COAST RANGE ASSOCIATION PRESENTATION FOCUSES ON OWNERSHIP, TAXES, AND ECONOMICS UNDERLYING FOREST PRACTICES

Giving Guide

By Victoria Stoppiello

If you looked at the photograph in the July 18 Tillamook County Pioneer story about Coast Range Association (CRA) Director Chuck Willer’s presentation on July 19, you might have thought the presentation was going to be about clearcutting.
If you noticed that the presentation was sponsored by the Rockaway Beach Citizens for Watershed Protection (RBCWP), you might have thought it was going to be an anti-spray presentation.
In both cases you would be wrong. The focus of Willer’s presentation was the economic structures and tax advantages that underlie what we see in the watersheds of the Oregon Coast Range.

Willer spoke to a crowd of more than 50 people in a community room at the Tillamook Central Library. Much of his presentation was right out of a Bernie Sanders play book: Those who have money (and therefore power) are able to manipulate government systems to reduce their own taxes while stripping local jurisdictions of the means to provide basic services like police protection and public education.
The graphic which is more meaningful than a photo of a clear-cut is the map of Oregon forest ownership. Willer and his assistants obtained public information regarding who owns every patch of ground for all counties north of Curry, Jackson and Josephine in western Oregon except Tillamook County.
It turns out that Tillamook County charges $1535 for ownership data, roughly three times the fee that any other county charges; some counties charge zero. For example, a researcher can obtain all the land ownership data for Multnomah, Clackamas, and Washington Counties via Metro for $485. As a nonprofit, CRA has not had the financial wherewithal to make the expenditure to obtain Tillamook’s ownership data.
According to a Pioneer reporter, Tillamook County departments are reviewing their fees. Willer stated that an unusually high portion (30 percent) of Tillamook County revenue is from fees for services. That means building permit fees, public information access fees and so forth tend to be higher because these offset low property tax revenues. That’s where forest ownership and related capped property taxes impact Tillamook County’s ability to provide services.

From the information obtained, CRA created a color-coded map showing that “Real Estate Investment Trusts (REIT) and Timber Investment Management Organizations (TIMO) dominate private forest ownership in Western Oregon. The largest REIT is Weyerhaeuser. The largest TIMO is Hancock Timber Resource Group.” Forests in these ownerships, what CRA labels “Wall Street Owned Forests” are red on the map. Other big corporate owned forests are orange. All remaining private land is grey and land inside urban growth areas is black. Click here for enlargement of map, key and more information.

REITs and TIMOs are not taxed the way corporate property typically is taxed. According to morningstar.com, “Each year, REITs send Form 1099-DIV to their shareholders, containing a breakdown of the dividend distributions. For tax purposes, dividends are allocated to ordinary income, capital gains, and return of capital. As REITs do not pay taxes at the corporate level, investors are taxed at their individual tax rate for the ordinary income portion of the dividend,” which is typically at a lower tax rate.
TIMOs buy, manage, and sell forestland and timber on behalf of various institutional investors — e.g., insurance companies, pension funds, endowments, and foundations for a specified period of time — quite commonly 10 to 15 years. TIMOs, especially when they are investing pension funds, have an implicit fiduciary responsibility to manage the investment to maximize profits.
The shift in type of ownership and therefore taxation of Oregon forest lands occurred over a long period of time, beginning in 1977 when timber property tax was eliminated and replaced by a harvest tax.
The upshot is that the change in ownership of forestlands from past structures to the current REITs and TIMOs means that there’s been a loss of property tax income to counties. During 1990 – 1995, local governments in western Oregon received $119,184,299 per year, but after forest ownership transitioned to REITs and TIMOs,
the same jurisdictions received $18,371,172 in the five years from 2007 to 2012, a roughly 85 per cent reduction in revenues from corporate forests.
It is important to note that there are several kinds of forest lands in the Coast Range: federal forests which are regulated according to federal rules, state forests, in particular Clatsop State forest and Tillamook State forest, and privately held forests. From one audience question at Willer’s presentation, it was apparent that not everyone understands the differences among these types of forest ownership. For years, this writer believed that “timber tax” came from any forests that were cut in the Coast Range; however, timber tax is only generated from state forest land and helps fund schools, city and county government, and fire districts. Something referred to as “harvest tax” is generated from cutting on privately held forest, but most harvest tax revenue actually goes to the Oregon Forest Resources Institute to do education and public relations, for example literature that is mailed to building designers encouraging them to use wood products. (The World Forestry Center in Portland does not appear to benefit from harvest tax revenues, but by donations primarily from large corporate timberland owners.)