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Mr. Granvall estimated the value of reproduction timber
using a discounted cash-flow analysis. In applying this
analysis, Mr. Granvall considered any timber less than 40 years
of age to be reproduction timber. Mr. Granvall projected the
value of the reproduction timber at 50 years, which he considered
to be the optimum harvest age, and discounted it to present value
using discount rates ranging from 4.7 percent for Site V (highly
productive) to 7.7 percent for Site I (poorly productive). He
then applied the comparable sales adjustment factor of .61 to
arrive at a total value for reproduction timber of $4,937,389.
Mr. Granvall estimated the value of bare land by site class
and then applied the comparable sales adjustment factor to the
total. Using this approach, Mr. Granvall estimated the value of
the bare land at $7,233,807.
Respondent’s expert, James W. Prochnau of Jackson &
Prochnau, Inc., appraised approximately 69,000 acres8 of
8The difference in the number of acres appraised by each
expert as timberland is attributable to their differing opinions
as to how much of the land has a higher and better use as
something other than timberland. It is petitioner's contention
that, in addition to the 79,127 acres of undeveloped land
classified as timberland by Mr. Granvall, approximately 2,000
acres of land transferred to the Partnership had a higher and
better use as development land. Respondent, on the other hand,
argues that of the undeveloped land transferred to the
Partnership, only 69,000 acres should be classified as timberland
while 11,084 acres had a reasonable potential for development
and, accordingly, should be valued as such. The parties refer to
this "higher and better use" property as transitional or
development property.
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Last modified: May 25, 2011