2409.22_50
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FOREST SERVICE HANDBOOK
ROCKY MOUNTAIN REGION (R2)
DENVER, CO
FSH 2409.22 – TIMBER APPRAISAL HANDBOOK
CHAPTER 50 – TRANSACTION EVIDENCE
Amendment No.: 2409.22-2014-2
Effective Date: 6-18-2014
Duration: This supplement is effective until superseded or removed.
Approved: BRIAN FEREBEE, Deputy Regional Forester Date Approved: 06/06/2014
Posting Instructions: Amendments are numbered consecutively by title and calendar
year. Post by document; remove the entire document and replace it with this
amendment. Retain this transmittal as the first page(s) of this document. The last
amendment to this title was 2409.22-2014-1 to 2409.22_Zero_Code.
New Document
2409.22_50
Superseded Document(s)
2409.22_50 (Amendment
by Issuance Number and Effective Date
2409.22-96-5, 7/18/1996)
20 Pages
20 Pages
Digest: In order by code, summarize the main additions, revisions, or removal of
direction incorporated in this amendment.
50.5 – Revises definition of Appraisal Zone to include the third appraisal zone. Revises
definition of Dead to reflect combining dead and live as one appraisal species group.
Revises definition of Market Adjustment to reflect current method of calculating the
market adjustment. Revises definition of Performance Ratio to reflect current method of
calculating the performance ratio.
51.2 – Removes reference to appraising in MBF. Reflects current procedures for
calculating sale cost adjustments. Updates appraisal program from Paradox to Access
TEA234.
51.3 – Revised Exhibit 01 to Current Appraisal Data Bulletin format. Modifies bulletin
format to remove duplication between the amendment and the bulletin, and
unnecessary data.
Region 2 Amendment: 2409.22-2014-2
EFFECTIVE DATE: 6/18/2014
DURATION: This supplement expires 5 years from the effective date unless superseded or removed
earlier.
2409.22_50
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FSH 2409.22 – TIMBER APPRAISAL HANDBOOK
CHAPTER 50 – TRANSACTION EVIDENCE
51.4 – Clarifies separation of Appraisal Base Period Price by species or species groups.
Updates Market Adjustment to reflect current method of calculating the market
adjustment.
51.41 – Deleted obsolete section.
51.42 – Deleted obsolete section.
51.6 – Reflects combining dead and live as one species group within the Burned Timber
discussion. Combines calculation for deteriorating live and dead timber. Replaces
Unusual Species and Form adjustment with the Quality Unusual Adjustment to eliminate
duplication.
51.61 – Updates appraisal program from Paradox to Access TEA234. Clarifies inflation
of Logging Cost Adjustment formula.
Region 2 Amendment: 2409.22-2014-2
EFFECTIVE DATE: 6/18/2014
DURATION: This supplement expires 5 years from the effective date unless superseded or removed
earlier.
2409.22_50
Page 3 of 21
FSH 2409.22 – TIMBER APPRAISAL HANDBOOK
CHAPTER 50 – TRANSACTION EVIDENCE
50.5 - Definitions
Adjusted Base Period Price. Base Period Price plus the Market Adjustment.
Adjustment Factor. It is anticipated that a variable adjustment factor will be
necessary at times to modify the outcome of appraised rates to prevent no-bids.
Usually applied to the Competition Factor.
Advertised Rate. Predicted Bid minus the Competition Factor Amount plus any
adjustments to Base Rate.
Appraisal Zone. An area comprised of National Forests or portions of National
Forests from which Average Bids and Average Sale adjustments are applied to a sale
being appraised, and which share common markets for wood products of similar
species. Region 2 currently consists of three zones. Zone 1 consists of the
Arapaho/Rosevelt, Pike, Nebraska, Medicine Bow-Routt, Shoshone, and Bighorn
National Forests. A sub-zone to Zone 1 consists of the Front Range Districts on the
Arapaho/Roosevelt National Forest with the exception of the Redfeather RD, and Front
Range Districts (Pike portion) of the Pike/San Isabel National Forest. Zone 2 consists
of the Black Hills National Forest. Zone 3 consists of the Grand Mesa, Uncompahgre &
Gunnison; Rio Grande; San Isabel; San Juan; and White River National Forests. (FSH
2409.18, 40.5)
Base Period. The time period from which data is used to update the Current
Appraisal Data Bulletin and is usually the period covered by the most recent four
quarters. This is a rolling four-quarter period. In some cases, the rolling period may be
changed to reflect rapid changes in the market or in bidding patterns.
Base Period Bid Ratio. Average weighted overbid divided by the average
weighted Advertised Rate from an Area for the Base Period. Also called overbid
percent.
Base Period Index. The Base Period Western Wood Products Association's
(WWPA) White Woods Lumber Price Index weighted by volume sold in the Zone.
Base Period Price (BPP). Weighted average High Bid of competitive sales within
the database.
Bid Premium. The difference between the advertised rate of a timber sale and
the bid rate of that sale upon award.
Burned Timber. Timber that has been fire-charred to the point that it has 50
percent or less of the chip value remaining.
Region 2 Amendment: 2409.22-2014-2
EFFECTIVE DATE: 6/18/2014
DURATION: This supplement expires 5 years from the effective date unless superseded or removed
earlier.
