Statement on Land Valuation.

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A decision made on (09/11/2006) regarding Statement on Land Valuation.

Subject:	Statement on Land Valuation
Decision Reference:	MD-PH-2006-0094	Exempt clause(s):		None
Type of Report: (oral or written)	Written	Person Giving Report (if oral):		E Le Ruez
Telephone or e-mail Meeting?	N/A	Report File ref:		50/P/2
Written Report – Title	Statement on Land Valuation	Written report - author		E Le Ruez
Decision(s): 1. In 2005 the States approved P93/2005 (“States of Jersey Property Holdings: establishment”), which set the foundations for creating the new Property Holdings Department. The report accompanying the proposition included the following statements : “…All organisations, both commercial and ‘not for profit’, must make best use of their property to realise both a financial return and to ensure that services are delivered efficiently and effectively. The States of Jersey is no exception….” “…The States has agreed a Strategic Plan which sets out the continuing development of our economy.…The States property is a valuable commodity which should be used to support and underpin the States Strategy. The current administrative approach must be changed into a more entrepreneurial and innovative approach which ensures that the best use is made of all property…” “….maximise and implement opportunities for cost reduction and for extracting capital from the portfolio…” During June 2006, as part of the Strategic Plan, the States approved the Property Plan which also set down the aims of the Department as including : “….the extraction of optimum benefit from property assets…” and stated that : “…A change in emphasis, with greater focus on the value of property, will be vital…” It is thus very clear that the new Property Holdings Department, reporting to the Treasury and Resources Minister, has a duty to extract the optimum benefit from the Public’s property assets. This view is reinforced by the recently published report of the Comptroller and Auditor General on the 2007 Property Business Plan. The Report supports the Plan for 2007 and draws attention to the need in the next plan to examine in more detail the States use of property, particularly office space, where opportunities exist to improve efficiency. States departments should be mindful that from 2008 Property Holdings will be introducing charges which reflect the true value of the property being used. This alone should bring about a greater efficiency in property use, in that departments will be under some pressure to return a property asset to Property Holdings if the property remains funded from their budget but is not providing any useful service. As Assistant Minister, Treasury and Resources, with delegated responsibility for property, I wish to remind those both within the States organisation, as well as outside, that the full value of land must be recognised. This policy has been required for quite some time, and as noted above, was re-affirmed earlier this year. The Property Management section of Property Holdings regularly negotiates with private landowners over the grant of wayleaves and rights of access as well as resolving boundary issues and buying and selling land. Anyone seeking such agreements is strongly advised to contact the Department at the earliest opportunity They should be aware that no proposal involving Public land (or access through such land) should be taken for granted and that full market value is likely to be charged. This will include projects for domestic housing, commercial, or other general purposes. Such charges are generally levied on the number of units of any development. The greater the number of units, the greater the charge. The States have asked for a new approach to how the Public deal with property, and part of that approach is to extract value from property and related transactions as they arise. It is no longer the case that the Public will find it acceptable to receive a lower value than a private individual would require in most property transactions. There may be economic benefits that are derived from tourism, agricultural or charitable projects which require a different approach. However these will be dealt with on a case by case basis, and for tourism and agricultural will likely require the support of the Economic Development Department. For example, should the situation arise whereby a development is dependent upon gaining access across land controlled by the Public, the value of that land will be higher than the value assessed for ordinary wayleave agreements. Customary practice in such situations is to arrive at a valuation through negotiation, however for the avoidance of doubt, where a development is not possible without the sale of land or grant of right of way (including for access to services) to a prospective developer, the developer can expect to be charged a significant proportion of the anticipated profit from that development. For the avoidance of doubt such States land may include, but not exclusively be restricted to, footpaths, fields, car parks, and sundry strips of land. It will generally not include direct access into a main road to access mains services, provided that the works are reinstated to the satisfaction of the Department, and provided that the Department has been notified significantly in advance of such works. However the onus is placed on the developer to contact the Department to identify whether proposed works do cause valuation issues. 2. Under Standing Order 168 (1) (a) and 168 (3) the Minister for Treasury and Resources hereby notifies the States that he has accepted the recommendation of Property Holdings to agree to the above statement.
Reason(s) for decision: Under Standing Order 168 (1) (a) and 168 (3) the Minister is required to notify the States of his acceptance of recommendations in respect of the disposal, acquisition, letting or renting of land on behalf of the public of Jersey.
Action required: The Director of Property Holdings to circulate the statement.
Signature: (Assistant Minister)[1] Deputy J Le Fondré			Date of Decision: MD-PH-2006-0094 09/11/06

Statement on Land Valuation.

