15-44-103. Legislative intent -- value of forest lands -- valuation zones. (1) In order to encourage landowners of private forest lands to retain and improve their holdings of forest lands, to promote better forest practices, and to encourage the investment of capital in reforestation, forest lands must be classified and assessed under the provisions of this section.
     (2) The forest productivity value of forest land must be determined by:
     (a) capitalizing the value of the mean annual net wood production at the culmination of mean annual increment plus other agriculture-related income, if any; less
     (b) annualized expenses, including but not limited to the establishment, protection, maintenance, improvement, and management of the crop over the rotation period.
     (3) To determine the forest productivity value of forest lands, the department shall:
     (a) divide the state into appropriate forest valuation zones, with each zone designated so as to recognize the uniqueness of marketing areas, timber types, growth rates, access, operability, and other pertinent factors of that zone; and
     (b) establish a uniform system of forest land classification that takes into consideration the productive capacity of the site to grow forest products and furnish other associated agricultural uses.
     (4) In computing the forest land valuation schedules for each forest valuation zone to take effect on January 1, 1994, the department shall determine the productive capacity value of all forest lands in each forest valuation zone using the formula V = I/R, where:
     (a) V is the per-acre forest productivity value of the forest land;
     (b) I is the per-acre net income of forest lands in each valuation zone and is determined by the department using the formula I = (M x SV) + AI - C, where:
     (i) I is the per-acre net income;
     (ii) M is the mean annual net wood production;
     (iii) SV is the stumpage value;
     (iv) AI is the per-acre agriculture-related income; and
     (v) C is the per-unit cost of the forest product and agricultural product produced, if any; and
     (c) R is the capitalization rate determined by the department as provided in subsection (6).
     (5) Net income must:
     (a) be calculated for each year of a base period, which is the most recent 5-year period for which data is available;
     (b) be based on a rolling average of stumpage value of timber harvested within the forest valuation zone and on the associated production cost data for the base period from sources considered appropriate by the department; and
     (c) include agriculture-related net income for the same time period as the period used to determine average stumpage values.
     (6) The capitalization rate must be calculated for each year of the base period and is the annual average interest rate on agricultural loans as reported by the Northwest farm credit services, agricultural credit association of Spokane, Washington, plus the effective tax rate.
     (7) The effective tax rate must be calculated for each year of the base period by dividing the total estimated tax due on forest lands subject to the provisions of this section by the total forest value of those lands.
     (8) For the purposes of this section, if forest service sales are used in the determination of stumpage values, the department shall take into account purchaser road credits.
     (9) In determining the forest productivity value of forest lands and in computing the forest land valuation schedules, the department shall use information and data provided by the university of Montana-Missoula.

     History: En. Sec. 3, Ch. 783, L. 1991; amd. sec. 36, Ch. 308, L. 1995; amd. Sec. 3, Ch. 297, L. 1997.