2409.22_60
Page 1 of 11
FOREST SERVICE HANDBOOK
DENVER, CO
FSH 2409.22 - TIMBER APPRAISAL HANDBOOK
Region 2 Amendment No. 2409.22-96-8
Effective July 17, 1996
POSTING NOTICE: Amendments are numbered consecutively by Handbook
number and calendar year. Post by document name. Remove entire document and
replace with this amendment. Retain this transmittal as the first page of this
document. The last supplement to this Handbook was Amendment 2409.22-96-7 to
!2409.22,60 Contents.
This amendment supersedes Amendment 2409.22-95-7 to 2409.22,60.
Document Name
2409.22,60
Superseded New
(Number of Pages)
9
11
Digest: Edited to reduce size through reference to other sections containing
identical information. Expands where necessary for clarification, corrects errors,
and adds missing information to complete instructions.
60.5 - Removes definition of Dead.
61.22 - Revised to describe action to take regarding Performance Ratio when reappraising a no-bid sale.
61.41 - Removes direction.
61.5 - Removes reference to erosion control costs.
61.6 - Adds High Risk unusual adjustment calculation for sales whose normal
Operating Season is 4 month or less. Renumbers items.
ELIZABETH ESTILL
Regional Forester
R2 AMENDMENT 2409.22-96-8
EFFECTIVE 7/17/96
2409.22_60
Page 2 of 11
FSH 2409.22 - TIMBER APPRAISAL HANDBOOK
R2 AMENDMENT 2409.22-96-8
EFFECTIVE 7/17/96
CHAPTER 60 - BLACK HILLS TRANSACTION EVIDENCE
60.5 - Definitions. Most definitions are shown in section 50.5; only those that have
special emphasis on the Black Hills Zone are listed here.
Competitive Unit. A Ranger District with a Base Period Bid Ratio of five
percent (.0500) or more.
Database. The database contains all sales over $2,000 from the Forest for the
previous four quarters as long as the Forest is a Competitive Area. If the Forest
becomes non-competitive, sales from non-competitive Units are progressively
deleted from the database, beginning with the oldest quarter, until the database is
competitive. The database must contain a minimum of 50 percent of the volume
sold on the Forest. If the database falls below 50 percent, sales from the noncompetitive Units which meet all criteria for inclusion in the database except for
being competitive, shall be added by quarter starting with the most recent quarter
and progressing to the oldest quarter until the 50 percent level is achieved. Sales
from non-competitive Units shall be included at the greater of the predicted bid or
high bid with the associated statistical high bid. The sales from non-competitive
Units shall be deleted from the database as soon as possible and thus create a more
competitive basis of sales in the database.
Non-competitive Unit. Any Ranger District not meeting all the criteria of a
Competitive Unit.
Species Adjustment. An adjustment to account for white spruce volume when
it is greater than 10 percent of the total net sale volume.
Zone. The Black Hills National Forest.
61 - TRANSACTION EVIDENCE APPRAISAL.
61.1 - Introduction. See section 51.1 for general description of TEA appraisal
process and use.
The Competition Factor Amount for each area is that amount published in the
Black Hills Zone, Current Appraisal Data Bulletin issued at least quarterly.
61.2 - Administrative Considerations. Appraisers of extensions and damage
packages should use the conversion factor listed in the Index Operations table of the
Current Appraisal Data Bulletin to appraise in MBF units of measure.
61.21 - Responding to Market Changes. See section 51.21. Unusual sales will be
excluded from the database. Examples of such sales are default with timber
property value, standard rate, dead, and aspen. These sales do not contain the data
necessary to form the relationship of costs and bid data.
R2 AMENDMENT 2409.22-96-8
EFFECTIVE 7/17/96
2409.22_60
Page 3 of 11
61.22 - Responding to Sales Receiving No Bids. When a specific sale does not
receive any bids and the Forest Service and industry jointly agree on an error which
may effect the advertised rate, change the sale in the best interest of the public and
appraise as soon as possible.
When four sales or 13.5 percent, of the previous four quarter offered volume, or two
sales in one quarter, do not receive any bids, re-appraise the no-bid sales and reoffer within the following two quarters with a Competition Factor of 100 to 150
percent of the published Factor in the Current Appraisal Data Bulletin.
(That is, 1.20 X 10% Competition Factor = 12% Re-offer Competition Factor)
The published Competition Factor is that factor, either 5% or 10%, normally earned
by the Forest to determine competitive status. The factor at this point does not
include any additional adjustments due to performance ratios or other adjustments
to allow latitude in bidding due to market changes; however, once the no-bid
Competition Factor is determined for the re-offer, the current Performance Ratio
minus .85 as published in the Current Appraisal Data Bulletin may be added to the
factor to calculate the Competition Amount (section 61.7).
