A continuation of Worthless Value thread-

Scott, I agree with you and Kerry on species rating. There are cases where it is needed, and some where it should not be used. But that is a determination for the appraiser to make.

The Eighth edition of the CTLA Guide instructed regional committees to establish their basic values ($/inch). This also encouraged the use of the cookbook method. I have been asked many times for the "updated" numbers for our region. My response has always been "figure it out for the tree". Using averages or regional figures should only be a last resort when no other method can work. It is more work to find current prices at the nursery, but the results are more accurate and much more defensible.

Reply to post by Russ Carlson, on April 05, 1999 at 01:22:40:

And how many Easter eggs did you find Russ?


1. SPECIES RATING "There are cases where it is needed, and some where it should not be used." Maybe semantics but I'd say it should always be used explicitly in the analysis but sometimes might be 100%. Same mathematical result as leaving it out but the methodology is consistent and appraiser judgment is apparent.

2. COOKBOOKS. Another problem with both species lists and regional unit prices or tree prices is that they gt misconstrued as or even characterized as standards. CTLA has been reasonably clear that 'the Guide is a guide, is a guide, is a guide.' [I think that's a Lew Bloch quote.] The lists, then, are simply a guide to a guide. But if appraisers are not able to clearly explain why data inputs and depreciation judgments are made, if they can only rely on lists then a) they are bound to the lists or b) if they vary from the lists - either carelessly or intentionally - their performance can be characterized in cross-examination as sub-standard. "Mr. Appraiser, the regional species list published by the exalted ISA Chapter says this tree should have been rated at 40%. But you rated it at 80% didn't you. That is clearly sub-standard methodology! What can you say about that?" "Well, um, er I , well, you see." But Russ Carlson would say "Sir, the regional list is a guide and is not absolute. The facts in this case are clear that the species of this tree did not influnce the benefits enjoyed by 60% and that only a 20% reduction in replacement cost was justified by species consideration."

Reply to post by Scott, on April 05, 1999 at 01:22:40:

One benefit of averge pricing - both to appraiser and client - is the time saving. If the potential for fuzziness is disclosed using the regional average may be perfectly acceptable.

For example, if parties are looking for a rough figure to make a settlement and won't take the result to court. [You need to have a sense for the parties or be clear that a litigation level opionion may require some refinement].

For example in urban forest inventories where rough estimates are needed for management purposes and there are a lot of species involved.

Again, it gets back to professional appraiser judgment on the purpose and use of the appraisal and the most appropriate methodology. One size does not fit all. One recipe from a cookbook does not fit all meals.

Reply to post by Russ Carlson, on April 05, 1999 at 01:22:40:

Without starting another thread on value, some things to think about. Basic value is used as the dollar value of a plant. Species value is the horticultural value of the given plant. If you spend any amount of time on page 48 of the 8th edition, you will find that some plants are selling for a higher price just because of consumer demand (the good old american way). These two values to differ, and as has been posted earlier, there is a time to use species value and not to use species value. The 8th edition has accomplished more for our profession in getting the appraiser to understand how an appraisal, and it's components are carried out. However, not everyone who picks up a d-tape and invoice understand and can explain.

Whe we began the training for the 8th edition around the country, most attendees just wanted the numbers, not how to arrive or explain. It has been said many times throughout this board, read, understand and ask questions if you don't.

Our appraisal system is realitively new compared to others. Only fifty years old. It takes just one mistake in a competent court of jurisdiction to ruin the system for everyone. Don't give up, and keep asking questions. Bill

Reply to post by Bill Cassel, on April 05, 1999 at 01:22:40:

In reaching that necessary understanding some real basics ned to be stressed and clarified.

1. RCM and TFM are COST approaches to value. They start with the COST to replace or reproduce the appraised plant. Think "production" rather than "exchange." PRICE is related to exchange.

2. "Basic Value" (8th p. 59) is more accurately described as "Basic Cost." "Basic Price" (8th p. 59) is more accurately described as "Unit Cost." This is a COST approach, think COST.