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FSH 2409.22 – TIMBER APPRAISAL HANDBOOK
CHAPTER 50 – TRANSACTION EVIDENCE
Cable Yarding Cost. An additional allowance which may be necessary, if
appropriate, in timber sales requiring cable logging systems. This is handled by an
unusual adjustment determined by empirical calculation.
Competition Factor Amount. The Adjusted BPP multiplied by the Competition
Factor.
Competition Factor. A rate reducing the Predicted Bid to the Indicated
Advertised Rate to allow for market shifts since the most recent update and for minor
differences in sale conditions not accounted for by other adjustments. The factor may
be increased by a Performance Ratio adjustment in periods of high, or potentially high,
no-bid situations. Minimum factors are:
Competitive Areas:
Ten (10) percent.
Non-competitive Areas: Five (5) percent.
Competitive Area. A Forest with a Base Period Bid Ratio equal to or exceeding
five percent (.0500) determined on a rolling four-quarter period, or where a forest
receives two or more bids on one-half or more of its sales during the same rolling fourquarter period.
Competitive Sale. Any sale which receives a Bid Premium equal to or greater
than five percent or any other sale receiving two or more bids and the total high bid
value exceeds the total advertised sale value.
Contractual Costs. Slash disposal costs.
Current Appraisal Data Bulletin. The official Bulletin listing updated Regional
average costs and values for TE Appraisals. Section 51.3, exhibit 01, is an example of
how the bulletin appears.
Current Index. The most recent monthly (last month of quarter) WWPA White
Woods Lumber Price Index.
Database. A data summary of Competitive Sales and all sales within a
Competitive Area for the Base Period. The database must contain a minimum of 50
percent of the volume sold in the zone. If the database falls below 50 percent, noncompetitive sales which meet all criteria for inclusion into the database except for
competitive standing, shall be added by quarter starting with the most recent quarter
until the 50 percent level is achieved. Non-competitive sales shall be included at the
greater of the predicted bid or high bid. The non-competitive sales shall be deleted from
the database as soon as possible and thus create a more competitive basis of sales in
the database.
Region 2 Amendment: 2409.22-2014-2
EFFECTIVE DATE: 6/18/2014
DURATION: This supplement expires 5 years from the effective date unless superseded or removed
earlier.
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FSH 2409.22 – TIMBER APPRAISAL HANDBOOK
CHAPTER 50 – TRANSACTION EVIDENCE
Dead. Trees that are not live but contain enough solid wood to be termed a
sawlog.
Deteriorating Timber. Timber such as insect infested "live" timber or live windthrown timber.
Indicated Advertised Rate. Predicted Bid less Competition Factor Amount.
Logging Cost Adjustment. A regression equation reflecting the effects of sale
volume per acre and average sale DBH on average cost of logging (stump to truck).
The equation is derived from an analysis conducted in 1987; however, the cost
adjustment reflects rates per CCF adjusted for inflation.
Market Adjustment. The rate of change (percent) between the Base Index and
the Sale Average Index is applied to the Base Period Price for the market Adjustment
for all species. The Market Adjustment can be reduced or increased so that the
Adjusted Base period Price is the higher of minimum rates or the Base Period Price plus
or minus the Market Adjustment. (Current Index/Base Period Index X High Bid) – High
Bid = Market Adjustment. May be shown as a separate adjustment for updates made in
interim months or added to the Base Period Price at quarterly updates.
Net Advertised Rate. The Advertised Rate minus Specified Road Costs, but not
less than Base Rate.
Non-competitive Area. Any Forest not meeting all the criteria of a Competitive
Area.
Other Sale Adjustments. Usually includes Logging Cost Adjustment and
Specified Development costs.
Overbid. A term meaning the same as Bid Premium.
Overbid Percent. High bid less (-) Advertised Rate divided (/) by Advertised Rate
equal (=) % Overbid.
Performance Ratio. A ratio of how well the Transaction Evidence Appraisal
(TEA) system performs as an indicator of true market value. The ratio is determined by
dividing the weighted average Advertised Rate by the weighted average High Bid for the
Base Period.
Predicted Bid. The Adjusted Base Period Price plus Sale Base Period
Adjustments less Specific Sale Adjustments and Logging Cost Adjustment.
Region 2 Amendment: 2409.22-2014-2
EFFECTIVE DATE: 6/18/2014
DURATION: This supplement expires 5 years from the effective date unless superseded or removed
earlier.
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FSH 2409.22 – TIMBER APPRAISAL HANDBOOK
CHAPTER 50 – TRANSACTION EVIDENCE
Sale Base Period Costs. Zone Base Period weighted average costs of
Transaction Evidence appraisals for haul, road maintenance, temporary roads, and
contractual costs.
Sale Cost Adjustments. Adjustments consisting of Specific Sale Adjustments
and Other Sale Adjustments. Adjustments pertain solely to the sale being appraised.
Specific Sale Adjustments. Specific sale characteristic costs used to adjust a
given sale from the zone average sale. These are specific haul, temporary roads, road
maintenance, unusual adjustments, and contractual costs.
Specified Development Cost. The Purchaser Credit estimate for Specified Road
construction and reconstruction.
Unusual Adjustments. Specific Sale Adjustments made necessary due to
circumstances of cost centers and species values not being representative for a specific
sale (sec. 51.6).
