Restricted-Use Timber Land
To encourage reforestation of harvested lands and effective management practices, the Texas Legislature amended the Tax Code by adding Subchapter H to Chapter 23 to provide for restricted-use timberland appraisal. The new subchapter was effective January 1, 2000. Owners of timberland who harvested and reforested by seedling plantings or managed natural regeneration on timberland where harvest was restricted in order to protect critical wildlife habitats, provide roadway buffers, preserve special or unique sites, and protect streams and other water bodies can apply for this special use appraisal.
Land can qualify as restricted-use timberland as the result of either of two separate conditions:
- timber harvest is restricted in areas designated as an aesthetic management zone, critical wildlife habitat zone or streamside management zone or
- timber is harvested and regenerated by plantings or natural regeneration.
Aesthetic Management, Critical Wildlife Habitat, and Streamside Management Zones
The Texas Forest Service (TFS) was directed to adopt an administrative rule governing the requirements for land to qualify as being in one of the three zones. Useful definitions included in the rule are:Basal area – the cross-sectional area of a tree, in square feet, measured at 4-1/2 feet above the ground.
Public right-of-way – A United States or state highway, a county road, a farm to market road, other public maintained roads, and public use areas such as public park, school, lake, cemetery, and church.
Management plan – A written plan or a collection of written directives governing management of an applicant’s timberland that the landowner has developed, written, and implemented, with or without professional assistance. The plan must use the forestry best management practice consistent with the agricultural and silvicultural nonpoint source pollution management program administered by the State Soil and Water Conservation Board under Agriculture Code, §201.126, identifying specific management practices, including restrictions on harvest, for each of the types of zones included in the plan.
Aesthetic management zones are timberlands that the TFS has already determined are special or unique (based on natural beauty, topography or historic significance) or timberlands along public rights-of-way. The buffers must be at least 100 feet but not more than 200 feet wide along any side, contain trees at least ten years old or 35 feet tall, and contain a tree density equaling 50 feet of basal area per acre. The landowner must comply with a management plan that addresses harvest restrictions assuring the ongoing aesthetic value of the zone.
Critical wildlife habitat zones are timberlands on which harvest is restricted in order to protect the habitat of plant or animal species listed as endangered or threatened by the Federal Endangered Species Act or listed as endangered by the Texas Parks and Wildlife Code. The existence of the species and a plan to protect it must be documented by an agreement with a federal, state or private organization that is responsible for protecting the species. To qualify for the special appraisal, the landowner must provide three of the following seven benefits: habitat control, erosion control, predator control, providing supplemental supplies of water, providing supplemental supplies of food, providing shelters, and making census counts to determine population. A management plan developed with input from an endangered species specialist that addresses harvest restrictions and required activities must be adhered to.
Streamside management zones are to protect or to preserve a waterway or body of water. To qualify as this zone, the landowner must restrict harvest based on a management plan conforming to the silvicultural non-point source pollution management program developed by the Texas State Soil and Water Conservation Board. The protection is provided by restricting harvest in buffers 50 feet from each bank of a waterway or body that contains water at least 30 percent of the year. The buffers could be as wide as 200 feet from each bank depending on slope, soil, cover type, and proximity to public water supplies. Three hundred (300) well-spaced, 10 year old trees on average per acre or an average of 50 feet of basal area per acre must be maintained in the streamside management zones.
Lands qualifying for restricted-use timberland appraisal due to the existence of these zones will continue to qualify for the special appraisal as long as the qualifications are met.
Harvested and Regenerated Timberlands
On or after January 1, 2000, lands appraised under Subchapter E, Appraisal of Timberland, at the time timber was harvested which are being regenerated to the degree generally accepted in the area for commercial timberland and with the intent to produce income would qualify for restricted-use timberland appraisal. TFS has developed recommended guidelines for determining adequate reforestation that will be useful to chief appraisers.
These guidelines recognize that reforestation is a process that begins with final harvest and may take several years to complete depending on drought and other conditions. TFS also suggests that regeneration occurs when the landowner makes substantial effort to begin the process (i.e., site preparation, purchase of seedlings, hiring contractors). Since lands qualifying for restricted use timberland are only given the special appraisal for ten years after harvest, this allows landowners the maximum benefit.
