Tree Appraisal Methods in Urban Forestry Management

“Issues in Urban and Community Forestry Management”Tree AppraisalsWarnell School of Forestry and Natural ResourcesSeptember 11, 2013Athens, GAPresented by Chris Barneycastle, Barneycastle Forestry Services, Inc.

Discussion and review of Council of Tree and Landscape Appraisers Guide for Plant Appraisal – 9th Edition • Overview of Tree appraisal process including discussion of 4 methods • Examples of tree appraisals • Questions

Council of Tree and Landscape Appraisers Guide to Plant Appraisal – 9th Edition • 9th Edition published in 2000 • 1st Edition published in 1957 • Council comprised of representative form American Nursery and Landscape Association; American Society of Consulting Arborists; American Society of Landscape Architects; Associated Landscape Contractors of America; Association of Consulting Foresters of America; International Society of Arboriculture; and Tree Care Industry Association

Council of Tree and Landscape Appraisers Guide to Plant Appraisal – 9th Edition • Provides guidelines for determining appraised value of trees, shrubs, plants, etc. • Very comprehensive – not “user friendly”. • Provides a background of the history and evolution of the appraisal process, explains approaches and methods (with examples), and provides guidance to insuring the appraisal is done properly and professionally. • It is a “guide”. • Awaiting 10th Edition.

Overview of Tree Appraisal Process • Trees perform several basic landscape functions including aesthetic, environmental, engineering, and architectural • Aesthetic – beauty, backgrounds, and complimenting or enhancing architecture • Environmental – erosion control, wind control, air and temperature alteration, and wildlife habitat • Engineering – air conditioning, acoustical control, glare and reflection reduction • Architectural – screening objectionable views, privacy control, and enframement

Overview of Tree Appraisal Process • When appraised for their landscape contribution and when replacement costs are taken into consideration, trees have substantially more dollar value than their “timber” value.

Overview of Tree appraisal process • Appraisal process is used to establish a dollar value for total or partial loss of trees in a landscape or other wooded areas. • Reasons for Appraisals – Settlement for damages through arbitration, mediation or litigation; insurance claims; and IRS casualty losses. • Fire, trees removed, root damage, chemical damage, ROWs & easements, etc.

3 Approaches to Plant Appraisals • Cost Approach – uses costs to repair and replace plants and trees. • Income Approach – used to appraise income producing property (ex: Christmas tree farms, orchards, and tree farms). • Market Approach – uses differences in real estate value before and after trees are removed.

Cost Approaches to Plant Appraisal • Replacement Cost Method (modified version of Replacement Cost Method) • Cost of Repair Method • Cost of Cure Method • Trunk Formula Method

Unit Tree Cost • Unit Tree Cost is a factor used to establish a dollar value on each square inch of cross sectional trunk area at a specified height on the trunk. • Unit Tree Cost can be calculated by obtaining retail costs of trees from nurseries or can be obtained from a Regional Committee. • Southern Chapter Regional Committee published a Unit Tree Cost of $66 per square inch in 2005. • Used to determine Basic Tree Cost.

Factors in Plant Appraisals • Size • Species • Condition • Location

Factors in Plant Appraisals Size • Usually DBH, caliper, or height. • DBH measured at 4.5 feet above ground. If co-dominant stems, usually measured at narrowest point below fork. • If on slope or leaning, DBH measured at right angles to the trunk at 4.5 feet along the center of the trunk axis (not uphill side). • Size and Unit Tree Cost are used to determine Basic Tree Cost.

Factors in Plant Appraisals Species • 0 – 100% rating. • Species ratings for most southern species found in Southeastern US Tree Species Rating Guide – July 2005 published by the Southern Chapter of the International Society of Arboriculture.

