Z'Berg-Warren-Keene-Collier Forest Taxation Reform Act of 1976

This complex act^[8] made numerous revisions to the assessment and collection of taxes for timber and timberlands. Its primary features include: creation of the Timberland Preserve Zone (TPZ), where only timber production along with certain compatible uses are allowed, and a shift of tax collection of timber taxes by the State (Board of Equalization), based on regional (market area) timber values.

Creation of the TPZ is by contract between a county and an individual timberland owner. Although the owner agrees to restrict his development of forestland to certain limits, the county must then tax the land based on its productive capacity. The "highest and best use" concept of valuation, based on sales of nearby lands, has been abandoned. Abandoning this concept relieves the landowner from the pressures of a tax spiral simply because adjacent owners might sell at a high price.

The tax shift on timber from the standing tree (inventory) to the cut log (yield) allows the timber owner to pay taxes at the time when a cash flow is created. Particularly for private, non-industrial owners, the inventory tax often forced liquidation of timber in order to provide sufficient funds to avoid tax delinquency. Owners can now "play the market" by attempting to sell at perceived high demand (and price) periods while retaining inventory during the low demand periods.

Collection of property taxes has long been a function of local county assessors and tax collectors. The act removed value determination from the local level and placed it with the State Board of Equalization. The Board of Forestry determines average timber values twice yearly, based on transactions within defined market areas of the state. Funds are distributed to counties based on tax collections during past years.