Under New Hampshire’s current use law, owners of qualifying land receive property tax reductions if they agree to maintain their land in an undeveloped condition, but proposed new assessments of some timberlands are causing alarm among individuals and businesses in the state’s forestry industry.At issue is a proposed change in how the value of timberland is assessed under the state’s current use law – a change that landowners and the forest industry say will result in a higher assessment of the value of certain timberland, and thus a higher tax bill.According to Donna Robie, executive director of the nonprofit Statewide Program of Action to Conserve our Environment, or SPACE, a coalition of coalition of natural resource conservation organizations, agricultural groups and recreational user groups that advocates for conservation of land through current use laws, said the increased assessments are designed to correct older standards that are outdated.She said the new assessment model, created by the Department of Revenue Administration and Department of Resources and Economic Development, would replace a model designed by using growth data from 1996.
A particular bone of contention is the assessment of white pine, typically the most profitable type of tree in New Hampshire. The board is considering raising assessments by about 12 percent, or about $10 per acre.The New Hampshire Timberland Owners Association, however, argues that white pine is being “overvalued” by the assessments, which could range from current levels of $86 to $130 per acre for documented stewardship land and $128 to $192 for forestland, to the proposed $97 to $146 for stewardship acreage and $138 to $207 for forestland.Documented stewardship lands are those whose owner has met certain qualifications, such as having an approved forest management plan. By meeting specific criteria, the owner of stewardship land receives a reduced current use rate.Economic impactsIn presenting testimony to the Current Use Board – which is considering the new rates — Jasen Stock, NHTOA’s executive director, said characteristics used by loggers for low grades of Eastern white pine would deem it “pulp wood,” while the board’s assessment formula for the same characteristics consider them “grade logs.”“Part of the Current Use Board’s model uses the Forest Service to do a random inventory sample of logs versus waste. Their standards say a certain stand of wood is log when the industry would consider it chip wood. You’re overvaluing the landscape, then assessing it at a higher tax rate, which results in a higher tax bill,” said Stock.To add insult to injury, Stock said, markets are simply no longer buying low-grade pine logs. The housing slowdown also has had a negative impact on the forest industry, and the recession only augmented that impact, he said.“Eastern white pine is used in a lot of home construction,” said Stock. “Consequently, with the slowdown, it’s devalued. The mills don’t even want to touch it [white pine].”
Despite the opposition, 11 members of the 12-member Current Use Board voted to approve the proposed higher rates.The lone vote against raising them was tree farm owner Tom Thomson.Thomson, a longtime Current Use Board member and son of the late New Hampshire Gov. Meldrim Thomson – during whose administration the Current Use Board was created — is a certified tree farmer and has land in current use.
“I couldn’t in good faith vote to increase anything,” he said of the Nov. 13 vote. “Our pine mills have taken a terrible hit. I couldn’t sit there and vote for an increase. So it was 11 to 1. I was the one.”Robie said she agreed in part with those opposing the increase.“To be fair to them, I can see both sides of the story. I agree this is probably the worst time to do this, but when do you do it?” she said. “And it’s true, with the new model there is no Grade 3” — poorer quality logs often used for pulpwood and pallets.Still, she insisted, the proposed current use assessments have nothing to do with markets and the economy, but are to correct outdated methods.“It’s one thing if the new model is using inaccurate information, but (the rates) are not going up substantially. We now have people working on the model full-time. We now have the best information available,” said Robie.
Public commentShe added that not all of the assessments are going up; only white pine is seeing an average increase of $10 per acre according to the proposed rates.For example, hardwoods under stewardship will be assessed as high as $36 per acre – a 5 percent increase – and non-stewardship hardwoods at $55 to $82 per acre — a 4.5 percent decrease.Assessments of other woods will actually fall by some $10 per acre.In fact, Robie said, on average, property owners might see assessments holding steady or even dropping.
“It’s not like they’re continually going up,” said Robie. “And it’s still much less than those who don’t have current use assessments.”NHTOA’s Stock disagreed.“It’s a property tax,” said Stock about the proposed assessment. “It’s not a lumber tax. It’s a means of assessing land to grow trees or corn or whatever, what can that acre produce?”He said the NHTOA wants the Current Use Board to take a “critical look” at the situation.“We have the data and the means to do it,” added Stock.
Current Use Board member Thomson said that industry-level experience is an important part of the assessment.“The formula is a good guide, but you need to look at what’s happening on the ground and apply that, too,” he said.NHTOA has asked the Current Use Board to hold the rate until the board has had a chance to review the information.“Why adopt a rate if it’s flawed?” asked Stock.Thomson agreed. “If all that is being used is the formula, why have the board?” he said. “Just plug data in the formula and disband the board. We’re supposed to be applying industry experience to the rules.”Thomson said “an awful lot” of comments from those opposed to the rate increase were presented to the board at a meeting in November, both from companies and landowners.Stock said it’s not just landowners and loggers who are affected. “At some point, higher assessments impact consumers,” he said. “It’s part of owning and growing that tree.”Robie said she feels a lot of time has been spent on developing a current and accurate assessment model, but, except for the NHTOA’s statements, neither her organization nor the Current Use Board has received much other public comment on the proposed rates.In fact, she said, 15 people attended the board’s three fall meetings. Another hearing was held Jan. 22.
If the proposed rates are approved, they will then be sent to the state for administrative review and could go into affect in April.Cindy Kibbe can be reached at email@example.com.
This article appears in the January 29 2010 issue of New Hampshire Business Review