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is not incurred until actual conversion, we think that a
hypothetical buyer would consider this potential cost. Mr. Allen
did not account for conversion costs in his analysis. Upon
consideration of the experts’ reports and testimony and other
evidence relating to the development potential of the property,
we believe that approximately 6,000 acres of the property held by
Pope & Talbot Development should be classified as development
property having a higher and better use than timberland.
In sum, we have considered each expert’s report and
testimony with respect to timber, timberland, and development
property and have determined that we cannot accept or reject
either party’s experts in full. Based upon the record before us
and the conclusions we have reached above, we believe that the
collective value of the timber and timberland was between $30 and
$40 million, and the value of the development property was
between $10 and $12 million.
Port Ludlow Community
The Port Ludlow community is a resort and residential
development project located in Port Ludlow, Washington, on the
Puget Sound. Prior to the transfer of Port Ludlow to the
Partnership, approximately 500 acres of land had been developed,
and approximately 750 lots had been sold at prices ranging from
$10,000 to $75,000. As of December 20, 1985, approximately 68
developed lots remained available for sale, and about 2,500
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