Annual Report 2014–15


Note 22: Property, infrastructure, plant and equipment (cont’d)



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Note 22: Property, infrastructure, plant and equipment (cont’d)

  1. Valuation of property


Valuation of land and buildings were undertaken by a qualified valuer Beau Jarvis, Certified Practising Valuer, member of Australian Property Institute, member number 77334. The valuation of land and buildings is at fair value, being market value based on highest and best use permitted by relevant land planning provisions. Where land use is restricted through existing planning provisions the valuation is reduced to reflect this limitation. This adjustment is an unobservable input in the valuation. The adjustment has no impact on the Comprehensive Income Statement.

Specialised land is valued at fair value using site values adjusted for englobo (undeveloped and/or unserviced) characteristics, access rights and private interests of other parties and entitlements of infrastructure assets and services. This adjustment is an unobservable input in the valuation. The adjustment has no impact on the Comprehensive Income Statement.

Any significant movements in the unobservable inputs for land and land under roads will have a significant impact on the fair value of these assets.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within a fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities

Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable

Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

Details of the Council’s land and buildings and information about the fair value hierarchy as at 30 June 2015 are as follows:


Council

Level 1

$’000


Level 2

$’000


Level 3

$’000


Total

$’000


Non-specialised land

0

95,000

7,920

102,920

Specialised land

0

13,110

1,512,892

1,526,002

Total land

0

108,110

1,520,812

1,628,922

Heritage Buildings

0


11,000

143,370

154,370

Buildings

0

48,776

92,660

141,436

Total buildings

0

59,776

236,030

295,806

No transfers between levels occurred during the year.
  1. Valuation of infrastructure


Valuation of infrastructure assets has been determined in accordance with a valuation undertaken by Thyagie Wettasinghe, Asset Engineer, Master of Asset Management.

The valuation is at fair value based on replacement cost less accumulated depreciation as at the date of valuation.

Details of the Council’s infrastructure and information about the fair value hierarchy as at 30 June 2015 are as follows:


Council

Level 1

$’000


Level 2

$’000


Level 3

$’000


Total

$’000


Roads

0

0

731,875

731,875

Bridges

0

0

94,193

94,193

Footpaths and cycleways

0

0

140,877

140,877

Drainage

0

0

129,734

129,734

Recreational, leisure and community facilities

0

0

4,712


4,712

Parks, open space and streetscapes

0

0

38,565

38,565

Other infrastructure

0

0

188,801

188,801

Total Infrastructure

0

0

1,328,757

1,328,757

No transfers between levels occurred during the year.
  1. Description of significant unobservable inputs into Level 3 valuations


Council

2015
$'000

2014
$'000

Specialised land and land under roads is valued using a market based direct comparison technique. Significant unobservable inputs include the extent and impact of restriction of use and the market cost of land per square metre. The extent and impact of restrictions on use varies and results in a reduction to surrounding land values between 5% and 95%. The market value of land varies significantly depending on the location of the land and the current market conditions. Currently land values range between $10,000 and $278,000,000.


1,526,002

1,510,582

Specialised buildings are valued using a depreciated replacement cost technique. Significant unobservable inputs include the current replacement cost and remaining useful lives of buildings. Current replacement costs is calculated on a square metre basis and ranges from $275 to $34,713 per square metre. The remaining useful lives of buildings are determined on the basis of the current condition of buildings and vary from 10 years to 100 years. Replacement cost is sensitive to changes in market conditions, with any increase or decrease in cost flowing through to the valuation. Useful lives of buildings are sensitive to changes in expectations or requirements that could either shorten or extend the useful lives of buildings.

87,050

88,357

Infrastructure assets are valued based on the depreciated replacement cost. Significant unobservable inputs include the current replacement cost and remaining useful lives of infrastructure. The remaining useful lives of infrastructure asses are determined on the basis of the current condition of the asset and vary from 10 years to 189 years. Replacement cost is sensitive to changes in market conditions, with any increase or decrease in cost flowing through to the valuation. Useful lives of infrastructure are sensitive to changes in use, expectations or requirements that could either shorten or extend the useful lives of infrastructure assets.


1,328,757

1,244,014
  1. Reconciliation of specialised land


Council

2015
$'000

2014
$'000

Land under roads

17,200

15,450

Parks and reserves

1,508,802

1,495,132

Total specialised land

1,526,002

1,510,582


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