Factors in Plant Appraisals Condition The condition rating is determined by evaluating the structural integrity and state of health of the plant, usually before the damage or removal. Factors 1. Roots 2. Trunk 3. Scaffold Branches 4. Small Branches and Twigs 5. Foliage and/or Buds Factors 1-3 each have a range of scores of 1-4 for structure and 1-4 for health (subtotal of 2-8 for each of the first three factors). Factors 4 and 5 each have a range of scores of 1-4 (health condition only). The scoring system is as follows:

Factors in Plant Appraisals Condition Scoring System 4 – No apparent problems 3 – Minor problems 2 – Major problems 1 – Extreme problems The maximum score a tree can receive is 32 and the minimum is 8. Percent condition ratings are calculated by assigning a total score to a tree and dividing it by 32. If the tree has been removed, may need to look at condition of surrounding trees. A tree in good condition will usually receive a 75-80 percent rating.

Factors in Plant Appraisals Location • The location rating involves the Site of the property, the functional and aesthetic Contribution of the tree, and the Placement of the tree. • The Site rating is based on the general appearance and relative market value of the area. • The Contribution rating is based on the tree’s functional and aesthetic benefits such as screening or buffers, wildlife attraction, shade, noise reduction, or the mere beauty the tree provides. • Placement rating is based on how effective it is providing its functional and aesthetic attributes. For example, the placement of a deciduous tree (one that loses its leaves in the winter) to provide summer shade and winter sun is critical.

Factors in Plant Appraisals Location • The location rating is determined by averaging the Site, Contribution, and Placement ratings for the tree. • Location rating = Site (.80) + Contribution (.70) + Placement (.60)/3 = 70 percent

Replacement Cost Method • Used when a tree is considered to be of replaceable size. • In most cases, based on the cost of installing the largest commonly available transplantable nursery tree. In the south, the largest commonly available transplantable nursery tree is 3 to 4 inches in caliper (diameter at 6 inches above ground). There are exceptions. • Need to determine Installed Plant Cost, which includes the costs of the tree and its installation.

Replacement Cost Method • Installation costs include cost of transporting plant to the site, planting it, maintenance and guarantees. The Guide says “Historically, the cost of installation was usually considered to be two to three times the cost of the tree”. • Actual installation costs on large projects is 1x or ½ cost of replacement tree. • Installed Plant Cost is adjusted by species, condition, and location ratings to obtain Adjusted Installed Plant Cost. • Removal and clean up costs should be added.

Cost of Repair Method • Used for damaged plants whose quality could be returned to near its pre-damaged condition by proper treatment (pruning, fertilization, etc.). • Pre-damaged value should be determined using Replacement Cost Method or Trunk Formula Method. • Can have a partial appraised value loss.

Replacement & Repair Cost Method - Example • 7 “ caliper river birch (multi-trunked) damaged by roofer (15 % crown loss) • Wholesale tree cost = $1,200 x 2 = $2,400 (retail tree cost) • Installation cost = 2 x $2,400 or $4,800 • Installed cost or Basic Cost = $7,200 • $7,200 x 1.0 (Species) x .80 (Condition) x .80 (Location) = $4,608 (Appraised Value) • $4,610 x .15 = $690 + $150 (pruning or cost of repair) = Total appraised value loss of $840

Modified Version of Replacement Cost Method • Used in cases where there has been extensive loss. • Provides a more “reasonable” value for cases involving significant number of trees. • I use installed cost of a 3 inch replacement tree and use incremental increases for larger trees.

Modified Version of Replacement Cost Method - Example • 3 inch replacement tree - $66 x 7.1 square inches = $469 x 3 (installation) = $1,407 installed cost • $469 per diameter inch increments • 27 inch white oak – Basic cost = 27 inches x $469 = $12,663 • $12,663 x .9 (species) x .7 (condition) x .7 (location) = $5,584 (appraised value)

Cost of Cure Method • Used where extensive damage has occurred and where plants and landscape can be brought back near to its pre-casualty condition. • Uses small tree installed replacement costs and compounds by number of years to parity using current interest rates.

Cost of Cure Method - Example

Trunk Formula Method • Commonly used to appraise the monetary value of trees considered too large to be replaced with nursery or field grown stock. • Determination of the tree value is based on the cost of the largest commonly available transplantable tree (LCATT) and its cost of installation, plus the increase in value due to the larger size of the tree being appraised. • Values are then adjusted by species, condition, and location.

