New policy sets compensation rules for expired tourism leases
Under the policy, compensation will be based on the depreciated value of buildings, equipment and other eligible assets located on the property.
A policy has been introduced to determine compensation for assets and equipment remaining on tourism properties when leases expire and the sites revert to state ownership.
The policy, developed by the Auditor General's Office and now in effect, sets out procedures for calculating compensation payable to leaseholders when tourism properties are returned to or repossessed by the state.
Under the policy, compensation will be based on the depreciated value of buildings, equipment and other eligible assets located on the property.
The policy applies when a tourism lease expires and the property is returned to the state, or when the government repossesses the site in accordance with relevant laws and regulations.
Where a property is deemed operational at the time of handover, compensation may be paid for movable and immovable assets directly connected to the provision of services at the property, provided they are included in an inventory maintained under the lease agreement.
If such an inventory is unavailable, compensation may be based on assets listed in a separate inventory prepared for valuation purposes under the policy.
The government may also compensate for movable assets not included in either inventory if the Ministry of Tourism decides to retain them.
The policy further identifies assets that former leaseholders may remove from the property and specifies categories of assets that will not be included in compensation calculations.
The Ministry of Tourism will determine whether a tourism property is considered operational at the time the lease expires.
The policy excludes several categories of assets from valuation calculations, including:
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Items that are no longer functional and cannot be restored for use through repairs or upgrades.
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Fixed assets requiring repairs where estimated repair costs exceed 30 per cent of the asset's projected book value.
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Equipment and goods that have exceeded the lifespan specified by the manufacturer.
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Obsolete equipment and materials.
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Buildings, structures and modifications constructed without ministry approval or in breach of approved plans and permits.
According to the policy, if a former leaseholder fails to provide documents and information requested for the valuation process within 30 days of notification, the depreciated value will be assessed based on the condition of the asset and its estimated remaining useful life.
Leaseholders will be granted 90 days to remove, sell or otherwise dispose of items that the ministry does not wish to retain or that are excluded from the compensation process.
The policy states that the Auditor General's Office will be responsible for appointing personnel to conduct asset valuations.
No compensation payments may be made until the final valuation has been completed and approved by the Auditor General's Office. The Ministry of Tourism will then release the funds in accordance with the valuation.
