As a result of the understaffing in realty and the lack of sufficiently trained personnel, land cases backlogged, land records were neither set up nor maintained, and there was disregard for any form of administrative procedure in recording and handling requests for land transactions. As a result, the current, partially, Government staffed realty branch and the United States Government are occasionally placed in a somewhat embarrassing position. In order to continue the present enterprise form of operation, it would be necessary to increase the fees 150 percent to pay the salaries of the 2 employees. If such were to be done, the United States Government would be burdened with trespass action and other management difficulties, the expense of which would far exceed the cost of paying the salaries of the enterprise employees from gratuity funds.

The tribal council or the area office have not been instructed to turn real-estate operations over to the Bureau; however, for good administrative procedure, personnel relations, and general good will it would appear that single sponsorship rather than dual sponsorship of such a function as realty operations would be a better arrangement. There are definite policy, procedure, and regulations that have to be followed, for the protection of the landowner as well as the Government, in consummating any land transaction. In fulfilling the requirements of completing a transaction, the unbiased approach promotes good will from the public with which realty personnel has to deal. Government employees have definite behavior patterns they must follow as well as the obligations such personnel have to their work and to the Government. Consequently, their effectiveness by training and moral obligations to their employer enables the work to be carried out more expeditiously and economically. It is, however, commendable of the tribes to expend their funds and manpower in helping support the functions associated with the branch of realty when this service is a United States Government responsibility as trustee.

Sincerely yours,

CHARLES S. SPENCER, Superintendent.

80451-58-23

DISPOSALS-REMOVAL FROM INDIAN BUREAU JURISDICTION BY PLACING OF UNRESTRICTED FEE-SIMPLE TITLE IN OWNERS

RESOLUTION No. 807 OF THE GOVERNING BODY OF THE CONFEDERATED SALISH AND KOOTENAI TRIBES OF THE FLATHEAD RESERVATION, AN INDIAN CHARTERED CORPORATION

Authorizing the purchase of the so-called. 1920 allotments located within the established timber units on the Flathead Reservation

Whereas there are now some 517 of the 1920 allotments comprising about 76,000 acres scattered throughout the currently established timber units, all of which units are described in the approved forest management plan; and

Whereas it is highly desirable that these allotments, many of which are in multiple heirship status, be purchased by the Flathead Tribes to protect such lands from alienation, and to provide for the unified ownership of these lands for the sustained production and conservation of the timber and grazing resources of the Flathead Reservation; and

Whereas such purchase of the scattered allotted lands which are interspersed with tribal timberlands will provide for the effective management and operation of the established timber units in a perpetually productive manner for the benefit of all members of the Confederated Salish and Kootenai Tribes: Now, therefore, be it

Resolved, That the Council of the Confederated Salish and Kootenai Tribes of the Flathead Reservation, in special session assembled, on January 8, 1955, at which nine members are present:

1. Authorizes the purchase for tribal ownership all of the 1920 allotments located within established timber units, providing the allottee owners are willing to sell.

2. The rates to be paid for such lands shall be in accordance with the minimum rates proposed in the appraisal paper entitled "Proposed Method of Appraising Cutover Allotments, Flathead Reservation"; prepared by regional forester, Thomas L. Carter, dated December 31,1952, except that higher rates may be applied in individual cases where unusual values may justify higher rates. A copy of such appraisal paper is attached and made a part hereof.

3. All mineral rights shall be included in such purchase.

4. No grantors fees shall be charged allottees in the negotiation of such purchases.

5. The area director is requested to disapprove all fee patents and/or supervised sales of allotments within the purchase areas covered by this program during the operation of such program, and should supervised sales be initiated following the close of the purchase program, it is requested that the tribe be allowed the privilege of meeting the high bids in such sales.

6. The purchase program shall proceed in an orderly and progressive manner; all allotments which are for sale shall be purchased in area No. 1 on the attached map first, the allotments in area 2 shall be purchased next, and so forth, by areas as progressively numbered on the map. Exceptions shall be made to this progression in cases where allottees who are indebted to the tribe, or who own key tracts, desire to sell their 1920 allotments.

7. The exchange of tribal lands outside timber areas for 1920 allotted lands within timber areas may be made in accordance with established procedure.

8. It is desirable to use local tribal funds reimbursed by Treasury funds as authorized by Resolution No. 802, dated September 24, 1952, which funds will be used for the purchase of the 1920 allotments. A voucher will be prepared by tribal officials describing the land purchased and the amount to be paid for each tract. Vouchers will be filed for a permanent record.

CERTIFICATE

The foregoing resolution was on January 8, 1953, duly adopted by the Tribal Council of the Confederated Salish and Kootenai Tribes of the Flathead Reservation, Mont., by a vote of 9 for, 0 opposed and 0 not voting, pursuant to authority vested in it by section 5 (B) (E) of the corporate charter of the tribes, ratified by the tribes on April 23, 1936, issued by the Secretary of the Interior on April 21, 1936, pursuant to section 17 of the act of June 18, 1934 (48 Stat. 984).

PROPOSED METHOD OF APPRAISING CUTOVER ALLOTMENTS, FLATHEAD RESERVATION It is recommended that the timber values on the cutover aloltments which the tribe proposes to purchase be appraised on the basis of capitalization of a permanent periodic income. Since the property is being operated under a sustained-yield plan of management to yield a cut every 60 years, the nature of the problem is to determine the present worth of individual tracts (allotments), at a definite rate of interest, of a permanent series of income payments.

A generally accepted formula for computing the present net worth of timber stands in similar circumstances is stated as:

a

C=

(1.0p '-1)

In this formula:

C=present capital value

a=periodic payment

'Interval between payments

p=interest rate

The amount of the periodic payment is the market value of the timber which can be harvested at the end of each 60-year period, and since it is difficult if not impossible to predict unit values that far into the future, common practice is to apply present unit values to the estimated future volume. If acceptable to all parties concerned it can be reasonably and conservatively assumed that on the average timbered allotment on the Flathead Reservation the annual net increment will be 100 feet board measure per acre. By obtaining the volume in this manner the net amount of which is 6,000 feet board measure we can multiply this volume by the current average contract price per thousand feet and obtain "a" in the formula.

❝t" in the formula is 60 years, because the approved management plan for the Flathead Reservation provides for a 60-year cutting cycle.

The interest rate most comomnly used is 5 percent. This value, if acceptable, would be substituted for "p" in the formula.

The present average contract price per thousand feet for all species combined is about $20.

Substituting in the formula, then we have:

$6.79=

120

(1.05 -1)

=Present per-acre value of the land for timber production on a managed sustained-yield plan of operation.

In addition to the timber production value these lands have a value for grazing use. Since there is an average annual return of about 15 cents per acre, and the return or income from grazing being an annual payment, it is suggested that the average income from this source be capitalized at 5 percent1 to obtain the value of the land for grazing purposes. Calculating the grazing value on this basis we obtain a per-acre value of 0.15/.05, or $3 per acre.

Taking the timber production value together with the grazing value, the total average value of these lands is indicated to be $6.79 plus $3, or $9.79 per acre. Providing this average appraisal can be applied to all of the land to be purchased by the tribe the entire procedure will have been tremendously simplified. The timber value should be applied to those areas within the allotments which are classified as commercial timberlands according to the timber type map which is available. The rate for grazing value should be applied to the entire acreage of each allotment, except in rare cases where there may be barren lands or lands inaccessible to livestock.

The rate of 5 percent is generally accepted by appraisers for capitalization purposes. This is the rate used by Henry T. Murray, Missoula, in his appraisal of rangelands on the Wind River Reservation, Riverton withdrawal area.