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To be read with the Policy — The application of Gross Rental Valuation to mining, petroleum and resource interests for local government rating purposes (PDF 2792 KB) found in Ministerial Circular M05-2015.

Introduction

The State Government endorsed the Policy - The application of Gross Rental Valuation to mining, petroleum and resource interests for local government rating purposes with effect from September 2015, following a three year trial, providing guidelines for the application of gross rental valuation (GRV) to mining, petroleum and other resource interests. That policy applies to:

• land the subject of a "relevant interest" within the meaning of s. 6.29(1) of the Local Government Act 1995, and
• land not the subject of a "relevant interest" within the meaning of s. 6.29(1) but used for:
  • the extraction, processing or refining of minerals as defined in s. 8 of the Mining Act 1978, or
  • the extraction, processing or refining of petroleum as defined in s. 5 of the Petroleum and Geothermal Energy Resources Act 1967, (referred to in that policy and in this document as a "resource interest").

Some of this land may be the subject of a State Agreement affecting whether that land is rateable or, if it is, the basis upon which the land will be rated. In the case of such land:

• industry and local government have agreed that the policy set out in this document will apply to such land as a matter of agreed policy between them
• a State Agreement proponent and a relevant local government may agree other arrangements by mutual consent with the concurrence of the Minister for State Development and in consultation with the Department of State Development
• a State Agreement proponent may request a variation to its State Agreement to reflect the policy set out in this document if it so chooses, and
• the State Government may apply the policy through the State Agreement variation process.

The policy set out in this document sets out the basis on which the Minister for Local Government (the Minister) will make determinations under the relevant provisions of the Local Government Act 1995 and in accordance with the Policy - The application of Gross Rental Valuation to mining, petroleum and resource interests for local government rating purposes found in Ministerial Circular M05-2015.

Objective

This document describes the legislative and policy basis for the rating of capital improvements on land the subject of a relevant interest or resource interest. In particular, it sets out the policy that guides the Minister for Local Government’s exercise of the power to determine the method of valuation of such land for rating purposes under s. 6.28 of the Local Government Act.

The document identifies the improvements that will be subject to rating on a gross rental value basis, providing clarity and consistency in the application of these provisions across the sector.

The second part of this document provides guidance for local governments and affected ratepayers in requesting such a determination.

Legislation

Local Government Act 1995

6.28. Basis of rates

1. The Minister is to — 
   1. determine the method of valuation of land to be used by a local government as the basis for a rate; and
   2. publish a notice of the determination in the Government Gazette.
2. In determining the method of valuation of land to be used by a local government, the Minister is to have regard to the general principle that the basis for a rate on any land is to be — 
   1. where the land is used predominantly for rural purposes, the unimproved value of the land; and
   2. where the land is used predominantly for non‑rural purposes, the gross rental value of the land
3. The unimproved value or gross rental value, as the case requires, of rateable land in the district of a local government is to be recorded in the rate record of that local government.
4. Subject to subsection (5), for the purposes of this section the valuation to be used by a local government is to be the valuation in force under the Valuation of Land Act 1978 as at 1 July in each financial year.
5. Where during a financial year — 
   1. an interim valuation is made under the Valuation of Land Act 1978; or
   2. a valuation comes into force under the Valuation of Land Act 1978 as a result of the amendment of a valuation under that Act; or
   3. a new valuation is made under the Valuation of Land Act 1978 in the course of completing a general valuation that has previously come into force, the interim valuation, amended valuation or new valuation, as the case requires, is to be used by a local government for the purposes of this section.

