Masses of spindly young trees crowd the forest floor and become tinder for destructive forest fires. Instead of focusing on the value of the trees to loggers, the Nature Conservancy’s Future Forests project would make it more viable to remove the young trees that make Arizona forests so dangerous. But thus far the project’s loggers, truckers and sawmills have not met tree removal targets.
Woodland property assessment
The on-going appeal regarding property assessment by Jim Corum, KWOA past president, is based on a lack of constitutional appropriateness regarding the disparity in application of property assessment criteria. The current assessment has economic implications for landowners regarding forestland as an investment given the carrying cost of the tax burden. For example, as a percentage of net income, woodland owners pay 15.6 percent of net income compared to 3 percent for corn farmers.
KWOA has conducted lengthy discussions covering many aspects of the issue including what criteria distinguish personal use from agricultural use for timber properties and the potential impact on counties’ tax base, particularly in light of the significant decrease in tax revenues from mined minerals.
Rough estimates indicate that Kentucky timber resources are only about 25 percent as productive as they could be due to lack of management. The KWOA board voted to form a committee to define what constitutes sustainable management practices. The committee will attempt to compare differences in tax rates between properties that implement sustainable management plans and those that don’t.
Recent high-profile property tax assessments for lots slated for future development in Fayette County resulted in new criteria for agriculture exemptions. There is no similar criteria for tree farms. KWOA is developing a related position paper focused on retaining property tax exemptions for all 10+acre woodlands. The position paper supports greater rewards for woodlands with active management plans. The first effort will be to develop and agree on the criteria that will differentiate a “working forest” (actively farmed) from a personal use or “volunteer” forest.
U.S. Congressional Working Forest Caucus
U.S. House and Senate bipartisan caucuses were formed to pursue common legislative objectives and policies relating to responsible, active management of privately owned forests. No Kentucky congressional legislators are members of these caucuses.
KWOA sent letters with the UK Kentucky Forestry Economic Contribution Report 2016 to the state’s U.S. senators and representatives. Sample letters were sent to KWOA members to encourage them to contact their congressional legislators about joining a caucus.
Member presentation on timber harvest
Eric Shrader, woodland owner and KWOA member, made a presentation to the board regarding his experience with a 2015 timber harvest. He shared the challenges, lessons learned, and the result of his efforts to have a logging inspection report corrected to reflect what he considered to be violations of best management practices during the harvest. A summary of his presentation is on the KWOA Practices page at www.kwoa.net.
Guest presentation from Dendri Fund
Barbara Hurt, Dendri Fund Executive Director, explained that the Dendri Fund is an independent foundation that gives grants focused on working groups: wood, water and grains. Born out of Brown Forman, a family-owned business, the Fund invests in building relationships, creating dialogue and shared learning, and fueling innovative solutions bringing together diverse perspectives. The Fund is in the process of changing its policy from a transactional to transformative grant-making process.
McCauley Adams, with Dendri’s wood working group, spoke about its focus on the importance of wood products to Brown Forman and to the quality of life for Kentucky’s future generations. Members brought up possible topics of mutual interest such as sustainable management of forests, the importance of other species besides oak and barrel-making and the threats from invasives.
KWOF sponsors six programs during 2017 with $3,450 in funding
KWOF contributed sponsorships to the following entities during 2017:
Greenup County Conservation District – $400 – to help fund their annual Woods and Wildlife for Your Wallet program.
Leopold Conservation Award – $500 – honors Kentucky farmers, ranchers and other private landowners who voluntarily demonstrate outstanding stewardship and management of natural resources.
UK Forestry Student Scholarship – $1,000 – to an outstanding student enrolled in the University of Kentucky’s professional forestry degree program.
Woodland Owners Short Course – $650 – The WOSC is designed to assist Kentucky’s woodland owners in the care and management of their woodland resource.
UK Kentucky Forestry Leadership Program – $400 – for two competitive scholarships to the weeklong program at Jabez for students interested in natural resource management.
Salt River Watershed Project- $500 – managed through the Kentucky Waterways Alliance.
New Kentucky Division of Forestry Director outlines plans for agency
Recently appointed Director James Wright introduced himself and updated the board on agency activities and plans. Mr. Wright reported on staffing levels at the agency and his goal to streamline management personnel and increase field staff, including an urban forester position. There is real hope to have US Fish &Wildlife Service provide ongoing support on all enforcement issues. Kentucky foresters are being sent to other states on fires and management practices through new neighbor agreements with the US Forest Service. These changes are saving general fund dollars and looking in new directions to fund and promote sustainable forestry.