PROPERTY HOLDINGS

REPORT TO MINISTER

STATEMENT ON LAND VALUATION

In 2005 the States approved P93/2005 (“States of Jersey Property Holdings: establishment”), which set the foundations for creating the new Property Holdings Department. The report accompanying the proposition included the following statements :

“…All organisations, both commercial and ‘not for profit’, must make best use of their property to realise both a financial return and to ensure that services are delivered efficiently and effectively. The States of Jersey is no exception….”

“…The States has agreed a Strategic Plan which sets out the continuing development of our economy. The States property is a valuable commodity which should be used to support and underpin the States Strategy. The current administrative approach must be changed into a more entrepreneurial and innovative approach which ensures that the best use is made of all property…”

“….maximise and implement opportunities for cost reduction and for extracting capital from the portfolio…”

During June 2006, as part of the Strategic Plan, the States approved the Property Plan which also set down the aims of the Department as including:

“….the extraction of optimum benefit from property assets…”

and stated that :

“…A change in emphasis, with greater focus on the value of property, will be vital…”

It is thus very clear that the new Property Holdings Department, reporting to the Treasury and Resources Minister, has a duty to extract the optimum benefit from the Public’s property assets.

This view is reinforced by the recently published report of the Comptroller and Auditor General on the 2007 Property Business Plan. The Report supports the Plan for 2007 and draws attention to the need in the next plan to examine in more detail the States use of property, particularly office space, where opportunities exist to improve efficiency.

States departments should be mindful that from 2008 Property Holdings will be introducing charges which reflect the true value of the property being used. This alone should bring about a greater efficiency in property use, in that departments will be under some pressure to return a property asset to Property Holdings if the property remains funded from their budget but is not providing any useful service.

As Assistant Minister, Treasury and Resources, with delegated responsibility for property, I wish to remind those both within the States organisation, as well as outside, that the full value of land must be recognised. This policy has been required for quite some time, and as noted above, was re-affirmed earlier this year.

The Property Management section of Property Holdings regularly negotiates with private landowners over the grant of wayleaves and rights of access as well as resolving boundary issues and buying and selling land.

Anyone seeking such agreements is strongly advised to contact the Department at the earliest opportunity They should be aware that no proposal involving Public land (or access through such land) should be taken for granted and that full market value is likely to be charged.

This will include projects for domestic housing, commercial, or other general purposes. Such charges are generally levied on the number of units of any development. The greater the number of units, the greater the charge. The States have asked for a new approach to how the Public deal with property, and part of that approach is to extract value from property and related transactions as they arise.

It is no longer the case that the Public will find it acceptable to receive a lower value than a private individual would require in most property transactions. There may be economic benefits that are derived from tourism, agricultural or charitable projects which require a different approach. However these will be dealt with on a case by case basis, and for tourism and agricultural will likely require the support of the Economic Development Department.

For example, should the situation arise whereby a development is dependent upon gaining access across land controlled by the Public, the value of that land will be higher than the value assessed for ordinary wayleave agreements. Customary practice in such situations is to arrive at a valuation through negotiation, however for the avoidance of doubt, where a development is not possible without the sale of land or grant of right of way (including for access to services) to a prospective developer, the developer can expect to be charged a significant proportion of the anticipated profit from that development.

For the avoidance of doubt such States land may include, but not exclusively be restricted to, footpaths, fields, car parks, and sundry strips of land. It will generally not include direct access into a main road to access mains services, provided that the works are reinstated to the satisfaction of the Department, and provided that the Department has been notified significantly in advance of such works. However the onus is placed on the developer to contact the Department to identify whether proposed works do cause valuation issues.

Statement Prepared By: Eric le Ruez

Director of Property Holdings