Alma Investments Limited v Chief Executive, Department of Natural Resources and Mines
[2001] QLC 58
•22 June 2001
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BRISBANE
22 June 2001
Re: Appeal against general valuation
Valuation of Land Act 1944
Valuation Roll No: 40264
Local Government: Pine Rivers
(V99-312)
Alma Investments Limited
v.
Chief Executive, Department of Natural Resources and Mines
D E C I S I O N
Background
This matter relates to land at Whitehorse Road, Dakabin, and described as Lot 504 on RP 903815, Parish of Redcliffe. The subject land has an area of 2,086 m² and is located near the intersection of Marsden Road and Whitehorse Road in the newly developing Alma Heights estate. Good access is available from Whitehorse Road which is a two lane bitumen sealed carriageway with earth verges and gutters. The subject land is zoned “Residential A” under the Pine Rivers Shire Council (the “Council”) Town Plan, as amended, on 7 May 1998, effective at the date of valuation of 1 October 1998. Normal utility services are available. The key issues are the use of the land, the impact of planning restrictions and comparison of sales.
On 24 March 1999 the Chief Executive issued a valuation of the subject land at $78,500. Following an objection the Chief Executive amended that figure to $72,500 on 15 June 1999. The appellant has appealed claiming the unimproved value should more properly be $30,000. At the hearing on 28 March 2001 the appellant was granted leave to amend that figure to $35,000, which is the amount now claimed.
Eric Gordon Oxenford, Director, appeared and gave evidence for the appellant. Mr D Grealy, counsel of Crown Law, appeared for the respondent, calling evidence from Gavin John Dunn, the departmental registered valuer responsible for determining the valuation.
The Evidence:The Impact of Planning -
While the subject land is zoned Residential A, the Alma Heights Estate is being developed under a rezoning agreement of 29 November 1991. The appellant acquired the entire land subject to that agreement on 28 November 1995, and has a contractual responsibility to complete certain works external to the site as part of that deed of agreement.
The subject land is also impacted by the Kallangur Commercial Development Control Plan No. 6 of 14 May 1988, and is subject to a consent approval of 30 May 1996 by the Council for a child care centre, subsequently extended on 29 February 2000, until 30 May 2002. Works required under the consent approval are insured by a bank guarantee of $5,000 ( Clause 27 of the consent order). The subject land is vacant.
Accelerated approval of the plans of subdivision of the child care centre was only approved by Council on the agreement of the bank guarantee to complete the external works. Ongoing subdivisional approvals of the adjoining residential inglobo lands have proceeded in accordance with the deed of rezoning agreement. The child care centre site is also bound by that agreement, particularly in respect of Clauses D, 4(b), 7 and Item 6 of the Schedule of Conditions, Annexure B.
Mr Dunn argues that the consent order relates specifically to the approval of the child care centre, and not to the rezoning of the land. However Mr Oxenford argues that should the child care centre not proceed, then the Council would seek another guarantee from the appellant that the external works covered in the child care centre consent order, would be provided elsewhere by the appellant. Mr Oxenford’s views were later supported by a statement from consultants, confirming the legal responsibility of the appellant to complete the external works as specified, or to reassign them to a new owner.
Mr Dunn has interpreted notings on the Council file of the property, which led him to understand that there would be some opportunity for a potential future owner to develop the land for a residence under the current zoning of Residential A. It was Mr Dunn’s view in such circumstances that if such a scenario was possible, then the only further cost to an owner, once the current permit had expired, would result in his losing the $5,000 bank guarantee. Mr Oxenford rejects that opinion.
The question needing to be answered in such a scenario is whether the external works set out in the deed of agreement would relate only to a child care centre, or would similar conditions also relate to the subdivision of residential lots on the subject land.
The Use of the Land -
It is agree by Mr Oxenford that the subject land is still being marketed as a site for a future child care centre. Both parties agree that its highest and best use would eventually be as a child care centre, but there is difference in respect of the potential use for that purpose at the relevant date.
