of trees of commercial species on it of a size being from four, to six
inches dbh.
(5)
Class "E" is land adaptable for use as forest property and there are
trees of commercial species on it of a size less than four inches dbh. This class of timberland also includes clear
cut property and property subjected to total harvest where the remaining
commercial species are less than four inches dbh.
(q)
The minimum number of trees required per acre to determine thirty square feet
of tree basel area of forty percent stocking for classification as forest land
shall be as follows:
|
D.B.H Range |
D.B.H. in 2" Classes |
Basel Area Per Tree |
Per Acre |
Per 1/5 Acre |
Per 1/10 Acre |
|
Up to 2.9" |
Seedlings |
|
400 |
80 |
40 |
|
3.0-4.9" |
4 |
0.0873 |
400 |
80 |
40 |
|
5.0-6.9" |
6 |
0.1964 |
153 |
31 |
15 |
|
7.0-8.9" |
8 |
0.3491 |
86 |
17 |
9 |
|
9.0-10.9" |
10 |
0.5454 |
55 |
11 |
6 |
|
11.0-12.9" |
12 |
0.7854 |
38 |
8 |
4 |
|
13.0-14.9" |
14 |
1.0690 |
28 |
6 |
3 |
|
15.0"+ |
16+ |
1.3983+ |
21 |
4 |
2 |
NOTE:
1. Area 1/5 acre, circle,
diameter 105’4 inches; square 93.4
inches per side.
2.
Area 1/10 acre; circle, diameter 74’6 inches; square 66 feet.
3.
Number of seedlings present may qualify on a percentage basis; Example, one
hundred seedlings would be equivalent of seven and one half square feet of
basal area (25% x 30 - 7.5).
4.
Seedlings per acre are based on total pine and hardwood stems. Where intensive pine management is practiced
a minimum of two hundred fifty well distributed pine seedlings will qualify.
(r) For the
purposes of this section, the stumpage price regions shall be as follows:
|
Region 1 |
Region 2 |
Region 3 |
Region 4 |
Region 5 |
|
Brooke |
Braxton |
Barbour |
Berkeley |
Boone |
|
Cabell |
Calhoun |
Greenbrier |
Grant |
Fayette |
|
Hancock |
Clay |
Monroe |
Hampshire |
Kanawha |
|
Jackson |
Doddridge |
Nicholas |
Hardy |
Lincoln |
|
Marshall |
Gilmer |
Pendleton |
Jefferson |
Logan |
|
Mason |
Harrison |
Pocahontas |
Mineral |
McDowell |
|
Ohio |
Lewis |
Preston |
Morgan |
Mercer |
|
Pleasants |
Marion |
Randolph |
|
Mingo |
|
Putnam |
Monongalia |
Tucker |
|
Raleigh |
|
Tyler |
Ritchie |
Upshur |
|
Summers |
|
Wetzel |
Roane |
Webster |
|
Wayne |
|
Wood |
Taylor |
|
|
Wyoming |
|
|
Wirt |
|
|
|
(s) For the purposes of
this section, the grades of harvest volumes per acre, measured by the Scribner
Rule as described by G. Luther Schnur in United States Department of
Agriculture Technical Bulletin No. 560, issued in the year 1930, with harvest
intervals over an eighty year rotation cycle shall be as follows
|
|
35 Years |
55 Years |
80 Years |
Total |
|
Grade 1 |
|
|
|
|
|
Site Index (75
or more) |
4.6 Cords |
2.6 Cords |
3.3 Cords |
10.5 Cords |
|
(Very Good to Excellent) |
1.5 MBFs |
4.4 MBFs |
8.6 MBFs |
14.5 MBFs |
|
Grade 2 |
|
|
|
|
|
Site Index
(65-74) |
3.3 Cords |
7.0 Cords |
4.6 Cords |
14.9 Cords |
|
(Fair to Good) |
1.0 MBFs |
4.4 MBFs |
8.6 MBFs |
14.5 MBFs |
|
Grade 3 |
|
|
|
|
|
Site Index
(less than 65) |
3.1 Cords |
15.4 Cords |
18.5 Cords |
|
|
(Poor) |
8 MBFs |
3.7 MBFs |
4.5 MBFs |
|
(t) The formula to
determine the managed timberland value for Class II parcels shall be as
follows:
Appraised Value Per Acre =
((Future Value of Harvest Revenues – Future Value of Management Costs) ((1 +
Real Discount Rate)) -1)) less discounted property tax Class II rate.