Pam Snyder, KDF Stewardship Branch Manager, reported that emerald ash borer has been found in six more counties. The division is re-gearing to roles that have an economic return. It is developing a cooperative agreement with NRCS on easements and timber stand improvement.
Emerald ash borer
The office of the Kentucky Commissioner of Agriculture has agreed to hold a meeting to discuss issues and economics related to the emerald ash borer. The emerald ash borer (or EAB), a native of Asia, is a half inch long dark metallic green beetle that kills ash trees within three to five years after they become infested.
Former KWOA president Joe Ball has contacted several statewide agencies and associations regarding the EAB threat. He assured the board that forestry is a big issue for the current commissioner, Ryan Quarles. In discussions with the commissioner’s marketing staffer, Ball thinks that woodland owners who have experienced timber loss from EAB damage may qualify for disaster relief funds. The USDA Farm Service Agency’s Emergency Forest Restoration Program provides payments to eligible owners of rural nonindustrial private forest land to carry out emergency measures to restore forest health on land damaged by natural disaster events. Insect disease is mentioned as damage that is eligible for relief funds.
UK Forestry Extension is developing a fact sheet utilizing existing forest inventory data for ash trees and EAB infestations to project the economic impact of resultant stumpage, canopy and overall downstream loss from this invasive. (Ash trees comprise seven percent of forest species in Kentucky.) Joe Ball recommended that loss payment be tied to cleanup and active management of future timber.
Senate Bill 38 relating to timber theft passed both the Senate and the House with one amendment and was signed by the Governor.
The bill amends KRS 364.130 to specify that a person, regardless of state of mind or whether the person believes to be authorized or not, is liable for three times the stumpage value of the timber and three times the cost of any damages to property when he or she takes the timber of another without legal right or color of title.
The amendment exempts residential property owners and farmland owners maintaining their fence rows who mistakenly remove the timber of an adjoining property owner from the requirement to pay treble damages.
HCR 29 directs the Kentucky Legislative Research Commission to establish a Timber Theft and Trespass Reduction Task Force to study issues regarding timber theft and trespass and to develop consensus recommendations to address those issues.
The task force would meet three times before submitting its final report to the LRCommission by November 30, 2016. The LRC has authority to alternatively assign the issues identified in the Resolution to interim joint committees or subcommittees.
Sponsored in the House by representatives Combs, Denham, Howard, Montell, Nelson, Osborne and Riggs, the resolution passed 95-0 in February. It is now in the Senate Natural Resources and Energy Committee.
KWOA voted at its annual meeting to support the resolution with a letter from President Frank Hicks. In addition, Keith Argow, President, National Woodland Owners Association submitted a letter of support to the senate committee. In his letter Argow notes that “…Kentucky has one of the weakest positions against timber theft of any state.” He argues that, in addition to inherent flaws, Kentucky’s current statute with respect to timber theft, KRS 364.130, is a civil statute that requires timber theft victims to file civil suits, an action that is out of reach for many landowners. The result, Argow concludes, is that “logging theft is an almost risk-free crime.”
KWOA members are encouraged to call and/or write their senators on the Natural Resources and Energy Committee in support of HCR 29. The 2016 legislative session adjourns April 12.
Senate Natural Resources and Energy Committee
• Sen. Jared Carpenter [Chair]
• Sen. Brandon Smith [Vice Chair]
• Sen. C.B. Embry Jr.
• Sen. Chris Girdler
• Sen. Ernie Harris
• Sen. Paul Hornback
• Sen. Ray S. Jones II
• Sen. John Schickel
• Sen. Johnny Ray Turner
• Sen. Robin L. Webb
• Sen. Whitney Westerfield
U.S. Secretary of Agriculture Tom Vilsack made a major announcement March 30th strongly promoting wood as a green building material and recognizing multiple green building rating systems. According to the Sustainable Forestry Initiative, the USDA announcement was made during the International Year of Forests celebration in Washington, DC. The event was co-hosted by the American Forest Foundation, the National Association of State Foresters, and the USDA Forest Service.