Re-offer Factor = 12.0%; Performance Ratio = .873 (current bulletin)
Total Factor for use: .120 + (.873 - .850) = .143 (14.3%)
61.3 - Current TE Appraisal Data. See section 51.3 and the following exhibit for
details of TE appraisal data. Exhibit 01 is an example of how the Current
Appraisal Data Bulletin appears and explanation of footnotes.
R2 AMENDMENT 2409.22-96-8
EFFECTIVE 7/17/96
2409.22_60
Page 4 of 11
61.3 - Exhibit 01
REGION 2, Zone 2
Black Hills Zone
Current Appraisal Data Bulletin
Bulletin No. BU?????.
Effective ???????? ?, 1996 until Superseded
Reference 61.3 - Current TE Appraisal Data - Following are the indices and Index
Operations values for use in appraising TE sales to be advertised on or after
xxxxxxxx x, 199x, TE damage appraisals for sales expiring on or after xxxxxxxx x,
199x, and extensions of sales terminating on or after xxxxx xx, 199x
SALE INDEX AVERAGES:
Base Period Index: 1st QTR CY 95 - 4th QTR CY 95
Current Index: WWPA, White Woods, January, 1995
BASIC PERIOD PRICE AVERAGES:
Weighted Average High Bid:
Adjusted Base Period Price For Market:
ALL LIVE 1/
337.23
316.12
All Species: 136.39
All Species: 125.73
INDEX OPERATIONS
To Convert $/CCF to $/MBF: X 1.9810
2. SPECIES
ALL LIVE 1/
UNIT OF MEASURE
CCF
6. DBH
12.55
AVE. CCF/ACRE
7.27
7. ADJ. BASE PER. PRICE
125.73
8. AVE. HAUL (.1201/CCF/Min)
19.94
9. AVE. MAINTENANCE
1.93
11. AVE. SLASH
4.18
13. AVE. TEMP. ROADS
0.20
16. TOTAL AVE.
26.25
28. COMPETITION FACTOR ADJ. 2/
15.46
37. BASE INDEX
316.12 3/
PERFORMANCE RATIO:
.873
PREVIOUS INDEX OPERATION
ADJ. BPP >85 BU22xx9x
BASE INDEX
PERFORMANCE RATIO
144.75
344.68
.927
1/ Except hardwoods
2/ Competition Factor Amount: $125.73 X 12.3% = $15.46
R2 AMENDMENT 2409.22-96-8
EFFECTIVE 7/17/96
2409.22_60
Page 5 of 11
The performance ratio for the most recent 2 quarters is .873. The competition
amount is based on the difference of .873 minus .85 (the highest ratio desirable)
plus the normal competition factor of 5% for non-competitive and 10% for
competitive units. The performance factor for .85 ratio is .023; the factors used to
calculate Competition Amount are .073 for noncompetitive units and .123 for
competitive units.
61.3 - Exhibit 01--Continued
3/ Base Index adjusted to CCF (1992-93 Basis) White Woods:
Selected
Conversion
Factor
A
B
C
D
E
F
Sale Index
Range
up thru 4.49
4.5 to 4.99
5.0 to 5.49
5.5 to 5.99
6.0 to 6.49
6.5 and greater
MBF to CCF
Average Factor
4.25
4.75
5.25
5.75
6.25
6.75
Example: Base Index per MBF
Sale BF/CF ratio 5.0125
MBF/CCF Conversion Factor
Adjusted Base Index, CCF Basis
Classification
CCF Basis
0.425
0.475
0.525
0.575
0.625
0.675
316.12
BF/CF
Ratio
134.35
150.16
165.96
181.77
197.58
213.38
316.12
0.525
165.96
WWPA(C), WW = 165.96
Show in: a) contract provision A(T)5a
b) bid form
c) prospectus
d)R2-2400-17 (Below Base Indices on line 37)
Note: Paradox will calculate sale index on line 35 and display WWPA Table below
line 36.
61.4 - Adjusted Base Period Price. The Adjusted Base Period Price is published in
the Current Appraisal Data Bulletin. This is the rate resulting from the average
high bid adjusted for market and is with roads in place. To arrive at the published
value the following procedure is used.
The high bid for each sale within the database is weighted by volume to arrive at
the average high bid. This can be considered the "unadjusted" Base Period Price.