Mr Oxenford argues that changes to the Commonwealth Government’s policy on child allowance payments in 1995/96, have tended to dramatically reduce the market for child care centres. With tightening of eligibility for financial support, there is now a reduced demand, and it is accepted that without Government subsidy most child care and aged care centres in Australia are not viable. Mr Oxenford advises that his industry advice reveals that before Government approval for a registered child care centre will proceed, there must be a perceived demand in the locality. That demand is currently assessed at about 300 children aged under 5 years in order to support a 75 place child care centre, which is proposed for the subject land.
To support his conclusion that demand does not exist for a further centre at Dakabin, Mr Oxenford provides statistical records from the Government Statistician revealing 1,403 children in the adjoining area of Kallangur in that age bracket. He notes also that Dakabin is included separately in a large area extending from Dayboro to Everton Hills with a population of 2,586 children of age less than 5 years. Mr Oxenford argues those statistics support a maximum of four to five child care centres for the area, of which there are already five in operation, as well as two others in adjoining centres. He notes the number of children between 1996 and 1999 had declined, supporting lack of demand for further child care centres. Mr Oxenford notes that the subject land as a child care centre was created by rezoning approval by Council, and not as a result of market demands.
In seeking an alternative use for the subject land, Mr Oxenford argues that the land could be converted back into single residential sites, subject to satisfactorily negotiating with Council over the external works requirements. Mr Oxenford sees scenarios for such a strategy, involving either use as a large single residence of 2,086 m², or subdivision into two new smaller parcels. He argues however that in either of those options the development of the external works at an estimated cost of about $54,000 would be required before Council released any owner from responsibility under the deed of agreement.
In assessing the likely cost of completing the external works, I note that it was subsequently agreed by the parties that, if the adjoining shopping centre site and the child care centre were developed concurrently, then the relevant engineering fees for the child care centre would be $6,000, of a total combined engineering fee of $17,500. Making that adjustment to the estimated cost of the external works at the child care centre, would result in $50,000 (rounded).
Mr Dunn argues that the survey costs in any further subdivision would represent $2,000, with the additional application fees, water and sewerage costs, reflected in the additional $4,000 to subdivide the land.
Mr Oxenford estimates the value of the land in its current state as follows:
| One Parcel | Two Parcels |
| Large lot, $75,000 to $80,000 | Total $95,000 (two lots) |
Allowing for variations in cost, Mr Oxford argues that the land component is no more than $35,000. However Mr Oxenford notes that in order to realise a residential use it would be necessary to seek further Council approval, as well as complete additional sewerage and water connections as house sites. Mr Oxenford argues that the estimated current land value of $35,000 equates to his current inglobo land component for the adjoining lands at $12,000 per lot for 700 m², with a subdivisional approval in place. If the land component of $17,000 per lot is added to the development cost of $27,000 per lot, then the asking price of $44,000 per lot approximates the current selling prices.
While Mr Dunn concedes that at the relevant date a child care centre probably was not the best use of the subject land, he notes that in Petrie there are in fact three centres within 500 metres of each other. It is noted that Petrie had a relevant child population of 749 (1996) and 631 (1999). However there was no evidence of the economic viability of that area, or indeed the catchment area of its clientele.
Comparison of Sales -
To support his estimate of direct comparisons with sales of vacant sites for child care centres, Mr Oxenford provides the following:
·(Mango Hill – North Lakes) This is for a 93 place child care centre which is to be shared on an after hours basis as a community centre. The consideration for lease as a community centre was unknown, but thought to be about $10,000 per annum. Mr Oxenford concedes that it is planned for a community centre adjoining the subject land, but the development is subject to finding by the Council, and there are currently no plans for its development. The sale had an area of 3,000 m², and sold for $300,000 ($100 per m²) in August 1999. The sale is seen as superior to the subject land, as the staging of the overall North Lakes development is seen to guarantee child numbers adequate to meet licensing requirements for the Commonwealth Government.
Mr Dunn is familiar with that sale but had considered the sale at $240,000 ($80 per m²). He agrees it is premature as a child care centre site at the date of sale, but notes that it is a late sale, well after the relevant date. Mr Dunn was also aware that planning at North Lakes makes provision for other child care centres near school sites in that overall planned community of 25,000 to 30,000 residents. However he notes that those extra sites are about 10 years in the future.