6.29. Valuation and rates on mining and petroleum interests

1. In this section —  relevant interest means —
   1. a mining tenement held under the Mining Act 1978 (whether within the meaning given to that term by that Act or by the Mining Act 1904); or
   2. a permit, drilling reservation, lease or licence held under the Petroleum and Geothermal Energy Resources Act 1967.
2. Regardless of any determination made under section 6.28(1), the basis for a rate on a relevant interest is to be the unimproved value of the land, except as provided for in subsection (3).
3. Subsection (2) does not apply to a relevant interest in a portion of land on which capital improvements are located if —
   1. the Minister has determined under section 6.28(1) that the gross rental value of the land is to be used as the basis for a rate on that interest; and
   2. the determination expressly excludes the application of subsection (2).
4. The Minister cannot determine under section 6.28(1) that the gross rental value of the land is to be used as the basis for a rate on a relevant interest in a portion of land if another estate in that portion of land is rateable on the basis of the gross rental value of the land.
5. For the purpose of subsection (3)(b) a determination is to be taken to expressly exclude the application of subsection (2) if the determination —
   1. was made before the commencement of the Local Government Amendment Act 2009 section 38; and
   2. specifically applies to the particular relevant interest.

Policy

Land that will be rated on a GRV basis

The Minister will determine the method of valuation of land that is the subject of a relevant interest as defined in s. 6.29(1) of the Local Government Act to be its gross rental value if the land has on it the following capital improvements:

1. accommodation, recreation or administration facilities and associated buildings, or
2. maintenance workshops existing within 100 metres of facilities listed in (a), provided that the capital improvements have been in place for at least 12 months.

The Minister can determine the method of valuation of land that is the subject of a resource interest defined as land not the subject of a "relevant interest" within the meaning of s. 6.29(1) but used for:

• the extraction, processing or refining of minerals as defined in s. 8 of the Mining Act 1978, or
• the extraction, processing or refining of petroleum as defined in s. 5 of the Petroleum and Geothermal Energy Resources Act 1967,

to be its gross rental value if the land has on it the following capital improvements:

1. accommodation, recreation or administration facilities and associated buildings, or
2. maintenance workshops existing within 100 metres of facilities listed in (a), provided that the capital improvements have been in place for at least 12 months.

The Minister may also determine gross rental value to be the method of valuation of land that is the subject of a relevant interest or a resource interest on which other capital improvements are located if the holder of the relevant interest and the local government agree that it should be rated on that basis.

Key values

The Minister's determinations under section 6.28(1) will be made consistently with the key values of objectivity, fairness and equity, consistency, transparency and administrative efficiency. To that end, the Minister will not approve an application for a determination under this policy (the application) unless the Minister is satisfied of the following matters.

Objectivity

• The land to which the application relates (the subject land) is the subject of a relevant interest or resource interest.
• The holder of the relevant interest or resource interest (the holder) has been accurately identified.
• The subject land contains capital improvements consisting of any one or more of accommodation, recreation or administration facilities or associated buildings,
  or maintenance workshops existing within 100 metres of these facilities (or other capital improvements if the holder and the local government have agreed to their inclusion in the subject land) (the relevant capital improvements).
• The relevant capital improvements have been in place for at least 12 months
  (or such lesser period as the holder and the local government have agreed).
• No other estate in the subject land is rateable on the basis of the gross rental value of the land.
• The subject land has been clearly defined to include only the relevant capital improvements.
• The Valuer General’s Office has provided notional values for use in modelling the effect of the changes on the rates that would be payable if a determination was made in accordance with the application (the notional values).

Fairness and equity

• The holder was informed in writing by the local government of:
  • the terms of this policy (through the provision of a copy of this document to the holder)
  • the local government’s reasons for considering making the proposed application for a determination under s. 6.28 (the proposal)
  • an existing arrangement between the local government and the holder relevant to the proposal, such as an arrangement for a payment in lieu of rates or a similar contribution, the local government's reasons for wishing to depart from that arrangement (if there is one)
  • the overall likely impact of the changes on the rates that would be payable under the proposal based on the notional values

    and was given at least 28 days after receiving that information to make submissions to the local government on the proposal (the holder's submissions).