Final harvest may include clear cut, seed tree or shelter wood harvests but would not include partial harvest, thinning to reduce stocking or single-tree selection. After harvest, the land can be regenerated by planting tree seedlings or by natural regeneration. TFS recommends that adequate regeneration has occurred when at least 300 well-distributed, desirable seedlings per acre are free-to-grow within two years of being granted the special appraisal. It is possible that drought and other natural forces could delay reforestation beyond two years. A chief appraiser must exercise judgment in instances when the first or possibly successive seedling plantings are unsuccessful due to weather conditions. The landowner should demonstrate continued efforts to establish new trees.
Seed tree and shelter wood harvests allow for natural regeneration. In a seed tree harvest, only a few, carefully selected, high quality trees are left remaining to provide seed for reforestation. A shelter wood harvest is a series of harvests in which mature trees are removed to allow early growth of new seedlings under the partial shade and protection of the remaining older trees.
In addition to the 300 tree criteria discussed above, TFS recommends slightly different guidelines depending on timberland’s proximity to waterways. On bottomlands, a term used to define lowlands adjacent to streams and rivers, they recommend natural regeneration of hardwoods including oak, sweetgum, and ash. Planting hardwoods or pines is an option depending on site conditions. For uplands, TFS recommends natural regeneration be accomplished by leaving at least eight well spaced, 16 inch diameter pine trees per acre. Chemical or mechanical site preparation or chemical release is recommended. Site preparation may not be necessary in areas where the harvested stand was pine and there is limited vegetation to compete with the seedlings.
Timberlands receiving restricted-use timberland appraisal due to harvest and regeneration cease to qualify on the 10th anniversary of the date the timber was harvested. For instance, a tract of land was appraised as timberland under Chapter 23, Subchapter E of the Tax Code for the 2002 tax year. In June 2003, a final harvest of pine trees took place. In February 2004, the landowner had completed site preparation, purchased seedlings, and hired a contractor to plant the seedlings. The chief appraiser determined that the landowner had made substantial efforts towards reforestation and that the land qualified for restricted-use timberland appraisal in February 2004. Beginning with the 2004 tax year and ending with the 2013 tax year, the land will be appraised as restricted use timberland so long as it continues to qualify. Beginning in the 2014 tax year, the land would be appraised as timberland so long as it continues to qualify.
The application requirements and process for restricted-use timberland are very similar to those for timberland appraisal (see Page 8). Only the differences will be noted in this Chapter.
A property owner must apply before May 1 of the tax year to receive this special appraisal. The chief appraiser may grant a 15-day extension for good cause.
The amendments to the Tax Code do not allow for late application for restricted-use timberland appraisal. In order for land to qualify for this special appraisal, a valid application must be filed or a request for extension made before May 1. Valid applications received after May 1 can only be approved for the subsequent tax year.
As with timberland, owners of restricted-use timberland do not need to make a new application unless the land’s eligibility changes or the chief appraiser requires a new application. See the discussion on Page 9.
The landowner’s responsibility to notify the chief appraiser of changes in use of the land is the same for restricted use timberland and other timberland. The significant difference is in the penalty assessed for failure to do so. For timberland, the penalty is equal to 10 percent of the difference between the taxes imposed under timber use and the taxes that would have been imposed under the new use and applies for each year the property received the incorrect appraisal but not for more than 5 years. For restricted use timberland, the penalty is 10 percent of the difference but for not more than 10 years. See the discussion on Page 9.
Chief Appraisers Action
Upon review of each application, the chief appraiser may approve the application and grant restricted use timberland appraisal, disapprove the application and ask for additional information or deny the application. These actions must follow the same procedures as for timberland, which are discussed on Page 9, with one notable exception.
Denial Based on Zone Determination
Before a chief appraiser can deny an application for restricted-use timberland appraisal based on aesthetic management, critical wildlife habitat, and or streamside management zones, the TFS must determine the validity of the zone. TFS has adopted an administrative rule governing the procedures for a chief appraiser requesting determination of a zone. The request must be made on a form prescribed by TFS and available from their office and on their Web site. Items to be attached to the request for zone determination are a copy of the application for restricted-use timberland appraisal, maps showing the site location and zone location if its location or acreage is contested, information documenting the case if the minimum 50 square feet per acre of basal area is contested, and other information in support of the district position.
