Figuring long term timber value in a State appropriation.

[mailman]

 I have recently had a major landslide on some property I own in Ohio. It has closed down a major state route and the State has been awarded federal emergency funding to open the road back up ($4.5 mil). Ive received a couple of certified letters detailing my real estate that will be involved in the temporary fix. Looks like 9 building lots along the road, and about 17ac behind the lots will be involved,and another 5ac for access to the back side of the 17.(Its a really big slip). So far it looks like they want to buy the building lots along the road, but just work on the remaining acreage.
 I went down and marked walnut trees on everything but the 5 ac of access. I marked and recorded all walnut trees over 8" up the largest at 30". I had 59 trees averaging 16" and a bunch buried in the mud that I cant get to.
 I guess my question is, have any of you seen a situation like this?
 Will I be stuck with the current value of the immature trees or will they figure the value the trees would have been worth if they hadn't taken them early. Most of the trees marked would have survived the slip.
 Should I go back and record smaller walnut trees? If so how small?
 I'm going back down to mark white oak next.  
  

[Ron Scott]

You will need to determine and negotiate with the State as to how they intend to pay you and at what values for the timber. You should want to be paid damages for the loss of any future commercial timber values that you might have.

You should seek out the services of a professional consulting forester serving your area to determine the loss of your timber values.  

[BuckeyeAaron]

I don't fully understand the situation completely based on the recounting but if the timber has already been lost due to the landslide I don't see how you would be entitled to any payment for trees. However, if you're indicating that the State wants to use your land to fix the landslide damages, and timber would be lost in doing so, then yes - you should seek payment for any marketable timber.  But I don't think it's reasonable, or legally prudent, to see payment on immature saplings or poles that may be lost as there is no way to know of those trees would ever mature into commercial products (similar to how owners losing land for pipelines in Eastern Ohio can get paid for standing merchantable timber but not non-merch. timber). Or if I completely missed the spirit of the post and the state wishes to outright purchase your property then that's a matter of real estate value - which you may or may not decide to include an estimate of stumpage value for.

And FYI, I am a consulting forester in SW Ohio.  Depending on where you are located I'd be happy to offer more detailed guidance on the phone or recommend a consultant close to your area.

[mailman]

The Trees I'm measuring are still standing and in good shape on land the state intends on using to repair the slip.
 Here is how I'm looking at it.
 I operate a business that logs and processes firewood. The state intends on taking land I own to fix a state highway, and in the process the are going to destroy my inventory, and since it is a growing renewable inventory the are also destroying future inventory.
 In my operation the only logs I sell are walnut, and white oak. I am marking, and measuring all Walnut and White oak down to 6". I am also doing a volume count on remaining hardwood in a small average area to get an estimate on the total cord count of firewood.
 I will figure walnut and white oak footage as timber, and everything else as cords of firewood.
 I would think as a person who sells logs to sawmills, and processes and sells hundreds of cords of firewood the state would have to pay me what I would normally get for all that wood.
 I just haven't figured out the whole future inventory part yet.  

[BuckeyeAaron]

That makes more sense.  Thanks for clarifying.  Figuring a value for the standing merchantable products is fairly straightforward. Simply inventory and apply market conditions.  The State may or may not be willing to pay for the loss of future merchantable products since there is no guarantee that those products would ever materialize.  Furthermore, along those lines of logic, what's keeping you from inventorying your 12" walnut/white oak and seeking damages for loss of potential future veneer?  While you may have a sawlog now, or firewood at minimum, you could have veneer in the future - but that doesn't appear to be in your current plan for restitution. So then why would the approach change for currently non-merchantable trees?

I could see this going a couple of ways:

1) State says no way - we will pay current market price for all currently marketable timber with no consideration being made for unknown future values.

2) You negotiate some sort of lump sum payment to cover the loss of future value.  This figure would likely be more heavily based on the State's willingness to pay and the amount you're willing to accept to feel satisfied rather than based on any inventory or market data.

3) Conduct a formal timber cruise to determine how much standing volume you have in non-merchantable material by species.  You would then apply a growth rate (likely 3 to 5% per year depending on site conditions) to grow that material forward a reasonable amount of time - you may elect to provide several benchmarks (i.e. when average DBH is 12", 18", 22", and 26").  Sort of like a timber basis in reverse.
Once you have these benchmark volumes you could then apply market conditions based on species and product clearly stating you are assuming future market conditions will be similar as they are today (you have no real other option).  The final step is then to calculate the net present value of each of these estimated stumpage values.  That basically tells you what is the value today of your ability to grow and sell timber in the future given the conditions of your property. Seeking payment for the net present value is far more likely than seeking the estimated stumpage value in unknown future conditions.

Just my two cents. But seeking the opinion of an attorney may be worth while.  Again, I know a couple in Ohio that have experience with natural resource law.  I'm happy to pass along names if at all helpful. 

Keep us posted on how this plays out.

[WDH]

3) Conduct a formal timber cruise to determine how much standing volume you have in non-merchantable material by species.  You would then apply a growth rate (likely 3 to 5% per year depending on site conditions) to grow that material forward a reasonable amount of time - you may elect to provide several benchmarks (i.e. when average DBH is 12", 18", 22", and 26").  Sort of like a timber basis in reverse.
Once you have these benchmark volumes you could then apply market conditions based on species and product clearly stating you are assuming future market conditions will be similar as they are today (you have no real other option).  The final step is then to calculate the net present value of each of these estimated stumpage values.  That basically tells you what is the value today of your ability to grow and sell timber in the future given the conditions of your property. Seeking payment for the net present value is far more likely than seeking the estimated stumpage value in unknown future conditions.

This advice is spot on. 

[BradMarks]

Let's hope that there was no activity on your land that may have triggered a landslide.  Probably there was not.  Still, I would Google Oso Landslide, Washington State for some perspective. If the State of Ohio offers you a reasonable value on your definable assets, it could be in your best interest to accept it.  Then you would be "the good guy", for what it's worth (or not), rather than be part of a lawsuit. I'm thinking eminent domain when I say that. Just my penny's worth. 

[mailman]

3) Conduct a formal timber cruise to determine how much standing volume you have in non-merchantable material by species.  You would then apply a growth rate (likely 3 to 5% per year depending on site conditions) to grow that material forward a reasonable amount of time - you may elect to provide several benchmarks (i.e. when average DBH is 12", 18", 22", and 26").  Sort of like a timber basis in reverse.
Once you have these benchmark volumes you could then apply market conditions based on species and product clearly stating you are assuming future market conditions will be similar as they are today (you have no real other option).  The final step is then to calculate the net present value of each of these estimated stumpage values.  That basically tells you what is the value today of your ability to grow and sell timber in the future given the conditions of your property. Seeking payment for the net present value is far more likely than seeking the estimated stumpage value in unknown future conditions.

This advice is spot on. 

Yep. That is what I'm thinking.
I meet Saturday with a rep from the state to go over their plans. I should have a better Idea what's going on after that.
I've got an attorney looking over everything.
The forester I've used in the past is buried in work right now, so I may need someone for that. Will know more after Saturday.
The State has spent a couple weeks drilling core samples and the general consensus is soil makeup and extremely heavy long term rain caused the slip.
Thank you everyone for the info so far.