3. The Basic Cost should reflect the actual cost of a replaceable size plant of the same or comparable species. It should reflect the cost to be incurred by the owner or other party interested in replacement: a homeowner doesn't have the expertise or equipment to install the plant so it should be retail installed cost; a loss of nursery stock, sitting above ground should simply be the cost of obtaining similar plants at the same point in the distribution chain; a big landowner with in-house equipment and expertise might incur wholesale + direct labor with no retail markup.

4. Species considerations, except as reflected in actual costs, should all be made after the determination of Unit Cost and calculation of Basic Cost by depreciation through the Species Factor, <=100%. This is where horticultural judgment comes into play, but remember the key is value to the beneficiary not the preferences of the horticulturist.

Reply to post by Scott, on April 05, 1999 at 08:54:37:

One aspect of this discussion that might need a little bit of a nudge is: the wild fluctuation of nursery stock pricing. It seems to me that an appraiser who does the home work on each case for pricing is vulnerable to artificially created pricing fluctuations, which may not be credible in five years whent he case goes to trial. In our area, current nursery pricing would not necessarily be more reliable or credible. The grower's catalog might be a better, more accurate, and more stable source. One needs to have a feel for how those prices change when the plant material hits the wholesale market.

It has been my experience that catalogues published in the fall and winter provide stable projected pricing in the market. Growers lock in a lot of sales based on those lists and stick to them by contract. Material which is not sold before winter may be worth most anything, or worthless; when the spring dig rolls around.

A late frost really messes with the market as far as stock digging at the growers is concerned. A trend I see developing out in this niche of the woods is the starting and growing of stock that is hardy for a region - in a warmer region. For instance, stuff for the Inland Northwest is best bought from growers in the Willamette Valley on the coast. The stock gets to size faster, and doesn't have a radical change in climate to adjust to when moved inland. We're cooler here, but not as cool as say; Wyoming, Utah, Colorado. But guess who our local Inland NW growers are growing for! Yep, the locally grown stuff is suited more for higher and cooler climates and is priced higher than stuff we can ship in from the coast.

The point is, there are definate markets in the growing industry that may have nothing to do with local pricing.

While there are some great points made about the drawbacks of the "cookbook" approach, I catch myself continuing to advocate consensus efforts in local regions. Our appraisal methods suffer credibility gaps when wildly differing appraisals are presented on the same case, a point well made by Bill. Sure, there are some variables with which there may never be solid agreement. We each bring some sort of bias to the table. Should our bottom lines differ that much?

One of the things we hope to do locally is agree on how to identify and articulate disparities in philosophy. Kevin might want to rate that Black Locust 100% that lives along the creek bank. The local weed board and the city arborist (for real) would want to rate the species 0%. I say they are both full of beans, [some of them say: "So is the creek" (couldn't resist)]the real utility of the species lies somewhere between those two extremes, and will consistently reside there. If, as the RM Ch. has done, we don't want to nail that rating down in stone, we can at least give a starting point which would serve as a guide to someone who has never looked at Black Locust in an appraisal before. RM ch. gives a percentage and expects a +/- 10% fluctuation.

May your Monday following Easter be blessed with later in the week efficiency and production.

Best regards,
KWK

Reply to post by Kerry, on April 05, 1999 at 09:04:51:

Some very interesyting points Kerry.

RE: COST FLUCTUATIONS. A COST approach appraisal should reflect the cost that the damaged party would incur to replace the loss 'as of the date of appraisal.' So the costs at that date are much more important than the costs prevailing when it eventually gets to trial. Certainly, the appraiser should be sensitive to wild fluctuations at market moments, but if the data were collected from reputable local sources as of the date of appraisal the appraisals should not vary that much. The appraiser might note that as of the date of appraisal prices for XYZ trees are abnormally high due to high demand. The appraiser might note that species of equal performance are available at uninflated levels.

Lew Bloch brought up a good point in regard to the delay between appraisal and court. An attorney asked him to update prices. The (cost approach) appraisal should reflect costs as of the date of appraised value. If the court or attorney want that value updated to the date of judgment they shpould ask for a revised report which explicity distinguishes the date of loss and the advanced date of appraisal. Or the court might consider a penalty for the delay, but many appraisers tell me that's not often considered. In any case it 's up to the attorney to present a case.