51 - TRANSACTION EVIDENCE APPRAISAL
51.1 – Introduction
Transaction Evidence Appraisal (TEA) is the only approved appraisal method for new
sales, extensions, and rate redeterminations of all convertible products with an
appraised value equal to or greater than $10,000 stumpage value. Forests are
encouraged to appraise all timber using the TEA method regardless of value.
Transaction Evidence Appraisals value timber much the same way prices are
established on most commodity markets. Essentially, the buyer, through a competitive
bidding process, establishes the value for subsequent bidding to start.
A weighted average bid, established from competitive bidding over the most recent
period, is the basis for the TEA process. The average bid (Base Period Price) is then
adjusted for current market conditions, using the WWPA White Woods Index or similar
index reflecting most current lumber market prices. The adjustment may be upward or
downward depending on the most recent performance of the Index when compared to
the most recent weighted period. The result is an Adjusted Base Period Price.
The Adjusted Base Period Price is further adjusted for logging, skidding, contractual,
temporary roads, haul, and road maintenance costs to the extent that they vary from the
average of the most recent four quarters or modified Base Period. There are other
adjustments to handle unusual situations, but are not necessarily considered on every
sale. This adjustment results in the Predicted Bid.
Region 2 Amendment: 2409.22-2014-2
EFFECTIVE DATE: 6/18/2014
DURATION: This supplement expires 5 years from the effective date unless superseded or removed
earlier.
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FSH 2409.22 – TIMBER APPRAISAL HANDBOOK
CHAPTER 50 – TRANSACTION EVIDENCE
The Predicted Bid is adjusted downward by a Competition Factor Amount unless the
appraisal is for a sale not to be advertised (sec. 51.7). The minimum Competition
Factor Amount (Percentage) is five percent (.05) of Adjusted BPP for non-competitive
areas and ten percent (.1000) for competitive areas. The Competition Factor Amount
for each area is that amount published in the Current Appraisal Data Bulletin. This
adjustment for competition is usually the final adjustment and results in the Indicated
Advertised Rate (which is equal to the Advertised Rate, unless a Base Rate adjustment
is required).
51.2 - Administrative Considerations
Region 2 converted to the CCF Unit of Measure as of April 1, 1994. Databases for both
MBF and CCF were maintained through December 31, 1994, after which time the
database for MBF was suspended.
A PC-based appraisal program is employed by several appraisers throughout the
Region. The program consists of two basic operations: the first for calculation of Sale
Cost Adjustments; and the second for completing the appraisal and bid information
before final transmission electronically to the Regional Office. Initial calculation of Sale
Cost Adjustments may be done by hand or electronically using spreadsheets.
Access TEA234 is a relational database used for the second operation. Sale Cost
Adjustments and other pertinent information are needed to report timber sales to
Regional and National levels. Forests are encouraged to use electronic means to
calculate timber sale appraisals to reduce costs and improve accuracy through
elimination of calculation errors.
See the guide for instructions on using Access TEA234 to appraise timber sales in
Regions 2, 3, and 4.
51.21 - Responding To Market Changes
The Base Period Price assumes a constant volume by quarter as reflected from
historical annual sale offerings. Great alterations of volume may result in an artificial
demand or it may create an extremely fluctuating database. Neither of these situations
is desirable; therefore, it is extremely important that sale offerings are relatively uniform
throughout the year.
Unusual sales are excluded from the database. Examples of such sales are sales with
timber property value, standard rate sales, and aspen (except for the POL database).
These sales do not contain the data necessary to form the relationship of costs and bid
rates at this time.
Region 2 Amendment: 2409.22-2014-2
EFFECTIVE DATE: 6/18/2014
DURATION: This supplement expires 5 years from the effective date unless superseded or removed
earlier.
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FSH 2409.22 – TIMBER APPRAISAL HANDBOOK
CHAPTER 50 – TRANSACTION EVIDENCE
The target time for the updated database to be published in the Current Appraisal Data
Bulletin and available for use is one month following the end of the quarter. This
requires that all bid information be submitted to the Regional Office within the time
frame designated in section 92.1. More frequent updates through the Bulletin may be
necessary to reflect rapidly changing market conditions.
It may be necessary to segregate a species if bids for a certain species exceeds 10
percent variance from the database average bid. Under some conditions, a certain size
class within a species for which market has been lost or is nonexistent may also require
segregation to promote markets or reflect actual value for existing markets. Conversely,
it may be necessary to combine species if the bids by species is 10 percent or less
variance from the average bid. Species or size class separation for value allows
purchasers to value individual species or size groups within the Index groupings through
the bidding process. Variance between species should be checked periodically for
relevance to the actual market situation.
The volume under contract may be affected by the TEA process and shall be reviewed
semi-annually. If the volume under contract falls below 2.25 years (as determined by
dividing the total volume under contract by the harvest volume of the most recent year),
the TEA process must be reviewed to determine if it is the cause. Whenever the
standards specified in FSM 2422.1 are not met, the process should be reviewed to
determine action necessary to meet standards.
51.3 - Current TE Appraisal Data
TEA data is updated at least quarterly in the Current Appraisal Data Bulletin. Data
consists of Regional averages based on individual 2400-17 data for sales submitted for
the most recent four quarters, or modified Base Period, and includes averages for
diameter and volume/acre, Adjusted Base Period Price, haul, road maintenance, slash
disposal, and temporary roads. Any changes or peculiarities of these averages is
explained in footnotes. Exhibit 01 shows an example of how the Bulletin appears when
issued. This is an example only and not to be used for appraisals of actual sales.