Where:
n = 80 years
Future Value of Harvest Revenues – value of harvest
revenues in year 80 using compounding formula below
Vn = Vo (1 + i) n -
1
Where: Vo =
harvest revenue in year o (i.e. 35, 45,
55 or 80)
i = capitalization rate
n = rotation length
Vn = future value of harvest
revenues
Future Value of Management Costs – value of management
costs in year 80 using the formula for calculating the future value of a
terminating annual series as given below:
Vn = a{(1 + i)n –
1/i}
Where: a =
annual management costs
i = capitalization rate
n = rotation length
Vn = future value of
management costs
(u)
The formula to establish the appraised value of managed timberland for Class
III and IV parcels shall be the same formula as used in subsection (t) for
Class II parcels except the discounted property tax rate for Class III and
Class IV properties is used; Provided,
That if the present natural resource and county computer systems cannot be
programmed to change appraisals based on tax classifications or until a new
computerized appraisal system can be put into effect, the property tax discount
shall be a blended rate including both Class II and Class III rates.
(v)
The total appraised value of the managed timberland on a given parcel shall be
determined by application of the following formula: AV = (P1V1) + (P2V2) + (P3V3)
where: AV is Property Appraised Value, P1 is Total Acreage of Parcel in Soil
Productivity Grade One, P2 is Total Acreage of Parcel in Soil Productivity
Grade Two, P3 is Total Acreage of Parcel in Soil Productivity Grade Three, V1
is Value of Soil Productivity Grade One, V2 is Value of Soil Productivity Grade
Two and V3 is Value of Soil Productivity Grade Three.
(d) (w) The
value of an acre of managed timberland in a county shall always be less than
the value of an acre of timberland of comparable soil quality in the county
that is not certified as managed timberland.
(e) (x) Any person aggrieved by any valuation of
timberland may file a written objection to the valuation with the county
assessor on or before January 15, of the assessment year. The written objection
shall then be treated as a protest filed by the taxpayer under section
twenty-four-a, article three of this chapter. If any person fails to exhaust
the administrative and judicial remedies provided in said that
section, that person shall be is barred from taking any further
administrative or judicial action regarding the classification of the property
for that assessment year.
(f) (y) Upon request of the Tax Commissioner or
the assessor or county commission of the county in which the managed timberland
is located, the director of the Division of Forestry shall inspect the property
and determine whether or not the property continues to qualify for preferential
valuation as managed timberland under this article. In the event If
the director of forestry determines that a property does not qualify as managed
timberland due to a change in its use, or it is discovered that a material
misstatement of fact was made by the owner of the property in the certification
of the property as managed timberland under subdivision (1), subsection (d),
section ten of this article, or it is discovered that the property owner is not
complying with the terms of the managed timberland plan, including any period
of time for coming into compliance granted the owner by the director of
forestry, the director shall give written notice to the owner of the property
by certified mail, return receipt requested, the Tax Commissioner and the
assessor of each county in which the property is located that the certification
of the property as managed timberland is revoked.
(g) (z) The aggrieved owner of the property which
had its managed timberland certification revoked pursuant to any provision of
this code may, at any time up to sixty days from the date of notification from
the Director of Forestry, petition the circuit court of the county in which the
property is located for relief.
(h) (aa) The provisions of this section enacted in the year
1998 shall apply to tax years
beginning on or after January 1, 1999. The provisions of this section as amended and reenacted
in the year 2017, shall apply to tax years beginning on or after January 1,
2018, and shall, then and thereafter, supersede the legislative rules
previously promulgated for the
valuation of managed timberland and timberland for ad valorem property tax purposes.
NOTE: The purpose of this bill is
to establish a
specific valuation of managed timberland and timberland that is not managed
timberland for ad valorem property
tax purposes. The bill provides remedies to persons aggrieved by the valuations
and for compliance inspections and notice of revocation. The bill provides for appeals and an
effective date.
Strike-throughs indicate language
that would be stricken from a heading or the present law and underscoring
indicates new language that would be added.
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