Tee Pee Zee
posted 1/27/10 Sierra County is preparing to finalize a new Timber Production Zone ordinance. As was reported last week, TPZ has been a growing source of contention in several counties. There are flaws with the enabling law, shorting counties on the revenue from those lands which they keep in growing timber for the benefit of the entire state. In the previous story, we questioned what constituted "timber producing land" and provided a link to an 18 acre parcel in a city’s limits. There are 7 parcels in Sierra County under 10 acres. The County’s newest proposed codes determine that a solitary parcel of less than 80 acres is not a viable timber production parcel. Parcels smaller than that will not be able to have a house. The county has roughly 65 parcels under 80 acres, which is about 22% of the number of parcels, but only 3% of the total acres. They are likely not all owned by 65 different owners. There are about 66 parcels between 80 and 160 acres. A hundred and sixty acres is a nice hunk of land, and could be a timber producing unit in many places in the county, but not in all places. A hundred and sixty acres east of Loyalton might not offer harvest quality timber. Charts (first row indicates parcel sizes): Less than 80 80 to 160 160 plus 65 66 161 22.26% 22.60% 55.14%
Tee Pee Zee Two
(Tee Pee Zee One is below)
In TPZ, by number of parcels
In TPZ, by acres
|
Less than 80 |
80 to 160 |
160 plus |
|
2596 |
7079 |
72064 |
|
3.18% |
8.66% |
88.16% |
The factions which have historically quarreled over the fine print in TPZ have reportedly met and proposed wording everyone can agree to. That will go to the Planning Commission, and then to the Board. People will have plenty of opportunity for input.
Best, though, is to provide input to our elected state representatives. Cities enjoy the wood from our lumber and tax it for decades as houses and buildings. Cities enjoy our clean waters. Cities should pay the timber producing counties for keeping the hills in trees.
posted 1/24/10
Tee Pee Zee
Timber Production Zone is a classification that the legislature intended to protect forest land from parcelization and development. The California Forest Taxation Reform Act of 1976 provided a tool to value forest land for its ability to produce trees, and to tax it at that rate, deferring a tax on the trees until they are sold, producing a yield tax. In exchange, the landowner agrees to limit uses of the land to those which are "compatible" with growing timber. The zoning agreement lasts ten years, and can be renewed annually as long as trees grow.
Essentially, it removes land from general zoning and considers the "best, highest use" to be timber production and open space. This, at times, would require people to cut trees to pay taxes.
The term "best, highest use" is a way for county assessors (through appraisers) to tax your land at the use they expect you could enjoy. Unfortunately for many rural land owners, if the land could be split and developed, it’s "best, highest use" would be development property, and the county taxes it at this much higher rate.
The legislature realized this higher tax rate encouraged development and discouraged timber, and so they encouraged the owners of timber producing parcels to maintain the lands in timber. Lands zoned for timber production would be taxed at a significantly lower rate and in exchange must be kept primarily in timber production, and related activities.
The state left much of the implementation of the law to the counties, and as result, there were very different interpretations from county to county.
The act was somewhat similar to the very successful "Williamson Act" for agriculture, but the legislature seems to have reasoned that ag land saw income annually, while timber producing land saw income only after decades. They did not provide subvention funds the counties for lost property tax as with Williamson act, reasoning that the counties would see taxes when the trees are cut.
Zoning the land for timber production certainly has encouraged timber land owners to keep the land in trees. Naturally, those who benefit the most aren’t owners of one and two hundred acres, though certainly families still have land because of the reduced taxes under TPZ. The single biggest owner of such TPZ land is Sierra Pacific Industries. They, and other large landowners, are deeply invested in keeping timber zoning in place.
However, it is the counties who suffer under this plan. The timber, if it ever is harvested, doesn’t bring in anything like the money that would have been claimed in taxes if the county had been able to tax it as though it were developable land.
The most strident detractors of timber zoning claim that it provides an unfair tax advantage to those rich enough to own tracts of forest land. Some realtors use the zoning as a sales point on parcels that will become the private reserves of the wealthy, who will build a nice house and grounds. The law indicates a house according to the "needs" of the timber management, but should there be a limit to the largeness of the house or the smallness of the parcel? Further, they claim that the uses to which TPZ land can be put are too broad. Stretching the point, in some counties, detractors point out that the land could be used for recreation, and that a hotel could be built if it were called a recreational camp. That hasn’t happened, and probably couldn’t happen, but the point is taken that some owners of TPZ land do make money other ways, including hunting clubs and camping. Those uses logically do not detract from the primary purpose of the zone, growing trees.
Cap and Trade has changed the scene in unknowable ways. SPI recently contracted some carbon sequestering on lands in California. The Prospect has not yet been able to verify if the land is already zoned TPZ or what effect the zoning has, if any, on the carbon contract. It is possible landowners could take carbon contracts to not cut trees that they are enjoying timber zone tax benefits on.
If that is the case, detractors will scream even louder, but let’s pause for a moment to think about something besides money.