Region 2 Amendment: 2409.22-2014-2
EFFECTIVE DATE: 6/18/2014
DURATION: This supplement expires 5 years from the effective date unless superseded or removed
earlier.
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FSH 2409.22 – TIMBER APPRAISAL HANDBOOK
CHAPTER 50 – TRANSACTION EVIDENCE
51.3 - Exhibit 01
EXAMPLE - NOT FOR DETERMINING APPRAISED RATES
REGION 2, ZONE 1, NW Intermountain Zone
Current Appraisal Data Bulletin
BULLETIN NO. BU21XX13
Effective XXXXX 1, 2013 Until Superseded
Reference FSH 2409.22,51.3 - Current TE Appraisal Data - Following are the indices
and Index Operations values for use in appraising TE sales to be advertised on or after
XXXXXXX 1, 2013, TE damage appraisals for sales expiring on or after XXXXXXX 1,
2013, and extensions of sales terminating on or after XXXXX 15, 2013.
SALE AVERAGE WWPA INDEX (2007-08 Basis):
SPECIES: Lodgepole Pine & Douglas-fir
Engelmann Spruce
Ponderosa Pine
True Firs
All Live
White Woods
357.75
357.30
279.80
337.53
355.39
BASE DATA PERIOD: Xst QTR CY12 - Xth QTR CY13
APPRAISAL BASE PERIOD (QTR, CY): 6-13
BASE INDEX: XXX, 2013 (2007-08 basis)
Average High Bid: (Base Period Price)
INDEX OPERATIONS
2.
LP&DF:
ES:
PP:
TF:
All Live:
349.92 2/
21.49
79.34
3.00
9.19
25.54
______________________________________
SPECIES
LP&DF
UNIT OF MEASURE
CCF
Mbf/Ccf Ratio:
.46948
6. DBH (all spp)
9.8
AVE. CCF/ACRE (all spp)
19.2
7. BASE PERIOD PRICE
21.49
8. MARKET ADJUSTMENT
-0.33
9. ADJUSTED BASE PER. PRICE 3/ 21.16
10. BASE SKID-YARD COST
105.41
13. BASE HAUL (.1130/CCF/Min)
65.04
16. BASE RD MAINTENANCE
4.91
ES
CCF
.47627
9.8
19.2
79.34
-1.64
77.70
105.41
62.38
6.45
PP
CCF
.41098
9.8
19.2
3.00
0.00
3.00
105.41
67.11
2.06
TF
CCF
.46190
9.8
19.2
9.19
0.34
9.53
105.41
54.89
10.43
Region 2 Amendment: 2409.22-2014-2
EFFECTIVE DATE: 6/18/2014
DURATION: This supplement expires 5 years from the effective date unless superseded or removed
earlier.
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FSH 2409.22 – TIMBER APPRAISAL HANDBOOK
CHAPTER 50 – TRANSACTION EVIDENCE
19. BASE SLASH
22.
29.
34.
35.
BASE TEMP. ROADS
COMPETITION AMOUNT
SALE SPECIFIED RD COST
BASE INDEX WWPA 2/
2.19
1.52
3.70
3.63
2.14
1/
3.06
349.92
2.11
1/
3.46
349.92
4.18
1/
1.97
349.92
2.62
1/
4.75
349.92
0.77
0.77
0.77
0.77
PERFORMANCE RATIO:
1/ The competition factor for the Bighorn, Medicine Bow-Routt, Arapaho/Roosevelt and
Shoshone will be set at 10% (competitive). The competition factor for the Nebraska and
Pike will be 5% for this Bulletin period (non-competitive).
COMPETITION FACTOR by Forest and VALUES based on all species live ADJ BPP.
Bid/Ad
LIVE CCF:
LP&DF
ES
PP
TF
Zone as a Whole:
Bighorn
2.93
2.12
7.77
0.30
0.95
Medicine Bow/Routt 1.10
2.12
7.77
0.30
0.95
Nebraska
1.00
1.06
3.89
0.15
0.48
Arapaho/Roosevelt 1.52
2.12
7.77
0.30
0.95
Pike
1.00
1.06
3.89
0.15
0.48
Shoshone
1.54
2.12
7.77
0.30
0.95
2/ Base Index adjusted to CCF (2007-08 Basis) White Woods: 349.92
Selected
Sale
Class
BF/CF Ratio
Factor
Range
Average
A
4.0 to 4.49
4.25
B
4.5 to 4.99
4.75
C
5.0 to 5.49
5.25
D
5.5 to 5.99
5.75
E
6.0 to 6.49
6.25
F 6.5 and greater
6.75
G
2.0 to 2.49
2.25
H
2.5 to 2.99
2.75
I
3.0 to 3.49
3.25
J
3.5 to 3.99
3.75
Example: Base Index per MBF
Sale BF/CF ratio:
MBF/CCF Conversion Factor
Adjusted Base Index, CCF Basis
MBF to CCF
Conversion
Index,
Factor
CCF Basis
0.425
148.72
0.475
166.21
0.525
183.71
0.575
201.20
0.625
218.70
0.675
236.20
0.225
78.73
0.275
96.23
0.325
113.72
0.375
131.22
349.92
5.0122
0.525
183.71
Region 2 Amendment: 2409.22-2014-2
EFFECTIVE DATE: 6/18/2014
DURATION: This supplement expires 5 years from the effective date unless superseded or removed
earlier.
