CAPITAL IDEAS -- LIVE!
News Conference for Forest Owners
Sponsored by the Alabama Forest Owners' Association, Inc.
This Conference was recorded on AUGUST 19, 2009.
Hayes D. Brown
starting time: (00:00)
Hayes D. Brown, attorney and forest owner, will moderate this news
conference. Hayes' email address is
Click Here to View & Hear Prior News Conferences.
Cap and Trade and Forestry
Svend Brandt-Erichsen is an environmental lawyer with the
Marten Law Group,
based in Seattle, Washington. After reading his paper entitled,
Offsets For Greenhouse Gas Emissions: Clarifying the Role of Forestry and
Agriculture, we thought Alabama forest owners should become
aware of some of the questions he raises in his paper. "At a recent
Senate hearing, Secretary of Agriculture Tom Vilsack and EPA Administrator
Lisa Jackson testified that their agencies’ analysis showed agriculture and
forestry offsets could generate nearly $3 billion a year in 2020, increasing
to as much as $20 billion annually by 2050, with revenues divided about
evenly between the two sectors. This sounds promising for America’s farmers
and timberland owners, but will not be so easy to actually achieve. One of
the biggest challenges is striking a balance between the flexibility
landowners need to succeed in their primary business venture – farming or
timber harvesting – and the certainty GHG [greenhouse gas] legislation seeks
that carbon sequestered by offsets in soil and trees will remain in place
indefinitely." When reading Brandt-Erichsen's paper, watch for words
such as reversal risk, effectively permanent, subordinate future debt,
additionality, leakage, verification, and flexibility. You may also want
California's Climate Action Reserve -- protocol for forestry offsets to
see where that state would lead us if Congress decides to follow.
Phone: (206) 292-2600
Linda S. Casey
Forestry: What does it look like?
Linda Casey is the State
Forester of Alabama, the executive leader of the
Commission's employees and operations. Back in
January, Frank Green, Georgia Forestry Commission, told us about a
Georgia judge who had decided that timber harvesting in bottomland
cypress-tupelo stands that contain large trees is not necessarily an
"ongoing silvicultural operation," and therefore would not fall under the
Nationwide Silvicultural Exemption [from water quality law permits/NPDES]. Frank made several suggestions that
landowners could follow to "prove" their activities are "ongoing
silvicultural operations," but a further step was needed. The employees of
the Corps of Engineers (COE) and the Environmental Protection Agency (EPA) are
frequently called to check on complaints that a landowner is destroying
a beautiful bottomland forest to develop it for housing or a shopping mall.
COE or EPA employees may not be familiar with normal forestry operations
and might shut down valid forestry harvesting or regeneration activities at
great expense to the landowner. In the fall of 2008, EPA's Tom Wellborn
asked the Southern
Group of State Foresters Water Resources Committee to prepare a general
guidance document that would assist a field representative in making an
accurate "ongoing call" on bottomland hardwood and cypress swamps. Linda
Casey is a member of the Water Resources Committee.
Casey's Introduction and the
SGSF's Recommendations to
Assist Federal Regulatory Agencies in the Determination of Ongoing
Silviculture in Bottomland Hardwood and Cypress Swamp
Phone: (334) 240-9304
Dr. Pete Bettinger
Forest Management and Planning
Pete Bettinger is a
Professor in the
School of Forestry at the University of Georgia. You have probably
seen Pete's name in AFOA's Calendar
of Events as an instructor of continuing education courses sponsored by
the University, but you probably haven't read the book he co-authored with
Kevin Boston, Jacek Siry, and Donald Grebner. Forest Management and
Planning contains a bit more technical forestry than most landowners
would be interested in, so we asked Pete to tell us how we non-technical
beings might use it and benefit from his work. A
short table of contents (click on the map of the U.S.) is on the
publisher's website and the book may be purchased from
Amazon.com for $71.96 plus shipping.
Phone: (706) 542-1187
Dr. Brooks Mendell
Managing Professional Advisors
Brooks Mendell is President and Founder of
Forisk Consulting, based in Athens, Georgia. He is a frequent instructor
education courses of interest to foresters and forest landowners and
will be teaching a course in September on
Investing in Timber REITs, a topic that will be discussed later today by
Denise Davis (below). But today, we asked Brooks to tell us about one of the
toughest, but potentially most productive jobs a forest owner has:
Managing Professionals -- foresters, accountants, attorneys, geologists,
surveyors, etc. In the May/June issue of Forest Landowner magazine,
“Successful forest owners consistently do two things well: first, they hire
qualified professionals at the right price; second, they manage these
professionals to get what they paid for.”
Read the article -- it's short
but well worth your time.
Phone: (678) 984-8707
Robert T. Jackson, Sr.