To support his direct comparisons with vacant sites, Mr Dunn provides the following:
·Sale 1 – (Ming Dynasty Court and Surround Street, Dakabin – Lot 40 on RP 903814). This is a level Residential A site of area 763 m² in the residential estate adjoining the subject land. The sale is affected by a drainage easement along the northern boundary, is lower in elevation, and seen as smaller and inferior to the subject land.
The sale sold in October 1997 for $48,950, was analysed at $47,500, and applied at $44,500.
·Sale 2 – (Ming Dynasty Court, Dakabin – Lot 41 on RP 903814). This adjoins Sale 1, has an area of 733 m², is similar to Sale 1 and is overall smaller and inferior to the subject land.
The sale sold in September 1997 for $50,950, was analysed at $49,950, and applied at $44,500.
·Sale 3 – (Beeville and Frenchs Road, Petrie – Lot 29 on RP 90367). This is a 2,127 m² Residential A parcel, located about 9.6 kilometres south of the subject land, and currently used as a child care centre. The sale generally is seen as superior, and sold in January 1992 for $150,000, was analysed at $148,000 ($69.60 per m²) and is now applied at $160,000 ($75.00 per m²).
·Sale 4 – (Arlington Drive, Arana Hills – Lot 102 on RP 865682). This is a 2,497 m² site zoned Neighbourhood Facilities, located about 43.5 kilometres south of the subject land, and currently used as a child care centre. Overall the sale is seen as superior to the subject land.
The sale sold in December 1995 for $295,000, was analysed at $293,000 ($117.34 per m²) and is now applied at $260,000 ($104 per m²).
·Sale 5 – (16 Reid Street, Petrie – Lot 2 on RP 982462 and 1074 Anzac Avenue, Petrie – Lot 4 on RP 809300). These two adjoining properties which were subsequently amalgamated, and used for child care premises, have access only to Reid Street. Overall the combined sale is seen as superior.
Lot 2, (1012 m²) sold in December 1992 for $115,000, was analysed at $119,000 ($117.59 per m²). Lot 4 (2,114 m²) sold in January 1993 for $130,000, and was analysed at $134,000 ($63.38 per m²). Overall the sale was analysed at $80.93 per m²).
·Sale 6 – (Brays Road, Griffin – Lot 2 on RP 806749). This is a 2,000 m² future urban parcel located about 2.4 kilometres east of the subject land. Only electricity is available, there is no water or sewerage available, and Brays Road is bitumen sealed with earth shoulders and gutters. Overall the sale is inferior.
The sale sold in June 1997 for $90,000, which was analysed at $86,000, and applied at $64,000.
In his estimate of the subject land based upon direct comparisons, Mr Dunn has estimated a rate of $60 per m² or $125,160. After allowing for the cost of offsite works at $53,160, Mr Dunn estimates a value for the subject land at $72,000. Mr Oxenford concedes that there is a small recovery in the child care market at the date of the hearing, but argues that at 1 October 1998 there was no market for the land as a child care centre.
Mr Dunn relies upon his Sale 6 only in as much as it relates to a large home site with no potential for subdivision, no water or sewerage, and which has been applied at $64,000. Mr Dunn argues that for an additional $8,000 of unimproved value the subject land has much higher potential, while still being a large homesite, but with the potential for connection to sewerage and water. Mr Oxenford sees no comparison with Sale 6, as he notes that parcel is not encumbered with an agreement to complete offsite works to a further $50,000. Mr Oxenford argues that any future buyer of the subject land would have to spend that extra $50,000 before he could build upon the land. Such conditions do not relate to Sale 6.
Mr Dunn argues that an analysis of sales of child care centres in Kallangur and Pine Rivers correlate closely to the Residential B market. He notes that while those values have not increased in recent years, they have also not decreased in value. However Mr Dunn agrees with Mr Oxenford that there have been no new child care centres built since about the time of change in the Government’s policy in 1995-96.
Decision:
The Impact of Planning –
On the evidence it is clear that the rezoning of the subject land to Residential A included conditions under the deed of agreement which contractually require the owner of the land to complete certain external works. Those works relate to the development of works defined in an approval to Keilar Fox McGhie Pty Ltd of 31 January 1991. The initial estate design for the rezoning identified residential parcels fronting Whitehorse Road, including the now subject land.