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FSH 2409.22 – TIMBER APPRAISAL HANDBOOK
CHAPTER 50 – TRANSACTION EVIDENCE
WWPA(C), WW =
183.71
Show in: a) contract provision A(T)5a
b) bid form
c) prospectus
d) 2400-17, enter the MBF Index of 349.92
3/ Standard Rates are the Adjusted Base Period Price or Minimum Rates whichever is
higher. For LP the Standard Rate would be $21.69. If a sale is being sold direct for
standard rates it would be sold for the index operations adjusted base period price or
Base Rates whichever is higher. If a sale is being sold with competition for standard
rates it should be sold for the index operations adjusted base period price minus the
competition factor or Base Rates whichever is higher.
51.4 - Adjusted Base Period Price
The Adjusted Base Period Price is published in the Current Appraisal Data Bulletin.
There are separate Adjusted Base Period Prices for species groups such as Engelmann
Spruce/Douglas-fir, Lodgepole Pine and Other Species, and Ponderosa Pine. The
Adjusted Base Period Price for each species group is calculated from the average bid,
all species live, adjusted for market and is with roads in place. To arrive at published
values, the following procedure is used:
1. The high bid for each sale within the database is weighted by volume to arrive
at the average high bid.
2. The Market Adjustment is based upon the WWPA White Woods Index. The
White Woods Index for each sale within the database is weighted by volume to arrive at
the weighted average White Woods Index (Base Period Index). The formula for
calculating the Market Adjustment is: (Current Index/Base Period Index X High Bid) –
High Bid = Market Adjustment. This difference may be positive or negative and is the
Market Adjustment. The Market Adjustment is added to the Average Bid to arrive at the
Adjusted Base Period Price. An example of the Base Period Price calculation is:
Weighted Ave. High Bid = Base Period Price = $144.59
The calculation for Market Adjustment is:
(Current Index/Base Period Index X High Bid) – High Bid
(316.12 / 380.60
X 144.59) – 144.59
= Market Adjustment
= $-24.50
Base Period Price + Market Adjustment = Adjusted Base Period Price
$144.59
+ $-24.50
=
$120.09/CCF
51.5 - Sale Base Period Adjustments
Region 2 Amendment: 2409.22-2014-2
EFFECTIVE DATE: 6/18/2014
DURATION: This supplement expires 5 years from the effective date unless superseded or removed
earlier.
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FSH 2409.22 – TIMBER APPRAISAL HANDBOOK
CHAPTER 50 – TRANSACTION EVIDENCE
The Adjusted Base Period Price is increased by Sale Base Period Adjustments to
obtain a basis from which the specific sale can be compared. The Sale Base Period
Adjustments are published in the Current Appraisal Data Bulletin by category. The
categories are haul, road maintenance, contractual (slash disposal), and temporary
roads. The Sale Base Period Adjustment for each cost category is the weighted cost by
volume from the sales in the database.
51.6 - Sale Cost Adjustments
The Sale Cost Adjustments to be made for comparison of the average sale in the
database to the actual sale being appraised fall into two categories: the Specific Sale
Adjustments and Other Sale Adjustments. These costs maintain the same need for
accuracy as residual value costs. Where the residual value appraisal process relies
upon the accuracy of cost collection, the transaction evidence appraisal process relies
upon the accuracy of the database. Therefore, since the database is composed of sale
costs, the accuracy of the future database is dependent upon the accuracy of
calculating the sale costs.
The Predicted Bid is determined after all of the Sale Cost Adjustments (except specified
roads) are subtracted from the sum of the Adjusted Base Period Price and the Sale
Base Period Adjustments.
Specific Sale Adjustments are those sale costs which relate to the Sale Base Period
Adjustments (sec. 51.5). The sale cost categories for haul, road maintenance,
contractual, temporary roads, and unusual adjustments are Specific Sale Adjustments.
These items are calculated the same as the Residual Value Appraisal Process. Refer
to the following sections for direction in calculating the cost categories:
Cost Category
Haul
Road Maintenance
Contractual
Temporary Roads
Unusual Adjustment
Section
44.1
44.2
43
44.3
Described Below
Within the slash disposal calculation, consider the felling of unmerchantable live trees
and dead snags. The span of adjustment is wide. The appraiser must not appraise for
felling of trees which are already included in the engineer estimate for specified roads,
such as snags within the R-O-W of specified roads and those which will reach the
centerline of specified roads.
Unusual Adjustments: Unusual Adjustments are sale adjustments made necessary for
cost or value items that are not reflected in the database. An Unusual Adjustment is for
extraordinary situations and catastrophic occurrences. Unusual adjustments described
Region 2 Amendment: 2409.22-2014-2
EFFECTIVE DATE: 6/18/2014
DURATION: This supplement expires 5 years from the effective date unless superseded or removed
earlier.