• The council of the local government has:
  • considered the holder's submissions, if any
  • resolved to make the application
  • considered whether the changes which will occur if the application is approved should be phased in under s. 6.31 and Schedule 6.1 clause 2 of the Local Government Act 1995 provided the Minister with the minutes and agenda papers relevant to these matters.
• The holder's submissions, if any, and the local government's response to the holder's submissions (as recorded in the minutes of the council meeting at which the response was adopted) have been provided to the Minister.

Consistency

If the effect of the proposal would be to impose a different basis for rating the subject land from the basis on which one or more other relevant interests in the local government's district are rated, the local government’s reasons for the different treatment of relevant interests in the district have been provided to
the Minister.

Transparency and administrative efficiency

• The council of the local government has:
  • considered the holder's submissions, if any
  • resolved to make the application
  • considered whether the changes which will occur if the application is approved should be phased in under s. 6.31 and Schedule 6.1 clause 2 of the Local Government Act 1995 provided the Minister with the minutes and agenda papers relevant to these matters.

Guidance for local governments and affected ratepayers on requesting a determination

The guidance below is directed to an application for a determination under section 6.28(1) that the method of valuing the land the subject of the application for rating purposes should be its gross rental value (GRV).

Local governments

The policy section of this document identifies the land that should be rated on a GRV basis under the policy and the matters of which the Minister will want to be satisfied before he or she approves an application.

Before making an application, a local government should be satisfied that:

• the land the subject of the application is land which can be rated GRV under the policy, and
• in light of the application and its supporting material, the Minister will be able to be satisfied that making such a determination would be consistent with the key values of objectivity, fairness and equity, consistency, transparency and administrative efficiency, as detailed in the policy.

The starting point for a local government will be the matters identified under the key values of objectivity and consistency. The local government will need to ensure that all of the matters identified under those key values are addressed. In order to do that,
the local government is likely to have to consult with the holder of the relevant interest (the holder). An initial on-site meeting between representatives of the holder and the local government may be a useful way of facilitating that consultation.

Once the local government is satisfied that it has addressed all the matters identified under the key values of objectivity and consistency, the local government will need to address the key value of fairness and equity. That will involve the local government writing to the holder, addressing each of the matters identified under that key value and giving the holder at least 28 days from the day the holder receives the local government's correspondence to make submissions.

Once the local government has written to the holder and received any submissions from the holder, the council of the local government will need to consider:

• those submissions
• the other information addressing the key values of objectivity, consistency and fairness and equity.

Even if the council has previously considered the matter, the council must consider
the submissions and the other information and resolve to make the application to
the Minister. If the council resolves to make the application, it will also need to
consider whether the changes which will occur if the application is approved should be phased in.

Once the council has resolved to make the application, the following should be sent to the Minister and copies to the holder:

• the application
• the supporting material addressing each of the matters identified under the key values of objectivity, fairness and equity, consistency, transparency and administrative efficiency.

The Minister will then consider the application and may request more information from the local government before making a determination.

The holder

The holder should consult cooperatively with a local government considering making an application, even if the holder is opposed to the application being made.

In particular, it will be important to ensure that once the consultation process has been completed:

• the matters set out under the key value of objectivity have been correctly addressed in the holder's view or, if the holder considers they have not been correctly addressed, that the holder has set out why they holds that view in their submission to the local government, and
• in their submission to the local government, the holder has addressed any other matter which they wish the local government and the Minister to consider in deciding whether an application should be made and, if it is made, whether the application should be granted.

In considering an application, the Minister may request information from the holder before making a determination.

Effect of Minister’s determination

A determination under section 6.28 is very likely to change the amount of rates payable on the affected land. More information on the determination of the rates payable.

Applications

The completed application form and relevant attachments should be sent to:

legislation@dlgc.wa.gov.au

or

Executive Director
Sector Regulation and Support
Department of Local Government, Sport and Cultural Industries
GPO Box 8349 Perth Business Centre WA 6849