Pope & Talbot, Inc., & Subsidiaries - Page 23

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          adjustments to the comparable sales prices where necessary.  One            
          parcel, however, the Gold Mountain broadcast site, was valued               
          using an income approach, capitalizing net income at 17                     
          percent.12                                                                  
               The parties agree that eight parcels had a higher and better           
          use than timberland.  A comparison of the estimated values of               
          these properties is as follows:                                             

          Property          Mr. Allen           Mr. Slack                             
               Bucklin Ridge       $3,600,000          $2,400,000                     
               Poulsbo 80          112,500             130,000                        
               Everett             765,000             707,000                        
               Gamblewood          247,500             285,000                        
               Pete’s Mountain     792,000             1,247,000                      
               Discovery Bay       1,080,000           623,600                        
               Camano Hill         180,000             246,000                        
               Brown’s Point       558,000             697,000                        
               Total             $7,335,000          $6,335,600                       

               Like the market for timberland, the real estate market was             
          depressed in 1985.  As such, we do not agree with Mr. Allen's               
          determination that 11,084 acres of real estate held by Pope &               
          Talbot Development were potentially developable in the reasonably           
          foreseeable future.  Moreover, we note that upon conversion of              
          designated forestland into ad valorem property, the owner must              
          pay a conversion tax equal to the additional amount of tax that             
          the owner would have paid if the property had been subject to the           
          ad valorem tax rate for the preceding 10 years.  While this cost            


          12Mr. Slack valued the Gold Mountain parcel at $126,500.                    




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