by Jack Nelson, Indiana Division of Forestry

These are not today's newspaper headlines of a South American country or emerging third world country, but instead could have been the lead story for the Indianapolis News some time around the turn of the century.

At the time of European settlement in Indiana, about 90% (approximately 20 million acres) of the land base was forested. Early explorers to our state talked about traveling for days under a continuous canopy of trees broken occasionally where a tree or trees had fallen. Even when Indiana received statehood in 1816, it was still almost entirely forested.

By the early 1900's, however, this pristine picture of Indiana changed dramatically! Charles Deam, Indiana State Forester noted in the 1922 Department of Conservation Annual Report "Indiana contains 22,402,502 acres. The yearbook of Indiana for 1917 credits the state with 1,664,886 acres of timberland. This area had shrunk in 1920 to 1,387,248 acres- an average annual decrease of 92,456 acres. Our area of timber in 1920 was a little over 6% of our area. Deam went on to say that at the present rate of clearing, Indiana would be treeless in 15 years. Something had to be done!

It is interesting to note that up until 1920, all land was taxed at the same rate. It did not matter if the property was identified as cropland, wasteland, woodland, pasture, or swamp, it was alt taxed the same. Property owners were almost forced into cutting their forests to convert them to either cropland or pasture.

By 1920, there was a movement afoot to develop a means to encourage woodland owners to keep their land in trees. In 1921, the Indiana legislature passed the Indiana Forest Classification Act (I.C. 6-1, 1-6). This Act encouraged proper timber management and watershed protection on private forests. The incentive for landowners to enroll their lands in the program was a reduction in property taxes. Property taxes on qualifying land was determined by assessing the land at $1.00 per acre then applying the county tax rate resulting in a 90% or more tax reduction.

The program requires that the eligible area be at least 10.0 contiguous forested acres. Woodlands may be either native forests containing at least 40 square feet of basal area per acre, or at least 1,000 timber producing trees (any size), per acre. Tree plantations with at least 300 well-established timber producing trees are eligible to be a Classified Forest.

Certain activities cannot take place on Classified Forest lands:

• Grazing by domestic livestock
• Building of houses, sheds, etc.
• Intentional burning unless prescribed under a written management plan
• Growing of Christmas trees

Other activities are allowed and encouraged when appropriate to meet the landowner's goals and objectives for the land. These activities, however, must not be conducted in a manner which is detrimental to the health and productivity to the forest or

its watershed. These include but are not limited to:

• Timber harvesting
• Construction and maintenance of access roads and trails
• Firewood cutting
• Horseback riding
• Hiking
• Hunting (mushrooms, ginseng, deer, turkey, etc.)
• Wildlife management

HOW TO ENTER THE PROGRAM

Contact the district forester servicing your county and indicate your interest in putting land in the program. An initial inspection of the woods will be done to determine whether it meets the eligibility requirements. A written management (stewardship) plan, which may be prepared by the district forester or by a consultant or industry forester, is required prior to application. The plan puts into writing the landowner's goals for the woodland, and prescribes how to reach those goals over the next 5 to 10 years. The plan is flexible, and may change as the landowner's objectives change over time.

The actual Classified Forest application must be taken to a registered land surveyor, who will write an exact description of the area being classified. This information can be taken from an aerial photo and the property deed. It does not require an on site land survey. The county assessor and state forester must sign the application, which must also include the notarized signature of the landowner(s). At this point in time the application document is ready to be recorded in the county courthouse where the land is located.

REINSPECTIONS & ANNUAL REPORT

By statute, the district forester or a representative will be out to look over the Classified Forest at least once every 5 years. The

Landowner is encouraged to go along on these re-inspections to ask questions of the forester and to review management objectives. The forester will review the woods and provide a written status report to the landowner.

Annually, the landowner will receive a newsletter and report from the district forester. The landowner is required to complete the report and return it to the district forester.

SELLING OR TRANSFERRING THE CLASSIFIED FOREST

Once forest land is entered into the Indiana Classified Forest Program, it is in for perpetuity. Therefore whenever the classified land is transferred to a new owner either through an outright sale, inheritance, or gift, the classified status remains with the land. If the new owner or current owner wishes to take land out of the Classified Forest program, they may be subject to the back taxes (up to but not to exceed 10 years) plus a 10% per year interest penalty.

Currently, Indiana has a little over 4.2 million acres of forest land; approximately 19% of the land base is in forest. Some 6,300 landowners are presently participating in the Indiana Classified Forest program with close to 400,000 forested acres (10% of Indiana's forest land) enrolled in the program. This is the oldest known forest tax incentive program of its kind in the United States.

I think we Hoosiers can take credit for turning things around! The once bleak forest outlook of the 1920's (with Indiana's forest base at 1.3 million acres) contrasts sharply with today, where we stand with over 4.2 million acres of forest land. This success is a tribute to us all. Programs like the Indiana Classified Forest Act hove contributed greatly to this land transformation.

Without going into much detail, Indiana currently has two property tax systems. One is for non-agricultural land (defined as commercial, industrial, and residential land), and the other is for those lands falling under the definition of agricultural land (cropland, pastureland, forestland, etc.), as such, all forestland receives favorable property tax status.

The lands enrolled in the Indiana Classified Forest program receive a further tax reduction based upon a reassessment at a fixed $1.00 per acre assessed value. The county/township tax rate is then applied to this $1.00 per acre assessed value resulting in the taxes due per acre. Based upon the prevailing tax court's decision, Classified Forests cannot be valued at the statutory (I.C. 6-1.1-6) rate of $1.00 per acre. Thus the tax incentive based upon $1.00 assessment as we know it will not exist.

I am sure that the State Tax Board and the legislative Property Tax Study Committee recognize the uniqueness of forest land and the Classified Forest program. The fact that the legislature has the authority to enact legislation to enable the State Tax Board to promulgate rules and regulations, creates an opportunity to continue some type of tax based incentive for the program. It will take the effort of you, the Indiana woodland owner/Classified Forest owner, contacting the governor and state representatives and encouraging their support of a tax based incentive program.

Let us hope that one of the newspaper headlines for the start of our new century will read something like; "Indiana Forest Land Acreage Continues to Grow"!