The Market Adjustment is based upon the WWPA Whitewoods Index. The
Whitewoods Index for each sale within the database is weighted by volume, and
divided by the total volume to arrive at the weighted average Whitewoods Index
(Base Period Index). The Base Period Index is subtracted from the most recent
monthly WWPA Whitewoods Index (Current Index) to arrive at the difference
between indices. This difference may be positive or negative. The Market
Adjustment is added to the Average Bid to arrive at the Adjusted Base Period Price.
R2 AMENDMENT 2409.22-96-8
EFFECTIVE 7/17/96
2409.22_60
Page 6 of 11
An example of the Base Period Price calculation is:
Weighted Ave.
High Bid
$136.39
= Base Period Price
= $136.39/CCF
[(Current Index - Base Period Index) X .5*] = market adjustment
(316.12
- 337.23)
X .5* = -10.66
Base Period Price + Market Adjustment = Adjusted Base Period Price
$136.39
+ $-10.66
=
$125.73/CCF
* Note that .5048 is used here to convert the Index value from WWPA
MBF measure to CCF. (1/1.9810 CCF/MBF, Exhibit 01)
61.5 - Sale Base Period Adjustments. The Adjusted Base Period Price is increased
by the 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.
61.6 - Sale Cost Adjustments. The Sale Cost Adjustments 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 the 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 the 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. 61.5). The sale cost categories for haul, road maintenance,
contractual (slash disposal), unusual adjustments, and temporary roads are Specific
Sale Adjustments. These items are calculated the same as for the residual value
appraisal process. See sections 43.0 through 44.5 for further discussion of these
costs.
Erosion control costs are not a required appraisal item; however, an erosion control
plan should be written for each timber sale offered. As long as required erosion
control activities are not beyond what has been traditionally required for normal
sales on a particular forest, the costing of erosion control is not necessary. Include
as an unusual adjustment the difference between what is normally required and
R2 AMENDMENT 2409.22-96-8
EFFECTIVE 7/17/96
2409.22_60
Page 7 of 11
what is required for a new sale if erosion control exceeds the normal requirement.
The Forest must determine what is normal.
Unusual Adjustments: Unusual adjustments below are in addition to those
described in section 51.6. The following items are considered necessary for the
Black Hills Zone.
1. Cable. When skyline or cable logging is required in a sale, calculate the cost
for logging empirically. Include this cost and the volume to be harvested by this
method in the Logging Method Information (LOGCOSTC.FSL) screen when using
Paradox to appraise the sale. Paradox will calculate the proper weighted logging
cost when both ground based and skyline/ground lead systems will operate the sale.
Identify as an unusual adjustment when using R2-2400-17 appraisal summary by
multiplying the difference between the empirical cost and the conventional Black
Hills Zone skid cost by the percentage of cable volume to arrive at the skidding
portion of the cable cost adjustment.
Calculate the increased cost for slash work and include as part of the unusual
adjustment when slash height has a contractual limit less than 24 inches on the
cable acreage. Do not include this cost if lopping below a 24 inch height is not
required for the sale. This cost is added to the cable logging cost when summing
total costs.
The last step is to determine the overhead cost for the special skidding requirement.
Use the overhead percent listed in section 41 and multiply by the sum of skid cost
difference and slash cost difference to dtermine this cost.
The sum of these three portions (unless added slash cost is not included) weighted
by the proportion of cable volume over total sale volume is the unusual adjustment
for cable logging. Enter the unusual adjustment on the R2-2400-17, applying the
unusual adjustment to all species being offered on the sale.
The procedure to arrive at this unusual adjustment follows the four steps above,
and an example of such an adjustment follows:
a. Cable Skid $ - Zone Tractor Skid $ = Skid Cost Difference
$90.00
-
$22.71
=
$67.29/CCF.
b. Zone F&B $ X Lopping % = Slash Cost Difference (if needed)
$22.59 X .08
=
$1.81/CCF
c. (Skid $ + Slash $) x TPOH
$67.29 + $1.81
x .2194 =
= Overhead Cost Difference
$15.16
d. (Skid + Slash + OH) x cable volume
Total Sale Volume
= Sale Unusual Adj.