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FSH 2409.22 – TIMBER APPRAISAL HANDBOOK
CHAPTER 50 – TRANSACTION EVIDENCE
below are those experienced on some sales in this Region. Provided an appraiser has
the experience for timber sale appraisals or has a background as a sale administrator,
calculations for other unusual adjustments may be made without Regional Forester
approval so long as the adjustment does not exceed 10% of Base Period Price for the
species group(s) being appraised.
Do not apply unusual adjustments to any product or species being offered at standard
rates. Apply unusual adjustments only for those species or products being appraised
Transaction Evidence.
1. Burned Timber. Burned timber may be appraised using an unusual
adjustment for burned timber described below. Consider time between fire occurrence
and when logging may commence, species burned, aspect, size of timber, and other
factors which may influence quality and volume recovery.
The unusual adjustment for burned timber is equal to 8 percent of the current month
WWPA index, which relates to the approximate value of by-product selling value.
A deteriorating live timber adjustment should be considered in combination with the
burned timber adjustment for other factors such as the deterioration of products or
increased logging costs.
The process for adjustment is described in the following formula:
Current Index X .08 X .5 (Cubic Conversion)
316.12
X .08 X .5
=
=
Unusual Adjustment
$12.64/CCF
2. Deteriorating Live and Dead Timber. The appraiser will estimate the amount
of the recent dead volume that will move into the older dead category by the midpoint of
the contract term for the sale as a whole. Apply a 5 to 25 percent reduction of lumber
selling value based on the Current WWPA Index published in the Bulletin based upon
the overall condition of the deteriorating live and dead timber. As the amount of dead
volume increases, the amount of reduction would increase. The unusual adjustment for
deteriorating live and dead timber is the approximate amount of reduction in the selling
value (represented by the current WWPA index multiplied by the reduction factor) times
the cubic conversion factor for the sale:
Current Index
(316.12
X Reduction X Cubic Conversion X Deteriorating and Dead Volume = Unusual Adj.
Total Sale Volume
X
.09
X
.5
X
500 CCF) / 3500 CCF = $2.03/CCF
3. Quality Unusual Adjustment: This adjustment is optional and will be capped
at minus 40% of the current Index Operations Adjusted Base Period Price. The unusual
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adjustment will continue to be placed in the Unusual Adjustment field of the Species
Level Information form.
Subtract base MBF/CCF ratio for the species from the ratio in the cruise. If the
difference is greater than -0.010, rounded to the nearest one-thousandth, the species is
entitled to an adjustment for form if, in the appraisers opinion, the adjustment is justified.
Do not use for Dead, or PP as past rollups and current sales data is sufficient to reflect
the lower quality. Use only for ES, LP, DF and TF as appropriate.
Example 1: LP ratio from cruise is .4448(r); database ave. = .4777(R); diff = 0.0329; species qualifies for the adjustment due to form.
Example 2: If the LP ratio from the cruise is .4770; difference = -.0007; species
does not qualify.
The adjustment is based on the difference between ES/LP 2x6 #2&Btr and 2x4 Utility in
Random Lengths (the earliest date within the rollup month). The decision to use
specific lumber product differences is based on the assumption that smaller lumber
dimensions will be produced from poorer formed trees of equal diameter.
Difference in lumber = $110.00 per MBF (assumed)
$110.00
x
r-R
.04
x R = Adjustment for form
Example: Using the above example (qualified species), .4448 (r) - .4777(R) = -0.0329;
therefore, the calculated adjustment would be -$43.22. The quality unusual adjustment
is the greater of 40% of the current Index Operations Adjusted Base Period Price or $43.22/CCF.
4. Move-in Adjustment. Small sales do not have the opportunity to amortize
fixed costs as well as large sales. Give consideration to moving in equipment which
normally is included in cost centers for transaction evidence appraisal when appraising
a small sale. A sale cannot have both a "move in" and a "move out" cost as a "move
out" for one sale is the "move in " for another sale. Approved adjustments for small
sawtimber sales are:
sale size (CCF)
100 – 200
50 – 99
< 50
$/CCF adjustment
$4
$8
$16
5. Sorting and Handling Adjustment. Use of this adjustment requires experience
and knowledge of logging systems and some intuitive reasoning. Be as objective as
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possible, but it is recognized that some subjectivity needs to be factored into the endresult. If the appraiser does not have the experience, it is recommended that
consultation with a sale administrator or person experienced in logging systems and
appraisal be sought for advice on this adjustment.
For sawtimber sales where (POL) is being included as required removal, an unusual
adjustment for the cost of sorting the products for haul should be considered. Apply this
adjustment to both product groups (see Chapter 70 for similar adjustment in POL sales).
For sales where POL is optional material and a minor component of the sale volume,
apply a similar adjustment to the POL only to encourage bidding and removal.
For the average cost on which adjustment is to be made, use the Load Cost in section
42 of this handbook. For the percent adjustment, the appraiser must consider the ratio
of POL to sawtimber volume on the sale, uniformity of distribution on the sale area,
sizes, the average area being served by each landing, and so forth. Document the
need for such an adjustment and include reasoning on how the percent adjustment was
selected in the timber sale report. The following are percent ranges to consider as
adjustments for sorting:
If POL Volume % is:
1% - 20%
21% - 49%
% of Load Cost for Adjustment is:
0% - 50%
51% - 150%
If POL volume exceeds 49%, use POL adjustment table in chapter 70.
