Jan O'Sullivan (Limerick City, Labour) | Oireachtas source

I also thank Senators Paul Coghlan, Maurice Cummins and Michael Mullins for introducing this Bill and raising important issues with regard to the treatment of car-parking spaces in the valuation of retail centres.

This Bill addresses a real concern that the Minister for Public Expenditure and Reform, Deputy Howlin, and I share with Senators on all sides of the House - that retailers in town centres are losing out to the large out-of-town shopping centres and retail parks. Indeed, we had an interesting discussion on Senator Landy and his colleagues' Private Members' motion in the Seanad at the end of last year. Many of the issues that are being raised here in the Seanad are important ones, particularly for towns around the country. From the point of view of my own brief - because this is largely the area of responsibility of the Minister for Public Expenditure and Reform, Deputy Howlin - we have been able to address some of the issues raised with regard to planning guidelines and guidelines for development contributions. Indeed, I will introduce a planning Bill later in the year. We will take on board some of the suggestions that arose both in the previous debate and in this one in so far as we can under my remit, but valuation is a matter that is under Deputy Howlin's remit.

Many feel it is the availability of a plentiful supply of parking, which is sometimes though not always free of charge, in these out-of-town locations that is attracting shoppers away from town centres where parking is restricted and sometimes costly. There may be a perception that businesses in the retail parks enjoy an advantage over their town-centre competitors and that this parking advantage is not reflected in their costs or rates. The provisions in this Bill aim to redress this to some extent, at least, by increasing the rateable value of retail properties with parking for customers.

The Commissioner of Valuation is completely independent in the exercise of his functions under the Valuation Act 2001. The Department of Public Expenditure and Reform has been in contact with the commissioner to clarify existing principles and practice and has confirmed with the commissioner the practical application of the Valuation Act in this area. Car parks are rateable properties under the Act. Many car parks charge for parking and many exist as a stand-alone enterprise not linked to any shopping centre or place of work. Where a charge is made for parking, the car park is valued and rateable in its own right, as Senator Coghlan said in his contribution. Some car parking facilities, whether multistorey or at ground level, carry significant valuations and rates liabilities.

In those shopping centres where there is no charge, the arrangement is often reflected in the terms of the retailers’ lease and the value of the car parking is subsumed into the rateable value of the retail units in that centre. This was stated by Senator Landy. The availability of parking will be reflected in a premium on the rent paid. Higher rents are reflected in higher valuations and rates payable. The availability of parking can be looked on in a similar way to any other amenity in an area. The location of a restaurant in an attractive part of a town or city will attract a higher rent than one in a less attractive area. Therefore, a retailer in an area with plentiful parking will more likely be paying a rent and rates that reflect the parking amenity. The fact that there are extra costs is outweighed by the attractiveness of the whole package available in one location versus another. The increased custom is most likely justifying any additional cost. This is a generalisation but the point is that any imbalance between locations will be reflected in the rental market for retail units. It is also reflected in the valuation of the property and, in turn, the rates liability on those units. The rateable value is dictated to a large extent by the rent paid, so market forces influence the rental and rates costs incurred in different locations. Over time, town centre locations should see a relative cost advantage. The point is that market forces are already influencing costs, and if costs can redress an imbalance these shifts in rental and rates costs are already a part of the system. I understand that the Minister, Deputy Howlin, does not believe we can or should try to redesign a valuation system which already reflects market changes to achieve specific objectives.

Valuation is a very specialised area. Valuation principles are tried and tested, in many cases in the courts. Any change that is made to valuation practice has to be carefully considered to ensure it is does not have wider implications for the valuation and rating systems. While conscious of the objectives of this Bill, the Minister is satisfied that the valuation system as it stands is fully cognisant of the value of car parking. He will consider the points being made in the debate today. I will relay to him what I have heard here. He will be reading Senators’ contributions.

While the valuation system reflects the value of car parking and the changes in the rental market, the policy is to ensure that valuations are as up to date as possible and reflect current market conditions. Senators will be aware that my colleague, the Minister for Public Expenditure and Reform, as the responsible Minister, is currently in the process of bringing forward the Valuation (Amendment) (No. 2) Bill 2012. Senator Byrne asked when it would proceed. I will raise that with the Minister.