R2 AMENDMENT 2409.22-96-8
EFFECTIVE 7/17/96
2409.22_60
Page 8 of 11
(67.29 + 1.81 + 15.16) x 1600 CCF
= $13.48
10,000 CCF
2. Adverse Skid Adjustments. Include an unusual adjustment in the appraisal
when the percent slope (sale average) is greater than or equal to 10 percent. Use
the following Table:
Slope %
10
12
14
16
18
20
22
24
26
28
30
Adj.+(%)
9
10
12
14
16
17
19
21
22
24
26
Slope percent is based on a Sale-as-a-Whole average sideslope percent weighted by
volume (as apposed to acres), using the current RV skidding cost in section 42 for
the Black Hills Zone. Use of this unusual adjustment is limited to sales where 20
percent or more of the volume must be skidded uphill on slopes 10 percent or
greater. Calculate the Unusual Adjustment on the basis of a weighted average
difference in cost based on percent sale volume to be skidded uphill. Example: a
sale with 60% of its volume required to be skidded uphill on slopes of 18%:
$22.71/CCF X 0.16 Adj. X 0.6 = $2.18 per CCF (Sale-as-a-whole Adjustment)
3. Species Adjustment for Spruce. When white spruce volume is greater than
10 percent of the total net sale volume, calculate the increased cost for logging and
manufacturing and identify as an unusual adjustment for the entire spruce volume
in the sale. Reduce the Adjusted Base Period Price 40 percent (multiply by .60) for
the spruce volume. Sales with 10 percent or less of spruce volume are not
considered as containing a spruce component.
[Adjusted Base Period Price X .60][Spruce Volume / Total Sawtimber Volume] =
Unusual Adj.
[$92.91
X
.60) (1528 CCF/9320 CCF) = $9.14/CCF
4. Quality. When a sale consists of timber which the Forest Service considers
to be low quality or high quality, calculate an unusual adjustment using the
following chart. Note that the chart incorporates the conversion of the Current
Index to a log scale equivalent. Low quality wood is defined as timber having an
excessive amount of limbs contributing to lower grade lumber. Conversely, high
quality is defined as timber having a noticeably lower amount of limbs contributing
to higher grade lumber. The Black Hills National Forest shall define quality
criteria by Forest supplement. There should be an equal amount of volume
adjusted for higher quality as for lower quality. Consult with Forest Sale
Preparation Specialist before applying this adjustment factor.
R2 AMENDMENT 2409.22-96-8
EFFECTIVE 7/17/96
% Sale Harvest Acres Low/High Quality
< 25% low/high quality
> 25%, but < 50% low quality
> 50% low quality
> 25%, but < 50% high quality
> 50% high quality
2409.22_60
Page 9 of 11
% Adj. to Current Index
0%
+4.1%
+6.8%
-4.1%
-6.8%
Assuming a sale with 30 percent low quality wood:
Current Index X % Quality Adj. X .5 (MBF/CCF) = Unusual Adj.
316.12
X
.041
X .5
= $6.48/CCF
5. Scaling. When Contract Provision C6.81 dated 12/93 or later is included in
the contract include an unusual adjustment equal to the value included in Contract
Table A14.
6. High Risk. When the Normal Operating Season is restricted because of
unusual 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:
If Operations are Restricted to:
4 Months
3 Months
2 Months
1 Month
Adjustment Is:
6%
11%
16%
Reconsider Sale Viability
The percent adjustment will be applied against the Adjusted 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 which prohibits all operations during 2
months of the Normal Operating Season (AT17) which is listed as 5 months long.
The restriction affects about 20% of the sale area.
Assuming an Adjusted Base Period Price of $125.73, the calculation would appear
similar to the following:
$125.73 x .11 x 600/3000 = $2.77/CCF
61.61 - Other Sale Adjustments. Included within this category of Sale Cost
Adjustments are the Logging Cost Adjustment and the Specified Developments.
Although these items do not relate to the Sale Base Period Adjustments in Section
61.5, a relationship is established indirectly through the Base Period Price.
1. Logging Cost Adjustment. The Logging Cost Adjustment calculation is the
same as that described in section 51.61, paragraph 1. Use the same procedure and
R2 AMENDMENT 2409.22-96-8
EFFECTIVE 7/17/96
2409.22_60
Page 10 of 11
formula as described in that section when summarizing appraisal data on R2-240017. If Paradox is in use or Form 2400-17 is being used to hand summarize appraisal
data, the (-1.0) factor should be ignored.
2. Specified Developments. The sale adjustment for specified developments
are normally limited to specified road costs. Refer to section 44.5 for direction.
61.7 - 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 no-bid 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 .873, an additional adjustment to the
competition factor would be .023 (.873 less (-) .850 = .023) or 2.3%. For a
noncompetitive unit, this would mean a 7.3% Competition Factor rather than 5%,
and for a competitive unit, 12.3% rather than 10%.
The Competition Factor is used to calculate the Competition Factor Amount as
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 $125.73 and a Competition Factor of 12.3%:
$125.73 X .123 = $15.46/CCF Competition Factor Amount
R2 AMENDMENT 2409.22-96-8
EFFECTIVE 7/17/96
2409.22_60
Page 11 of 11
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.