Very few grain silos have ever been let in the market, and those that have will usually have been let under unusual terms. There will however be some rental evidence in the market for flat-bed grain stores.
The decision as to how to value a grain store is crucial, because the approach is different for the 2 main types of facility. If the store comprises mainly a silo or a nest of bins, the valuation is likely to be by the contractor’s basis, even if there is a flat store and other buildings on site. There is a cost in the cost guide for a flat store when valued along with a silos/bins using the contractor’s basis, and also costs for ancillary buildings. On the other hand if the store is mainly of the flat bed type the valuation will be by rentals comparison.
8.1 Grain Silos – Contractor’s Basis
Grain Silos should be valued on the contractor’s basis. Reference should be made to Rating Manual: section 4 part 3, and to the relevant practice note for this class.
8.1.1 Stage 1 – Estimated Replacement Cost (ERC)
All the buildings, civils and rateable items of plant and machinery commonly found in this type of property should be costed from the costing information provided in the Rating Cost Guide for the relevant revaluation period.
Adjustments to the costs where appropriate, are required for location, contract size and fees. These should be in accordance with the advice contained in the appropriate rating cost guide unless specifically stated in the relevant practice note for this class.
8.1.2 Stage 2 – Adjusted Replacement Costs (ARC)
The guidance for making adjustments to reflect obsolescence and age related disabilities is set out in the Rating Cost Guide for the relevant revaluation period
8.1.3 Civils Ancillary to Plant Items:
All the civil works which are directly ancillary to plant items such as steel supports, concrete bases/foundations, bund walls and bund bases should generally follow the allowances made on the items to which they relate i.e. a concrete base for say an oil tank would receive a similar allowance to that given for the oil tank. This applies even if the item itself is not rateable because of its size.
8.1.4 Site Works
Allowances for items of site works which serve the property such as yards, parking areas, landscaped areas, open storage areas, boundary fencing, underground site services and lighting should be based having regard to the following:-
Where the items of site works serve a particular building the allowance should follow the allowance made on the building to which they relate.
Where the items of site works serve the property as a whole the allowance should be based on the overall average allowance derived from the allowance made for all the buildings, civil works, plant and machinery items present on the site
8.1.5 Stage 3 - Estimation of Cost of the Land.
The value to be adopted for the land should be on the basis of a cleared site with such services, as existed at the relevant date, available for connection and with planning permission for grain storage reflecting all advantages and disadvantages of the site and its location. This will normally follow general industrial value for the size of site in the locality where the provender mill is situated.
Allowances for the land should be based on an overall average allowance derived from the individual allowances made at Stage 2 for the buildings, civils, and rateable items of plant and machinery situated on the site.
For further background information reference should be made to the Rating Manual: section 4 part 3 - part 6.
8.1.6 Stage 4 -Decapitalisation Rate
The relevant Statutory Decapitalisation Rate for this class of property must be adopted.
8.1.7 Stage 5 – Overall Consideration
This is often referred to as the “standback and look” stage. At this stage of the valuation care must be taken to ensure that adjustments are only made for matters which have not already been allowed for at stages 2 and 3.
Typically matters to be considered at this stage concern whether or not any end adjustment to the valuation should be made. Such matters for consideration at this stage would be in respect of disabilities that effect the site as a whole such as layout and access. Care should also be taken to avoid double counting where disabilities are already reflected in the site values.
8.2 Flat-bed Grain Stores – Rental Comparison Approach
This type of facility will be valued on the rental comparison method of valuation. It is important to verify the planning situation. Because of the nature of this type of property, the planning is often restricted to the storage of grain, seed and pulses only. This factor restricts value, and the most likely source of rental evidence will be open market lettings of properties with similar restrictions. If the property has no such planning restrictions and could be used for warehousing, the level of value should fall into line with the local levels of value
All buildings should be measured to GIA and the subsequent survey data entered into the Rating Support Application using a bulk class of M and the sub location 3GRS. Address-based matrices should be created, driven by sub location code and linked to scale VXFGIA1.
8.3 Valuation Considerations
The following factors will need consideration when determining the relative value of or making comparisons between grain silos:-
the silo should be in a satisfactory position relative to the markets for which it caters;
adequate transport facilities should exist by road, rail or water;
adequate handling equipment is necessary in order to provide flexibility of operation;
8.3.2 Surplus Capacity
It may be claimed on behalf of the occupiers that there is an excess of capacity in a particular silo. Regard should be had to the average of the last three to five years’ intake of grain rather than rely solely on the full capacity of the silo.
It is important to remember, however, that a silo must be capable of taking in its entire stock of grain in a comparatively short period of the harvest and for this reason the handling capacity of the dryers and plant must be much higher than would be necessary for more regular operations. Thus although a large amount of the plant may only be in operation for a small part of the year this is to be expected with this class of hereditament and no allowance falls to be made on this account.
8.3.3 Substitute Approach
When valuations are carried out on the contractor’s basis it may be necessary to have regard to a substitute building approach. Many inland concrete silos which were built up to the 1960s continue in use simply because they continue in existence. Consideration should be given to substituting these with a modern steel substitute for valuation purposes.
The size of bins reflected in the substitute will need to be tailored to reflect the nature of the use of the actual silos. This may mean several smaller bins where a variety of grains are stored or fewer larger bins for bulk storage.
This approach should not be adopted where attack from sea salt is likely, and where construction in reinforced concrete still occurs.