RE: SPECIES RATINGS. I could go along with Kevin's (or anybody's) 100% rating for many trees in a cost approach as long as they fulfill a particular role or function as well as any other plant. That's both site and beneficiary specific, not based on some arbitrary concensus. The key characteristic that would reduce species rating, in my opinion, is a short lifespac.

Regional or sub-regional lists may indeed be good guides for the new appraiser, or an experienced appraiser unfamiliar with particular material. But should that appraiser be walking into court to voice an expert opinion on that plant?

A 20% bracket around a guide is pretty small.

Whether it's cost or species rating or location rating for that matter, I consider competent and informed appraiser judgment (on both appraisal and horticultural issue) superior to a pick list.

Reply to post by Scott, on April 05, 1999 at 11:34:38:

Some points well taken.

I guess I would argue that limited service life is among several key considerations I would use to depreciate species. Fruit mess such as the foul odor of Ginko pods and Mulberries come to mind. Prolific seeders, like Black Locust, maples, in some parts of the country - oaks, and in our part of the country - Russian Olive, become concerns to noxious weed boards. Toxic qualities such as poison oak, sumac, ivy; and Tree of Heaven become concerns. Pine needle toxicity in ruminants is a concern if Ponderosa pines are placed in pastures during pregnancy periods here. Thorns can be a plus or a minus, you get the point. (pun intended) There a few more keys that I would consider.

I agree with the concern about appraiser competence. However, I am also aware of regions/areas where the local guy gets asked to render an opinion. They may not know about consulting arborists there, and the local guy, enterprising as he/she is does enough research to put some pieces together, and offer an opinion. Unlike the eastern coast, competent consultants are neither commonplace, nor considered of higher merit than a local guy who makes a living working with trees out west. YET!! We're slowly making progress in that vein, but let's not exclude the honest guy who gives it his/her best shot. That's what I see the guide doing, giving an otherwise knowledgeable person enough tools to bumble through and wind up in good shape.

Yeah, I know, that's how a lot of pseudo-experts come about. Goodness, I'd rather they at least have the material to read and make an educated guess, than just a guess. Maybe while they are at it, they will learn about proper pruning techniques.

Now that I've got all the hair standing on the back of your necks, I'll sign off for the evening.

Best regards,
KWK

Reply to post by Kerry, on April 05, 1999 at 20:14:23:

No raised hackles here.

RE: SPECIES. All good considerations. If there is a regulatory or policy recognition (as in a noxious weed board) that may indeed reflect a concensus sentiment among the community beneficiaries. Although I've heard of law suits by landowners who refuse to mow their lawns or control crabgrass under order from local authorities. I suspect Kevin was their consultant. This is the USA after all with private property rights.

Toxic qualities are valid concerns, but might be such threshhold consideations that no appraisal is necessary. "Does this plant contribute in this location?" If no then no value, period.

Things like thorns and messy fruits are interesting. If they make the tre undesirable or non-functional to the beneficiary maybe the reduce value. Say a neighborhood inventory ranks all trees, then those with such characteristics might be given less value or resources in a management plan. But if a property owner has a thorny honey locust that provides screen and shade as effectively as a non-thorny tree of the same size, and the tree is cut down by a trespasser, should the owner get less (replacement cost) value (i.e. get less screen and shade) in settlement because of the thorns he has been willing to acept all along?

RE: THE GUIDE. Yes, the Guide is a useful guide. Particularly to the apprentice or occassional appraiser. The problem is that it has been misunderstood to be THE source and THE standard. That has not been CTLA's intention. But CTLA has not well addressed the underlying concepts that should be clear to all appraisers. 9th edition sems to be going a long way to addressing that. One of the problems with earlier editions was that it gave the appraiser just enough rope to be left dangling over the edge of the cliff by clever cross-examination.