The primary purpose of the Bill is to accelerate the national programme of revaluing every commercial and industrial property in the country that is being undertaken by the Valuation Office. The Bill amends several provisions contained in the Valuation Act 2001. These amendments include a number of technical changes to Part 5 of the 2001 Act, which deals with how valuations, including the revaluation of entire rating authority areas, are carried out. The Bill also proposes to amend Part 6, which deals with the carrying out of revisions of the rateable valuation of individual properties within rating authority areas between revaluations. Provision is also made for the commissioner to enter into an arrangement with a person or persons to assist in the performance of the revaluation function. The effect of this provision is to enable the commissioner to contract out some of the revaluation work in order to augment the in-house capacity of the Valuation Office. This is one of the express provisions intended to assist the acceleration of the national revaluation programme. I understand that following enactment of the Bill, the commissioner intends running a pilot revaluation project which will utilise such external resources.

Following enactment of the Bill, it is envisaged that revaluation projects can continue to be conducted through the normal direct assessment methodology. However, the Bill also provides for the commissioner to conduct a revaluation using elements of self-assessment by ratepayers. This provision is also intended to assist the acceleration of the national revaluation programme, and I understand that, following enactment of the Bill, the commissioner intends running a pilot project which will utilise self-assessment principles. The Bill proposes to amend the 2001 Act by providing for the use of general market data or aggregated data, including statistical and computer-aided techniques, in determining valuations where the commissioner considers it appropriate to do so.

The Bill provides for streamlining of the appeals process. Under the Valuation Act, there is an opportunity to make representations before the final certificate is issued. There can be an appeal to the commissioner after the final certificate is issued and his decision can be appealed to the Valuation Tribunal and the High Court. The Bill will extend the period for representations to the commissioner and remove the appeal to the commissioner, which will streamline the representation and appeals process. Preparations for the return of this Bill to this House for Committee Stage are well advanced. I will try to obtain something more specific on that for Senators.

The national revaluation programme will be advanced as quickly as possible, and this is a priority for the Government and part of its Action Plan for Jobs. It will provide up-to-date valuations on which to base rates and greater equity and uniformity to commercial ratepayers. Not every business will see a reduction in its liability as a result of the revaluation because the shift in value is dependent on relative movements of property values. Local authorities will still have to raise the money they need for the services they provide.

Significant progress has been made on the national revaluation programme. The Valuation Office issued over 26,000 final valuation certificates for Dublin city and the three local authorities in Waterford in December 2013. Certification for South Dublin, Fingal and Dún Laoghaire-Rathdown authorities was completed previously, while that for Limerick city and county will be completed in 2014. When the revaluation of the Limerick authorities is completed, 55,700 properties will have been revalued. This equals one third of commercial properties numerically and 55% in terms of value. While there has been good progress recently on the revaluation programme, this momentum needs to be maintained. These revaluations mean that rates bills reflect modern values and relativities. Ratepayers in areas that have not been revalued are paying rates on valuations and relativities that existed in 1988. Once a local authority area has been revalued, the Valuation Act 2001 provides that the area will be valued again within ten years, at worst, but progressively revaluations will be repeated in a timeframe closer to five years rather than ten. Up-to-date valuations that reflect current market values and inherently include the value of amenities available, including car parking, comprise the best contribution that the valuation system can make to ensure a level playing field between town centres and out-of-town retail parks. If an imbalance continues to exist and if there is a need to support town centres, the policy solution will have to be found elsewhere.

The enactment of the Valuation (Amendment) (No. 2) Bill 2012 will assist the Commissioner of Valuation with the acceleration of the revaluation programme. Any issues arising from deliberations on this Private Members’ Bill that are consistent with sound valuation principles and practice can be considered further in the context of that Bill.

The Government’s Bill will greatly improve the valuation process and address many of the concerns expressed by Senators. However, the Minister does not oppose the Bill before the House. As I stated, I will bring the points raised in this debate to his attention. I thank the Senators for introducing this Bill and raising the important valuation issues we have been able to explore today.