It was on the basis of the initial approval conditions that the Executive Council approved the rezoning to Residential A. Under those arrangements any final development of the subject land must ensure that the external works are completed to the satisfaction of the Council. There is therefore no scope for any future owner to merely allow the current consent permit for a child care centre to expire, and then to exercise as of right privileges for a Residential A parcel, without completing, or transferring responsibility to complete, the required external works.
The Use of the Land –
In assessing the highest and best use of the subject land, it is likely that its future strategic location adjoining the high school, shops, and a community centre would support a use as a child care centre. Indeed that was likely to have been the reason why the Council approved that purpose.
However it is widely held in the community that the economic viability of child care facilities tend to be dependent upon some type of Government support arrangements. If population numbers in the relevant age group do not satisfy certain criteria, any failure to register a child care centre by the Government, raises the risk for an operator making the centre viable. Mr Oxenford as a very experienced developer is conscious of that limitation, although he continues to market the subject land as a potential child care centre site.
If I am therefore to assess the unimproved value of the subject land at the relevant date as a child care centre site, then I must make allowance for the potential risk of lack of viability in the market place. The difficulty in such an exercise is that it is not merely subject to normal market forces of supply and demand, but is also influenced by the political vagaries of Government recognition.
If I then considered the alternative use as residential sites, I must also allow for fresh approvals by the Council, either as a single house site or in subdivision into two lots. On the basis of the highest return to the developer as a residential site, I believe the subdivisional approach that would be the most viable, would reflect a likely unimproved value of the land at $39,000.
Comparison of Sales –
If I then consider Mr Oxenford’s Sale 1 (North Lakes), I note that he has estimated the capitalisation of the lease for community centre purposes at $100,000, leaving a residual component of that sale for the land at $200,000 ($67 per m²). Mr Dunn’s knowledge of that sale reflects $240,000 ($80 per m²). Both agree that the sale is a premature site for child care purposes, and both agree that the sale is superior to the subject land.
If I then consider Mr Dunn’s Sales 3, 4 and 5 I find those are all old sales, prior to the change in Government policy. I also note that there have been no new sales in the area since 1995/96. I note the following comparisons at the relevant date of 1 October 1998:
| Sale | Unimproved Value | Comparison |
| 3 4 5 Subject | $75 per m² $104 per m² $80.93 per m² (analysed 1992) $60 per m² | Superior Superior Superior - |
On that basis there is nothing to discredit Mr Dunn’s rate of $60 per m² for a developed site as a child care centre, which is agreed to be premature at the relevant date.
On the basis of comparisons with Mr Dunn’s Sales 1 and 2, I accept those represent unimproved values for 700 m² residential lots in that locality, which indicate any future subdivision potential of the subject land for that purpose. The use of Sale 6 provides an interesting comparison. Mr Dunn sees Sale 6 as a comparable parcel in size, but with no potential for further development. By comparison he sees the subject land as of similar size, but with further potential for development. However in order to capitalise upon that potential the appellant must spend an additional $50,000.
If I consider the subject land as a large single home site at Mr Dunn’s applied figure of $72,000, then the subject land would have a value to the appellant of $72,000 plus $50,000 or $122,000 as a large single house site. However the market place indicates a value for residential land purposes of that size at $95,000. I believe the comparison with Sale 6 at more than $64,000 may sound logical, but it overlooks the fact that the subject land has an inbuilt factor for external roadworks etc that the marketplace is not prepared to pay at the relevant date. On that basis I believe the future potential as a premature child care centre is more likely to equate to the known external costs of that site.
Summary:In summarising this matter I believe the potential for the subject land as a future child care centre represents its highest and best value at the relevant date. That supports the appellant’s current anticipation of its potential. I am also reminded that Section 33 of the Act directs that the respondent’s valuation is deemed to be correct unless proved to the contrary. I also note that s.56(2) of the Act places the burden of proving his case upon the appellant. On the evidence I believe that has not been fully discharged.
Conclusion:
Having considered the whole of the evidence I am not persuaded that the appellant has proved his case. The appeal is dismissed, and the unimproved value of Lot 504 on RP 903815 in the sum of $72,500 is affirmed.
NG DIVETT
MEMBER OF THE LAND COURT
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