Trunk Formula Method • A Unit Tree Cost is calculated to establish a dollar value on each square inch of cross sectional area at 4.5 feet on the trunk. • The Guide says Unit Tree Cost can be calculated by using wholesale tree cost, retail cost, or installed cost (huge difference between these 3!!). • Southern Chapter ISA recommends using retail tree cost.

Trunk Formula Method • A Basic Tree Cost is calculated by multiplying the appraised area increase by the Unit Tree Cost and adding the Installed Replacement Tree Cost.

Trunk Formula Method - Example • Tree species – Live oak • Tree DBH – 15 inches • Replacement Tree Size – 3 inch caliper • Replacement Tree Area – 7.1 square inches (.785 x 3²) • Replacement Tree Cost - $270 • Installed Replacement Tree Cost - $810 ($270 replacement tree + $540 installation cost) • Unit Tree Cost - $38/square inch ($270 replacement tree cost ÷ 7.1 in² replacement tree area = $38) • Appraised Trunk Area – 177 square inches (0.785 x DBH ²) • Appraised Trunk Area Increase – 169.9 square inches (Appraised Trunk Area of 177 square inches minus Replacement Tree Area of 7.1 square inches)

Trunk Formula Method - Example • Basic Tree Cost - $7,266 (Unit Tree Cost of $38 per square inch x Appraised Trunk Area Increase of 169.9 square inches = $6,456 + Installed Replacement Tree Cost of $810) • Appraised Value - $7,266 (Basic Tree Cost) x 1 (Species Rating) x .84 (Condition Rating) x .85 (Location Rating) = $5,188 • Note - $540 installation cost was calculated based on two times the cost of the replacement tree.

Appraised Values Should Be “Reasonable” • 9th Edition emphasizes reasonableness. • Recommends that market value of property should be considered in analyzing the contribution of the landscape. • Implies that all trees and other landscape plants should be no more than 20 percent of the market value of the property. • Every appraisal situation is different and the 20 percent rule does not always hold.

Field Work and Working With Remains of Trees • Tools and equipment – D-tape, yardstick, camera, 100 foot tape, spray paint, compass, field report forms, clipboard, survey flags, flagging tape, numbered metal tags, etc. • Remains can include entire tree, stump, stump hole, parts of tree, photos of trees before damage or removal, or no remains. • With little or no remains, need to rely on information provided by homeowner/landowner. • Sample plot representative of “affected area” can be used when there are no remains.

Examples of Recent Tree Appraisals CASE #1 • Automobile hit and uprooted 9 inch DBH red cedar in homeowner’s front yard • Used Trunk Formula Method • Appraised Value Loss was $3,260 ($2,960 appraised value plus $300 removal and clean up costs

CASE #2 • Utility company destroyed and damaged trees in a wooded area in the rear portions of 3 homelots in an upscale metro Atlanta subdivision • Conducted 100 percent tally of destroyed and damaged trees (108 trees 1” – 34” DBH) • Used Trunk Formula and Replacement Cost methods • 71 trees considered destroyed and 37 trees damaged • Total appraised value loss - $34,090

CASE #3 • 7 acre Tract in Morgan County • Couple purchased for homesite • Logger cut 130 trees (6” – 28” DBH) on 5 acre wooded portion • Forester determined timber value at $3,200 • Modified version of Replacement Cost Method Used to determine appraised value of trees • Appraised value of destroyed trees - $47,700

CASE #4 • 8 Acre Homesite in Gwinnett County • Developer bulldozed and chipped approximately 200 trees ( 2” – 18” DBH) over 850’ x 15’ swath (.3 acres) • No remains of trees to measure (tallied trees within 8 feet on both sides of swath) • Pulpwood value less than $1,000 • Appraised value of destroyed trees - $23,300 • Awarded $23,300 – out of court settlement

Tree Appraisal Methods in Urban Forestry Management