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commercial value. The market for timber and timberland was
depressed in 1985 but began to rise in mid-1986.
Petitioner’s expert, Ray E. Granvall, Jr., of Cascade
Appraisal Services, Inc., appraised approximately 79,127 acres of
timberland6 containing about 796,729 thousand board feet (MBF) of
merchantable timber as of December 20, 1985, and concluded that
the market value of the property was $26,510,000. Mr. Granvall
relied primarily on an economic approach, in which he separately
valued merchantable timber, reproduction timber (i.e.,
premerchantable timber that is less than 40 years of age), and
bare land and adjusted these indicated values to fair market
value by applying a comparable sales adjustment factor.
Mr. Granvall considered merchantable timber to include
softwood and hardwood stands over 40 years old. In estimating
the value of merchantable timber, Mr. Granvall utilized a
procedure known as "Conversion Return Analysis". This approach
starts with the value of the end-product, generally the spot
market prices for logs, and then deducts logging costs to arrive
at an indicated value for the merchantable timber. Mr. Granvall
started with an average delivered log price of $187/MBF. He
arrived at this figure using published price lists for both
6This figure includes acreage that petitioner described as
development properties in its proxy statement.
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