Download Unimproved Values of Contaminated Land

Unimproved Values of
Contaminated Land
Unimproved Values – Urban Valuation Policy 4.108
Legislative Authority
• Valuation of Land Act 1978
• Contaminated Sites Act 2003
Background
Contamination of land can result from either short or long term use of land for a range of
industrial, commercial and other activities. Contamination resulting from long term use of land can
pre-date current environmental and health legislation. It can also occur naturally.
The Valuer-General regards contaminated land as being land identified, recorded or described by
a state or local government authority as being contaminated or land which is commonly known to
be contaminated, where ‘contaminated’ has the same meaning as given in the Contaminated
Sites Act 2003.
The Contaminated Sites Act 2003 at Section 4(1) & (2) defines contaminated land as:
(1)
In this Act —
contaminated, in relation to land, water or a site, means having a substance present in
or on that land, water or site at above background concentrations that presents, or has
the potential to present, a risk of harm to human health, the environment or any
environmental value.
(2)
However, land, water or a site, or land, water or a site of a prescribed class or
description, is not contaminated where the regulations so provide.
Land which is contaminated may be at source (the source site) or instead may be an affected site
caused by migration, both terms defined in the Contaminated Sites Act 2003:
source site means a site —
(a) on which contamination; or
(b)
on which a substance,
has originated and from which it has migrated to another site (the affected site) causing, or
contributing to, contamination on that other site.
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affected site means a site on which contamination is caused, or contributed to —
(a)
by contamination; or
(b)
by a substance,
which has migrated to that site from another site (the source site);
Further information can be found at the Department of Environmental Regulation (DER) website
and in its publication “Assessment and management of contaminated sites – Contaminated sites
guidelines December 2014”.
Unimproved Value Defined
The Valuation of Land Act 1978 treats the determination of unimproved value differently
depending on whether land is inside or outside the Perth Metropolitan Region, a city or a town.
For land within the Perth Metropolitan Region, a city or any town it defines site value as follows:
site value of land means the capital amount that an estate of fee simple in the land might
reasonably be expected to realize upon sale assuming that any improvements to the land,
other than merged improvements, had not been made and, in the case of land that is reserved
for a public purpose, assuming that the land may continue to be used for any purpose for
which it is being used or could be used at the date of valuation;
For land located outside these districts and where the unimproved value is the capital amount of
an estate in fee simple and not based on a formula contained within the definition, it is defined as
follows:
the capital amount that an estate in fee simple in the land not including improvements might
reasonably be expected to realize upon sale.
Both definitions are similar with the major difference being the inclusion of merged improvements
in the determination of site value and their exclusion in assessing unimproved value for land
situated outside the Perth Metropolitan Region, a city or town. Aside from this difference, all other
improvements to land are required to be ignored under both definitions.
Where land is contaminated it must be considered to form part of the land regardless as to
whether it was a direct consequence of the use of the improvements on the land. So while the
assessment of site value requires an assumption that the improvements had not been made, it
does not follow that the contamination caused by them is also ignored.
Identification of Contaminated Land
Valuers making rating valuations are required to monitor the Contaminated Sites Database which
can be accessed via the DER website and should be aware of the 7 classifications and criterion
applying to land.
The Contaminated Sites Database records information on sites classified:
• contaminated - remediation required
• contaminated - restricted use
• remediated for restricted use
All other reported sites, including those awaiting classification, are recorded on the Reported
Sites Register which is not available online.
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Valuing Contaminated Land
Land valued for rating and taxing uses mass valuation techniques. Typically groups of ‘like’
properties having similar zoning and use are valued using standardised procedures at the same
time. Caution is needed when valuing land known to contain contamination and mass valuation
techniques are not preferred.
While the basic principles and methodologies applying to the valuation of contaminated land are
no different to those applying to mainstream non-contaminated land, greater care and more
investigation is required.
The decision as to how to treat land subject to contamination is of primary concern. When valuing
land subject to contamination, a first step is to establish whether it requires remediation now or in
the future and what the reasonable cost would be.
Some contaminates, depending on their location on or in the land, or if left undisturbed, may not
require remediation. It may be possible to develop the land without additional cost being incurred.
Others may be a direct and anticipated result of the current and continuing use of the land and in
these cases where there is a continuing use for an indefinite period, this may be considered the
highest and best use.
Land upon which contaminated and disused buildings, structures, hard stand, ponds and tailing
dams exist are to be valued on the basis that these items are not improvements to the land and
must be accounted for in the valuation. Similarly, when valuing vacant land to its highest and best
use, the full impact of the contamination, whether it is the removal, on site containment or in situ
treatment of the contaminates must be reflected in the valuation.
Policy
It is policy that when valuing land subject to contamination that:
1. Where land is in continued use for an indefinite period and the current permitted use can
coexist with the contamination as it does not pose an unacceptable risk, such use can be taken to
be the highest and best use of the land which should be valued on such basis.
2. Vacant land shall be valued to its highest and best use and the full impact of the
contamination, whether it is remediation by way of the removal, on site containment or in situ
treatment must be acknowledged and reflected in the valuation.
3. Land upon which disused contaminated buildings, structures, hard stand, ponds and tailing
dams exist are to be valued on the basis that these items are not improvements to the land and
must be accounted for in the valuation by reflecting the cost of removal and remediation of the
land.
4. Allowance may be made for stigma or market resistance attached to the site. This should be
considered on a case by case basis and not universally applied. Generally such allowance would
be expected to be modest.
5. The value may be adjusted where applicable for any additional administrative and reporting
burden associated with a ‘classified’ site compared to unaffected land. The allowance should be
realistic and not in excess of the real cost.
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Date of Most Recent Review
17 November 2016
Authorising Officer
Graham Jeffery
Valuer-General
LANDGATE
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ADDENDUM
Contaminated Sites Act – Schedule 1: Classification of Sites*
(*Contaminated Sites Act - Schedule 1, numbering in ‘classification’ added for reference).
Classification
Criterion
(1) Report not substantiated
A report under section 11 or 12 provides no ground to indicate
possible contamination of the site
(2) Possibly contaminated —
investigation required
There are grounds to indicate possible contamination of the site
(3) Not contaminated —
unrestricted use
After investigation, the site is found not to be contaminated
(4) Contaminated — restricted
use
The site is contaminated but suitable for restricted use
(5) Remediated for restricted
use
The site is contaminated but has been remediated so that it is
suitable for restricted use
(6) Contaminated —
remediation required
The site is contaminated and remediation is required
(7) Decontaminated
The site has been remediated and is suitable for all uses
Contaminated Sites Act – Section 3: Definition of “remediation”
“remediation” in respect of a site that is contaminated includes—
(a) the attempted restoration of the site to the state it was before the contamination occurred;
(b) the restriction, or prohibition, of access to, or use of, the site;
(c) the removal, destruction, reduction, containment or dispersal of the substance, causing the
contamination, or the reduction or mitigation of the effect of the substance;
(d) the protection of human health, the environment or any environmental value from the
contamination.
Potentially Contaminating industries, activities and land uses
Reference should be made to Appendix B of the “Assessment and management of contaminated
sites - Contaminated sites guidelines December 2014” which provides a comprehensive however
not exhaustive list of industries, activities or land uses with potential contaminates.
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