For example, assume load cost to be $5.43. POL volume is 40% of a total sale volume
of 1,000 CCF and is required to be removed. POL is small in diameter and uniform but
sawtimber is clumped where about 60% of the landings will require sorting. Sawtimber
is also small (9.0"). POL is not aspen. Judgement indicates a load adjustment of 110%
due to the sorting need for small POL (not aspen) and the high percent of POL on the
sale.
$5.43/CCF x 1.10 adjustment x .60 of sale = $3.58/CCF all species and products
(total cost allowance of $3,580)
This is the added cost to loading compared to a normal sale of sawtimber only and is
entered as an unusual adjustment for both products.
Given a different scenario, if both products are uniform in distribution, apply the selected
110% entirely, or:
$5.43 x 1.10 = $5.97/CCF all species and products
(total cost allowance of $5,970)
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Apply an adjustment to POL only if POL is optional bidding material to encourage
removal. Using the first example, the cost per CCF would remain the same, but applied
only to POL:
$5.43/CCF x 1.10 adj. x .60 of sale = $3.58/CCF POL species only
(total cost allowance of $1,432)
6. Skid Distance Adjustment. Skid distance must be supported by a Logging
Plan. Make no adjustment for skid distance on TE appraisals which have an average
skid distance less than or equal to l000 feet. Determine adjustments for distances
greater than l000 feet empirically by considering the additional costs as a result of time
from l000 feet. An example of such an adjustment follows:
Assume:
Rubber tired skidder - traveling at 5 miles/hour
Sum of skidder ownership, operator and operational costs
is $50.35/hr (From Engineering Cost Bulletin).
Sale average skid distance is l320 feet
8 cubic feet/log X 10 chokers = .8 CCF/turn
2 ways/turn (l320 ft. - l000) X $50.35/hr. =
(5280ft/mile) x (5 miles/hr)
.8 CCF/turn
$1.53/CCF
7. Low Stump Requirement. Low stump requirements on portions of the sale
necessary for Visual Management or other purposes may or may not need an additional
appraisal allowance for an unusual adjustment. If mechanical tree harvesting is usual
for the area and trees requiring low stumps are small enough for a mechanical shear or
cutting bar (usually 20-24 inches at the stump), then no appraisal allowance is
necessary. If stumps will be too large for mechanized felling, an adjustment based on
hand felling and bucking costs (section 42) may be necessary.
Normally, felling is approximately 40% of total fell, buck, limb and lop cost. A range of
+20 to +50 percent of this cost may be used for an unusual adjustment to sawlog
volumes for low stumps on that portion of the volume tied to the requirement. For
example:
Total Sawlog Volume is: 1,000 CCF sawtimber
Volume of Low Stump area: 200 CCF or 20%
Fell/buck/etc. cost:
$17.00/CCF
Felling cost only:
$6.80/CCF (40% of $17.00)
Low stump adjustment:
30% (Appraiser experience)
$6.80/CCF x .30 x 200 CCF / 1000 CCF = $0.41. Apply the adjustment equally
to all sawtimber species volumes.
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EFFECTIVE DATE: 6/18/2014
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8. High Risk. When Normal Operating Season is restricted due to other
resource constraints identified in the NEPA document, an unusual adjustment for higher
risk is approved. The following rate structure applied against the Adjusted Base Period
Price is approved for use:
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If Operations are Restricted to:
4 Months
3 Months
2 Months
1 Month
Adjustment Is:
6% of BPP
11% of BPP
16% of BPP
Reconsider Sale's Viability
This adjustment is applied against the Base Period Price in effect at the time appraisal
is made, and only for that portion of the volume being effected. Record the contract
provision requiring such restriction, the % adjustment, and volume to which the unusual
adjustment is being applied.
For example: C6.3#, 11%, 600 CCF would be recorded for a sale 3,000 CCF in size that
contains CT6.3 - Control of Operations that prohibits (for whatever reason) all
operations during 2 months of the Normal Operating Season (AT17) which is listed as 5
months long (making the actual Operating Season only 3 months). Assuming an
Adjusted Base Period Price of $121.42, the calculation would appear similar to the
following:
$121.42(BPP) X .11(% adj.) X 600/3000 (vol of CT6.3#/Tot. Sale) = $2.67
51.61 - Other Sale Adjustments
Included within this category of Sale Cost Adjustments are the Logging Cost Adjustment
and Specified Development Cost. Although these items do not relate to the Sale Base
Period Adjustments in section 51.5, a relationship is established indirectly through the
Base Period Price.
1. Logging Cost Adjustment. The Logging Cost Adjustment is based upon a
formula developed to relate varying costs due to size of tree (DBH) and volume per
acre. The volume per acre portion of the formula is developed only for CCF/ACRE. As
stated in the definition, this adjustment is a regression equation.
The equation is a highly sensitive portion of the TEA process; therefore, the appraiser
must be certain the variables entered into the equation are accurate. The diameter is
the sale average of all species in the cruise and is labeled therein as the "quadratic
mean" diameter. The volume per acre is determined by dividing the total appraisal
volume by the net cut acres. Do not include acreage which the purchaser will not have
to cover during the logging operation. Acres should be identical to the sum of the acres
shown in contract table A3 for scaled sales, or AT3 for premeasured sales.