The intention of the act is to prevent the development of land. It is successful. Carbon sequestering as a rather fuzzy idea, and the logistics are far from worked out. A market is being created like the "pork belly futures" market, but we’ll have to see what effect it actually has on timber land ownership, but it will eventually mean the land is managed to maximize carbon sequestering. Often, that means harvesting some timber to encourage growth of ages that capture the most carbon. What does not change is that the legislature remains successful in its goal to keep land undeveloped.
We note that timber production land does other things beside grow timber, and the county assessors and planning departments who are pushing to limit TPZ are capitalist to the extreme, with tax income being the primary motivation. Properly managed timber lands provide a community with clean air, clean water, biomass energy, wildlife habitat and recreational lands. The benefit of those, if the county had to pay for them, is unimaginable.
Likewise, harping on landowners who put a nice house and guest house on a 160 acre parcel and then enjoy TPZ tax benefits appears to be motivated by envy. It certainly is true that working and middle class people rarely enjoy the tax benefits of the wealthy, and we should be angry about that, but in this instance, the complainers are overlooking the essential fact that the legislators continue to be successful in their intention. Instead being broken into five and ten acre parcels, it remains at least at a quarter section, 160 acres.
Further, look at it from the perspective of the small timber landowner. While the county assessor might assume the best, highest use is development, the landowner might want to simply preserve the land as open space, making modest non-industrial use of the land. The landowner is benefiting the community by leaving the land as forest, why should they pay taxes as though they were greedy?
If the landowner builds a nice house, a garage, a shop for equipment, he’ll pay taxes on those improvements, and a higher rate on the land under those improvements.
When the act was first implemented the market for timber was good, and counties were liberal about what land could be zoned TPZ.
But in the intervening decades, TPZ landowners have become more creative at making money off the land, partially because timber revenues have declined. Owning land is expensive, and particularly if the landowner is actually managing the forest, taking out damaged and diseased trees, keeping understory to a healthy level, protecting streams and wetlands, which because of the lack of frequent wildfires actually requires removing conifers from the margins.
It is the declining tax revenues which are motivating the counties. If the state had given the counties a generous buy-out, by reimbursing counties for losses of revenue, the counties would probably accept very small parcels in TPZ.
However, the counties are not compensated, and so they feel they are shorted. The state isn’t even compensating Williamson act lands now. We have to work with what we have.
Currently, a brief review of TPZ in rural counties seems to indicate that 80 acres is about the smallest parcel size, though there are smaller parcels. Most parcels are 160 acres or larger. Those who object to the "estate" landowners in TPZ question what constitutes a viable size for timber management.
The California system uses zones and quality classifications from zone 1 (most productive) to 5 (non-productive). The values of those classifications for the zones indicate the value of the property for growing trees.
This quest for the "viable size" is really overlooking the intention of the law, which is that timberlands remain undeveloped. However, there is some meat to the question.
Still, it isn’t an easy question to answer, particularly if we keep in mind the public benefit of undeveloped land.
Timber growing conditions vary; two different places on the same property can have different value as timberland. If we take the strictest meaning of the word, meadows and wetlands do not constitute timberlands and should either be excluded or encouraged to fill in and grow timber. Clearly it was not the intention of the legislature to fill in wetlands to grow trees. It was the intention to preserve forest lands. Because property line boundaries cross watersheds, not all pieces of property, even adjacent pieces, are equally valuable as timberlands; still, non-timber producing areas are still valuable under the intention of the law.
Then, there are small parcels of valuable timber, such as Yew. Is it in the public interest to preserve an unusually dense 40 acre grove of uncommon trees? Does the public value of the trees outweigh the taxes such a small parcel would bring in?
To add to the problem, what is the value of the timber when logs have no value? The county only makes money when the timber owner does; the logs continue to grow when the economy is down, but the delayed income is hard for both.
However, the trees will be taxed again, when they are milled into lumber and pounded into houses; but those taxes don’t come back to rural counties, they’ll go to more urban areas. The critics of TPZ point out that 5.4 million acres are placed into reduced tax status, hugely benefiting large corporations and not often small landowners, and shorting the poorest counties in the state. The counties bear the cost of keeping the land clean and open and absorbing carbon; the winds blowing over the Sierras go to Nevada and the water that flows from our county benefits the cities of the south. Maybe it’s time for those areas to pony up, pay taxes to keep the timberland open.
In the meantime, it is left for the counties to codify what constitutes "compatible activities" and try to tax them, or to push timberland out of TPZ.
Recently High Sierra Rural Alliance recently claimed that land had to have an assessment to remove land from TPZ, and in Humboldt County groups are insisting CEQA review is necessary prior to changing the code.
Several counties are now considering redefining TPZ land. The most spectacular fight seems to be in Humboldt, as the Prospect has mentioned before, and if readers haven’t checked in on the battle (here), it might be a good idea, since we want to avoid such friction in our county.
Santa Cruz: 18 acre TPZ
A critique of TPZ
One source of the law.