If the application was received by the chief appraiser prior to April 1, the zone determination request must be submitted no later than 30 days after receipt of the application. If the application was received by the chief appraiser after April 1, the zone determination request must be submitted no later than 15 days after receipt of the application. The chief appraiser must also deliver to the applicant and each taxing unit in which the land is located a notice that a zone determination has been requested and instructions for the applicant and taxing unit to submit evidence. These notices and instructions are forms prescribed by TFS and are available from their office and on their Web site.
The TFS’s determination is conclusive as to the type, size, and location of the zone. The property owner or the chief appraiser may not protest the TFS’s determination to the appraisal review board or appeal it to district court.
The appraised value of qualified restricted-use timberland is one-half of the value that would have been determined for the land under Section 23.73(a) of the Tax Code. This section of the Tax Code refers to appraisal of qualified timberland, which is discussed in Chapter IV of this Manual. For example, a 100-acre tract of land in Newton County qualifies as timberland and is classified as Hardwood Forest Soil Type II. The landowner submits an application for restricted-use timberland appraisal after establishing a 10-acre streamside management zone and the chief appraiser approves the application. Based on the schedule of timberland values developed according to Chapter IV, Hardwood Forest Soil Type II has a per acre timberland productivity value of $100.00. The per acre value of the 10 acres qualified for restricted-use timberland appraisal would be $50.00 ($100.00 ÷ 2 = $50.00). The appraised value of these 10 acres would continue to be one-half of the value determined for Hardwood Forest Soil Type II for as long as the land qualified as restricted-use timberland.
Another example would be final harvest occurs on 100 acres of a 1,000 acre tract that was classified as Mixed Forest Soil Type II. The landowner prepares the 100 acres for planting and purchases pine seedlings. A valid application for restricted use timberland is filed and approved by the chief appraiser. Since the 100 acres is now planted in pine and is being managed as a pine plantation, the tract would be classified as Pine Forest Soil Type II. Based on the timberland values developed by the chief appraiser, Pine Forest Soil Type II has a per acre value of $386.00. The appraised value of the 100 acres qualified for restricted-use timberland appraisal would be $193.00 per acre ($386.00 ÷ 2 = $193.00) and would continue to be one-half of the value of Pine Forest Soil Type II for ten years from the date of harvest.
The appraised value of land qualified as restricted-use timberland cannot be greater than the market value of the land or than the appraised value for the year preceding the first year the land qualified for appraisal as restricted-use timberland.
1978 Value Does Not Apply
In 1978, Texas voters adopted a constitutional amendment providing for taxable values of timberlands to be based on productivity values rather than market values. So that the taxing units would not lose revenues, the law provided that a parcel’s timberland productivity value could not be less than its 1978 market value. This minimum value, found in Tax Code Section 23.78, does not apply to restricted-use timberland.
Section 23.78, on the minimum taxable value of timberland, states: “The taxable value of qualified timber land appraised as provided by this subchapter may not be less than the appraised value of that land for the taxing unit in the 1978 tax year, . . .” The subchapter referenced is Subchapter E (Appraisal of Timber Land). Restricted-use timberland is based on Subchapter H, which does not set a minimum value.
Change of Use and Rollback Procedures
Changes of use do trigger “roll back taxes.” Please see Chapter III of this Manual for a thorough discussion of reasons for imposing roll back taxes, what constitutes a change of use, the procedures for notifying landowners of the determination of a change in use, and calculating the roll back tax. There are slight differences in calculating the tax for restricted-use timberland. If land qualifying for restricted-use timberland appraisal changes to a use that qualifies as timberland, appraised under Subchapter E, the land has a rollback tax. The additional tax will be based on the difference between the restricted-use timber value and the timber value for the five preceding years. If the change is to a use that does not qualify as timberland, the additional tax will be based on the difference between the restricted-use timber value and the land’s market value for the preceding five years.
 See Chapter 215, Texas Administrative Code.
 Texas Forest Service Rule 215.1 identifies these bodies of water as intermittent and perennial streams, rivers, lakes, sloughs, ponds, creeks, reservoirs, watersheds or wetlands. Intermittent streams flow only during wet periods of the year, 30 to 90 percent of the time, and flow in a continuous, well-defined channel. Perennial streams flow through the majority of the year in a well-defined channel. Ephemeral streams, which are excluded, only flow during short periods following precipitation in low areas or in channels that are not well defined.
 These guidelines and additional information regarding zone determination are available from the Texas Forest Service and on their Web site.