67th Legislature SB 262.1
1 SENATE BILL NO. 262
2 INTRODUCED BY M. CUFFE
3
4 A BILL FOR AN ACT ENTITLED: “AN ACT GENERALLY REVISING CLASS 10 PROPERTY TAXATION OF
5 FOREST LANDS; REVISING THE COMPOSITION AND DUTIES OF THE FOREST LANDS TAXATION
6 ADVISORY COMMITTEE; PROVIDING FOR REVIEW AND CHANGES OF APPRAISAL METHODOLOGY
7 AND VALUATIONS; PROVIDING RULEMAKING AUTHORITY; AMENDING SECTION 15-44-103, MCA; AND
8 PROVIDING AN EFFECTIVE DATE AND A TERMINATION DATE.”
9
10 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
11
12 Section 1. Section 15-44-103, MCA, is amended to read:
13 "15-44-103. Legislative intent -- value of forest lands -- valuation zones -- rulemaking. (1) In
14 order to encourage landowners of private forest lands to retain and improve their holdings of forest lands, to
15 promote better forest practices, and to encourage the investment of capital in reforestation, forest lands must
16 be classified and assessed under the provisions of this section.
17 (2) The forest productivity value of forest land must be determined by:
18 (a) capitalizing the value of the mean annual net wood production at the culmination of mean annual
19 increment plus other agriculture-related income, if any; less
20 (b) annualized expenses, including but not limited to the establishment, protection, maintenance,
21 improvement, and management of the crop over the rotation period.
22 (3) To determine the forest productivity value of forest lands, the department shall:
23 (a) divide the state into appropriate forest valuation zones, with each zone designated so as to
24 recognize the uniqueness of marketing areas, timber types, growth rates, access, operability, and other
25 pertinent factors of that zone; and
26 (b) establish a uniform system of forest land classification that takes into consideration the productive
27 capacity of the site to grow forest products and furnish other associated agricultural uses.
28 (4) In computing the forest land productivity valuation for each forest valuation zone, the department
-1- Authorized Print Version – SB 262
67th Legislature SB 262.1
1 shall determine the productive capacity value of all forest lands in each forest valuation zone using the formula
2 V = I/R, where:
3 (a) V is the per-acre forest productivity value of the forest land;
4 (b) I is the per-acre net income of forest lands in each valuation zone and is determined by the
5 department using the formula I = (M x SV) + AI - C, where:
6 (i) I is the per-acre net income;
7 (ii) M is the mean annual net wood production;
8 (iii) SV is the stumpage value;
9 (iv) AI is the per-acre agriculture-related income; and
10 (v) C is the per-unit cost of the forest product and agricultural product produced, if any; and
11 (c) R is the capitalization rate determined by the department as provided in subsection (6).
12 (5) Net income must:
13 (a) be calculated for each year of a base period, which is the most recent 10-year period for which
14 data is available prior to the date the revaluation cycle ends. Data referred to in subsection (4)(b) must be
15 averaged.
16 (b) be based on a rolling average of stumpage value of timber harvested within the forest valuation
17 zone and on the associated production cost data for the base period from sources considered appropriate by
18 the department; and
19 (c) include agriculture-related net income for the same time period as the period used to determine
20 average stumpage values.
21 (6) The capitalization rate must be calculated for each year of the base period and is the average
22 capitalization rate determined by the department after consultation with the forest lands taxation advisory
23 committee, plus the effective tax rate. The capitalization rate must be adopted by rule. However, the
24 capitalization rate for each year of the base period for tax years 2015 through 2020 may not be less than 8%.
25 (7) The effective tax rate must be calculated for each year of the base period by dividing the total
26 estimated tax due on forest lands subject to the provisions of this section by the total forest value of those
27 lands.
28 (8) For the purposes of this section, if forest service sales are used in the determination of stumpage
-2- Authorized Print Version – SB 262
67th Legislature SB 262.1
1 values, the department shall take into account purchaser road credits.
2 (9) In determining the forest productivity value of forest lands and in computing the forest land
3 valuation, the department shall use information and data provided by the university of Montana-Missoula or
4 other sources recommended by the forest lands taxation advisory committee.
5 (10) (a) There is a forest lands taxation advisory committee consisting of:
6 (i) four members with expertise in forest matters, one appointed by the majority leader of the senate,
7 one by the minority leader of the senate, one by the majority leader of the house of representatives, and one by
8 the minority leader of the house of representatives; and
9 (ii) three five members appointed by the governor, one who is an two who are industrial forest
10 landowner landowners, one who is a two who are nonindustrial forest landowner landowners, and one who is a
11 county commissioner.
12 (b) The committee must be appointed and convened no later than July 1 of the year that is 2 years
13 prior to the first year of each reappraisal cycle. The terms of the members expire on June 30 of the first year of
14 each reappraisal cycle.
15 (c) The advisory committee shall:
16 (i) review data required by subsections (2) through (6), (8), and (9), including data on productivity
17 value, stumpage value, wood production, capitalization rate, net income, and agriculture-related income;
18 (ii) recommend to the department any adjustments to data if required by changes in government forest
19 land programs, market conditions, or prevailing forest lands practices;
20 (iii) recommend appropriate base periods and averaging methods to the department;
21 (iv) verify for each forest valuation zone and forest land classification and subclassification under
22 subsection (3) that the income determined in subsection (5) reasonably approximates that which the average
23 Montana forest landowner could have attained; and
24 (v) recommend forest land valuation techniques to the department.
25 (11) The members of the forest lands taxation advisory committee must be appointed and convened
26 no later than July 15, 2021, for the specific purpose of reviewing and establishing appraisal methodology with
27 the department. For the period of July 1, 2021, through December 31, 2022, the committee shall work with the
28 department to:
-3- Authorized Print Version – SB 262
67th Legislature SB 262.1
1 (a) review and develop appropriate productivity value, stumpage value, agricultural income, and
2 capitalization rate appraisal methodologies;
3 (b) identify appropriate sources of data, existing or in need of development;
4 (c) identify entities within the Montana university system, state agencies, or private entities qualified
5 and able to conduct forest land appraisal;
6 (d) document agreed to appraisal methodologies in the Montana Forest Land Classification and
7 Valuation Manual; and
8 (e) verify appraisal methodology through a reappraisal of valuation years 2015 through 2020 and
9 complete a subsequent third-party review to ensure:
10 (i) the correct methodology for each forest valuation zone and forest land classification and
11 subclassification under subsection (3); and
12 (ii) that the income determined in subsection (5) reasonably approximates that which the average
13 Montana forest landowner could have attained.
14 (12) The department shall adopt reappraisal values by rule as replacement values for use in the 10-
15 year rolling average calculations in consultation with the forest lands taxation advisory committee."
16
17 NEW SECTION. Section 2. Effective date. [This act] is effective July 1, 2021.
18
19 NEW SECTION. Section 3. Termination. [Section 1(11)] terminates June 30, 2023.
20 - END -
-4- Authorized Print Version – SB 262


Statutes affected:
SB0262_1.pdf: 15-44-103
SB0262_2.pdf: 15-44-103
SB0262_X.pdf: 15-44-103
Amended: 15-44-103
Introduced: 15-44-103