When the neighbor's logger wants to cross your land
Robert Jackson is a senior
partner in the law firm Jackson, Bowman & Blumentritt, PLLC, Hattiesburg,
Mississippi. About a month ago an AFOA member (let's call him Walter) called
AFOA and said he needed help. His neighbor had sold some timber and the
logger had asked for permission to haul logs across his land to the nearby
county road. Fearing his timber might be damaged or the haul road might be
left in disrepair, Walter wanted the logger to sign an agreement that would
provide him some protection from the problems he was worried about. "Does
AFOA have any sample temporary easements that I could use?" We didn't, but a
quick email to about 20 attorneys asking for the help Walter was seeking
brought several responses, including one from Robert Jackson. Mr. Jackson
wrote up an easement and sent it to AFOA, allowed us to review it and
suggest one or two changes (localizing it for Alabama use), and it's now
available for you to use. Thank you, Robert T. Jackson, Sr.
Temporary Easement for loggers
to harvest timber by Robert T. Jackson, Sr.
Phone: (601) 264-3309
Dr. Tamara L. Cushing
Tax Basis: What? How?
Tammy Cushing changed jobs
since she was a guest on
Capital Ideas - Live! last October. She moved to Clemson University
in South Carolina where she is now Extension Forestry Specialist and
Assistant Professor of Forest Management and Economics in the
Department of Forestry and Natural Resources. During a recent AFOA Ideas
Session, Tammy said that a lot of forest owners do not know what "tax basis"
is, they don't know how to use it to lower their taxes, and they haven't
established it for their timberland. We asked her to help set us straight.
Tax Tips for Forest Landowners for the 2008 Tax Year by Linda
Wang and John Greene:
Basis is a measure of your investment in
timber. The total cost of acquiring purchased forestland should be
allocated proportionately among capital accounts for the land, the
timber, and other capital assets acquired with them. The fair market
value of inherited forestland should be allocated similarly. This
usually results in a step-up in basis because the fair market
value of the property is higher than the decedent’s basis.
Establishing your basis can lower your income tax by reducing the
taxable amount of timber income. It also can help you recover
reforestation costs or your investment in timber lost in a casualty or
theft. If you did not establish your basis when you first acquired your
timber, you can do it retroactively. You may need a professional
forester to determine the volume and value of the timber at the time you
acquired it. If you acquired your timber or forestland many years ago,
you should compare the potential tax savings from establishing your
basis retroactively with the time and expense involved, to see whether
it is financially worthwhile. Report your original basis in timber and
land on Form T, Part I.
Phone: (864) 656-0878
Dr. Craig A. Harper
Food Plots -- Why?
Craig Harper is a Professor of
Wildlife Management and the Extension Wildlife Specialist at The University
of Tennessee. "Determine Your Objectives" jumped out at us when we
read an excerpt in The Forestry Source from Craig's book,
A Guide to Successful Wildlife Food Plots: Blending Science with Common
Sense (big file - 179 pages).
The first thing you should do before
getting started with a food plot program is define your objectives. Why
are you planting a food plot? Do you intend to improve available
nutrition for wildlife and increase the nutritional capacity on your
property? Or, are you merely trying to attract wildlife for easier
hunting or viewing opportunities? Are you “targeting” only white-tailed
deer, or are wild turkeys, bobwhite quail, mourning doves and/or other
species also a major interest? Answers to these questions influence not
only what should be planted, but how plots are managed as well. After
you have determined your objectives, realistic opportunities and
limitations should be identified.
Buy the book
for a desktop reference. $20
Phone: (865) 974-7346
Denise B. Davis
Timber & Timberland Investments: A Perspective
Denise Davis is a Chartered
Financial Analyst and an Independent Wealth Management
Advisor based in Hamden, Connecticut. On August 10, Barron's
financial magazine carried an article by Andrew Bary entitled,
Trouble in the Forest. The lead
sentence shouted, "U.S. TIMBERLAND MAY BE ONE OF THE WORLD'S most overvalued
asset classes." Our "you've got mail" buzzer started to buzz.
We read the
article and readers' comments, and one particular
comment, by Denise Davis, caught our attention. She wrote: "Furthermore, we
like timber because it has a low correlation with stocks and bonds and the
recent market drop of 35% he alludes to in the U.S. stock market, in my
opinion, supports holding timber for precisely the reason we like it so
much." She closed her comments with "So my point to Mr. Bary is, 'what's the
real point of your article?'"
The Role of U.S. Timberland in Real Estate Portfolios,
Journal of Real Estate Portfolio Management: Jan – Mar 2009; 15;1, Graeme
Newell and Chris Eves
Long Term Portfolio Returns from Timber and Financial Assets, Journal of
Real Estate Portfolio Management, 1997, 3:1, Thomas A. Thomson
Timber as an Institutional Investment, The Journal of Alternative
Investments, Winter 2005; 8; 3, Thomas Healey, Timothy Corriero, Rossen
Phone: (203) 848-6191
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