To determine the Logging Cost Adjustment, subtract the average variables (diameter
and volume per acre) published in the Current Appraisal Data Bulletin from actual
variables for the sale. The difference is the variance of the two sale variables from the
average sale. Either or both differences may be positive or negative. The Logging Cost
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Adjustment relating to the variables is determined by entering the calculated differences
into the equation. The equation is as follows:
2
2
3.96432D - 0.18968D + 2.10508(V/2) - 0.08880(V/2)
LCA= -1.0 x
x 1.337
2
The above formula is for use with hand-calculated appraisals where the R2-2400-17
hard copy is used. The formula programmed into the Access TEA234 Appraisal System
will yield a Logging Cost Adjustment with opposite sign but of the same absolute value.
The formula has been adjusted by an inflation factor. Considering the formula was
originally devised in 1987, and using an adjustment factor based on Producer Price
Index Values, an adjustment of +33.7% was used to update the formula from 12/87 to
9/95.
To use the formula, consider the following example:
Database average DBH = l2.l" (from Current Bulletin)
Database average vol/per acre = 8.9 CCF/acre (from Current Bulletin)
Sale DBH for sale being appraised = l2.0"
Sale vol/acre for sale being appraised = 7.1 CCF/acre
Obtain the variance between the average sale and the sale being appraised for the two
variables:
D = l2.0" - l2.1" = -0.l" d.b.h difference
V = 7.1 CCF - 8.9 CCF = -1.8 CCF/acre difference
Obtain the logging cost by entering the formula:
2
3.96432D - 0.18968D + 2.10508(V/2) - 0.08880(V/2)
LCA = -1.0 x
2
2
= (-1.0) x +3.96432(-.1) - 0.18968(-.1) + 2.10508(-1.8/2) - ...
2
...0.08880(-1.8/2) /2 X 1.337
When items on the numerator are calculated:
LCA
-2.36483
= (-1.0) x
x 1.337
2
= $1.58/CCF
2
x 1.337
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The Logging Cost Adjustment will be $1.58/CCF (R2-2400-17) or -$1.58/CCF when
viewed in Access TEA234 Appraisal Summary, Form 2400-17, Line 12.
2. Specified Developments. The sale adjustment for Specified Development
Costs are normally limited to specified road costs. Refer to section 44.5 for direction.
3. Species Adjustment. Any time the average bid for a species or group of
species consistently shows a variance (+/-) exceeding 10 percent of the average bid for
all species, the Indicated Advertised Rate will reflect the variance. Apply the variation
when directed in the Current Appraisal Data Bulletin. Avoid combining minor amounts
of other species (10% or less of total sale volume) with a species which is adjusted
higher or lower than the average bid.
51.7 - Competition Factor
The Predicted Bid is the high bid which is expected to be received if the sale receives
average competition. To allow for competition and other minor differences not
considered within the appraisal, an adjustment to the Predicted Bid is made. The
amount of adjustment is published in the Current Appraisal Data Bulletin and is based
upon the bidding competition within each National Forest.
1. Adjustment for Performance Ratio Related to High No-Bid. Studies of TEA in
Region 2 reveal a pattern of "high no-bids" increasing as the Performance Ratio of
Advertised Rates to High Bid Rates exceeds .85. The National standard for this ratio is
between .70 and .85 (FSM 2422.1). Although other factors may exist which cause a nobid situation, a Predicted Bid which is near the Base Period Price while the WWPA
Index is declining appears to be a significant factor. Other indicators are steep
increases or declines in WWPA Index for short periods, reduced spread between BPP
and current WWPA Index, and an uncertain, fluctuating market. Frequently, declines in
the WWPA Index exceed the quarterly change in Adjusted Base Period Price due to
intense bidding practices for reasons other than real value or to lingering effects of older
sales within the database (both could have the effect of offsetting any market
adjustment). To compensate for high Performance Ratios during declining or fluctuating
market periods, the following adjustments may be made to the Competition Factor.
When the Performance Ratio for the TE Database is greater than .85 based on
the last two quarters of data, calculate an adjusted competition factor and
competition amount by determining the difference between the current
Performance Ratio and .85 and adding the ratio to the normal Competition
Factor. When multiplying the factor times the Adjusted BPP, a competition
amount and subsequent Advertised Rate is obtained.
For example, if the performance ratio is .92, an additional adjustment to the competition
factor would be .07 (.92 less (-) .85 = .07) or 7%. For a noncompetitive forest, this
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would mean a 12% Competition Factor rather than 5% and for a competitive forest, 17%
rather than 10%.
The Competition Factor is used to calculate the Competition Factor Amount shown in
the Current Appraisal Data Bulletin. The following is an example of calculating the
Competition Factor Amount:
Adjusted Base Period Price X Competition Factor = Competition Factor
Amount
Assuming an Adjusted Base Period Price of $107.18 and a Competition Factor of
12% (Normal factor of 5% plus 7% for performance ratio):
$107.18 X .12 = $12.86/CCF Competition Factor Amount
2. Competition Amount for Sales Not Advertised. When a sale is not advertised
(negotiated under timber sale permit, contract, or special use permit or agreement),
normal competition does not exist. Therefore, it is not appropriate to apply a
competition factor. Any appraisal for sales not advertised shall not include a
competition factor and the appraised value and advertised rate will equal the Predicted
Bid.