According to a March 30th USDA press release Secretary Vilsack laid out a three-part plan addressing the Forest Service’s and USDA’s current green building practices. The strategy includes the following parts:
1. The U.S. Forest Service will preferentially select wood in new building construction while maintaining its commitment to certified green building standards. USDA will also make a commitment to using wood and other agricultural products as it fulfills President Obama’s executive order on Federal Leadership in Environmental, Energy, and Economic Performance.
2. The Secretary has asked the U.S. Forest Service to examine ways to increase its already strong commitment to green building by reporting to him on ways to enhance the research and development being done around green building materials.
3. The U.S. Forest Service will actively look for opportunities to demonstrate the innovative use of wood as a green building material for all new structures of 10,000 square feet or more using recognized green building standards such as LEED, Green Globes or the National Green Building Standard.
The plan explicitly recognizes the Green Globes standard and the National Green Building Standard, both of which recognize multiple forest certification standards. Opening the door to other green building rating systems increases opportunities for third party certified wood to be used and recognized in green buildings.
“This is just the market signal we need to expand markets for sustainably grown wood from ATFS,” said Tom Martin, President and CEO of the American Forest Foundation.
Regardless of the number of acres, woodland owners need to make arrangements for their estates while they are living and while they are competent to do so. An extensive guide is now available from the US Forest Service specifically for family-owned forests.
Estate Planning for Forest Landowners:
What Will Become of Your Timberland?
2009. General Technical Report SRS-112
Available as a pdf download at http://www.srs.fs.usda.gov/pubs/gtr/gtr_srs112.pdf
Although the report is more geared to large working timber holdings, its comparison examples of the impact of federal estate tax on family assets with and without estate planning are chilling. In the scenario (chapter 19) with no estate plan estate taxes could equal nearly one-eighth of the original estate. In the second example a simple plan leaving the estate to the surviving spouse avoids immediate estate tax. But the subsequent demise of that spouse could incur an estate tax equal to nearly one-fourth of the original combined estate. The final scenario presents three strategies that could reduce the example family estate tax bill by nearly $1.5 million compared to the simple plan. (These hypothetical examples are based on a family forest estate with assets valued at $10 million.)
The planning guide states that on the national level nearly three-fifths of all forest land is privately owned. More than four-fifths of that land belongs to nonindustrial owners. It also finds that the typical nonindustrial private forest owner is 60 years old. The importance of and urgency for timely forest estate planning should by now be evident. If you are still thinking it’s somebody else’s problem, complete the thirteen question “estate planning readiness” quiz on page 5 to better understand where you are in the process.
According to the book’s abstract, its purpose is to provide quidelines and assistance to nonindustrial private forest owners and the legal, tax, financial, insurance and forestry professionals who serve them on the application of estate planning techniques to forest properties. The book presents a working knowledge of the federal estate and gift tax law as of September 30, 2008.
All information offered by KWOA to whomsoever, whether written or oral, is intended for the sole, express purpose of assisting woodland owners attain the best long-range dollar return from their forestry operation, while at the same time maintaining a healthy, beautiful forest. KWOA is not engaged in rendering legal, tax, accounting or other professional service. No one should undertake any suggestion offered by KWOA without first consulting experienced professional advisors.
KWOA does not endorse and is not responsible for any statement, opinion, or advice given or made by anyone other than authorized KWOA representatives. All postings are those of the authors and you rely on such information at your own risk.
Source: American Forest Foundation
In early August U.S. Senators Diane Feinstein (D-CA) and Mike Crapo (R-ID) introduced legislation in the Senate that would help to fix the estate tax for family forest owners and farms. S. 3664, The Family Estate Tax Deferral Act of 2010, will help preserve forest land by helping families avoid the pressure of selling to pay taxes when land is passed down from one generation to the next.
If the estate tax is not reformed before 2011, any estate worth over $1 million will be subject to a 55% tax. This will affect many landowners, and may force some of them to sell or harvest their timber unsustainably in order to pay the tax.
S. 3664, the Feinstein-Crapo bill, is similar to the Thompson bill, HR 5475, in the House. The bill would provide family forest owners with an exemption from the estate tax, if they keep the land in their family and manage it as a forest. Landowners can harvest, if they harvest consistent with a forest stewardship plan.
More information about the bill and contacting your senators is available from the American Forest Foundation.