Reply to post by Scott, on April 05, 1999 at 21:41:01:

Wow, now that we've both made comments meant to inspire Kevin's inclusion into this discussion; I sure hope he has a sense of humor! (Thick skin too)

You said: "But if a property owner has a thorny honey locust that provides screen and shade as effectively as a non-thorny tree of the same size, and the tree is cut down by a trespasser, should the owner get less (replacement cost) value (i.e. get less screen and shade) in settlement because of the thorns he has been willing to acept all along?"

I say: "Yes". That thorned tree, over a thornless variety has a higher maintenance cost. Granted, it doesn't need pruning often, but it will need pruning. No climber in their right mind will charge the same fee for a thorned Honey Locust as they do a thornless variety.

I am excited about the revisions made in the 9th Ed. I agree, with past editions, the appraiser could be left dangling, not truly having enough information (or access to it) to explain the process he/she used to form the opinion rendered.

Best regards,
KWK

Reply to post by Kerry, on April 06, 1999 at 08:08:29:

Hey Kerry, where are those other guys?

If you treat TFM as purely a cost approach then costs are properly defined as capital costs, those required to produce (or reproduce) the appraised object. They would properly include establishment costs, those required to get the plant survivable and self sustaining.

That would exclude operating or regular maintenance expenditures - like pruning - which are properly expenses not costs. Expenses are deductions from revenue - to yield net revenue - in an income or benefits approach to value. If the maintenance expenses - whatever they are - were incurred or incurrable for the appraised object before they will be the same for the replaccement. They are a wash.

Or you could characterize them as expenditures that the beneficiary willingly exchanges for the continued stream of benefits, they equate to a market price for that portion of benefits that come from a prunded rather than unpruned tree. They would in this characterization be additions to not deductions from value.

If you do deduct the future premium on periodic pruning, how do you do it? You'd have to project the premium in various future periods, discount each back to the date of appraisal and then make the deduction from replacement cost to reflect the present worth of future benefits. So, I guess we'll need to work on a conversion to reduction in Species %ages.

And of couse in yhe particular case of thorns, it becomes moot when the ground based laser pruner comes on line.

Reply to post by Scott, on April 06, 1999 at 10:05:24:

I guess the other guys just like to lurk when a couple of us are willing to stick our necks out, eh?

Boy, I have a little trouble with the idea of revenue/expenses there. The planting site is the end user, isn't it? When you put two varieties side by side, and realize that one is going to require higher maintenance expenses, it seems to me that would impact the value via species rating.

The assumption that an owner voluntarily lives with maintenance costs/expenses is a little bit dicey. Often, an owner didn't have input as to the plantings on the site. Someone who purchases a site is locked in to what is there, until they take steps to adjust the inventory. That project might not be in the budget, so they go the less expensive route and maintain what is there.

To some degree I can agree with the principles you've presented, ie. cost vs expense. On the other hand, if a nurseryman grows both thorned and thornless varieties of Honey Locust, his/her costs are very similar but the thornless varieties sell better because they are more desireable. In other words, the maintenance requirement differences between species, even varieties, seems to me to be an important point for consideration during the appraisal.

Boy, that laser idea appeals to me, especially today. I wound up pruning Washington Hawthornes most of the day today, don't care if I see another one for a while either.

Best regards,
KWK

Reply to post by Scott, on April 06, 1999 at 10:05:24:

Been sitting back, and enjoying the conversation.

I'm in agreement with most of this discussion (even the comments to Kevin [g]).

RE: thorned/thornless- In this situation the thorns would have no bearing on the value, if the owner had willingly abided with them. Since it is often difficult to find standard species Gleditsia, I would substitute 'inermis' as a suitable replacement, with no deduction for the thorns.

Reply to post by Kerry, on April 06, 1999 at 14:02:04:

Did you wind up with wounds?

Reply to post by Scott , on April 06, 1999 at 19:45:36:

Yeah, I did. I had threatened the last time that I wouldn't touch a hawthorne with a ten foot pole. So I guess it was just a test when the big chief handed me a six foot pole pruner. I didn't get wounded by crawling around in the tree for a change, it was just the brush crawling up my leg as I moved around the trees looking up all the time. Kind of a pain in the rear if ya know what I mean.

Best regards,
KWK