It is the nairage assigned to a taxable property (both real and personal) by the Assessor for the purpose of taxation. Assessed value is usually or more often statutorily determined percentage of market value. It can also be said to be the value placed on land and building by a government unit for use in levying annual real estate taxes. This is synonymous with ratable value. The only difference is that while assessed value is mostly used in taxation, ratable value is common is commonly used in property rating. Assessed value can therefore be said to mean the residue of the annual value of an hereditament after all outgoings and/ or statutory deductions have been removed. This value is multiplied by the rate to arrive at the tax payable.
Definitions of assessed value on the Web:
- Value placed on land and building(s) by a government tax assessor for use in levying property taxes. The assessed value of the property may be different than the appraised value – one-ifbyland.com/dictionary.htm
- The value assigned to a given property by the municipality for the purpose of establishing realty taxes payable by the owner of the property – websiteupgrades.com/glossary/free/
- The value placed on a property by the B.C. Assessment Authority for the purposes of determining annual property Taxes. Assessed Value multiplied by the “Mil Rate” equals the tax levy for the year – erealty.ca/cgi-bin/erealty.cgi
- The value placed upon property by a public tax assessor for purposes of taxation. Assumable mortgage A mortgage that can be taken over by the buyer when a home is sold – debt-consolidation-equity-home-loans.com/glossary.htm
- The value of real estate or personal property as determined by a governmental unit, such as a city, for the purpose of determining taxes – insweb.com/learningcenter/glossary/general-a.htm
- The valuation placed on property by a public tax assessor for purposes of taxation – nmmfa.org/consumer/consGlosary_of_Terms.htm
- The valuation placed upon a property by a public tax assessor for purposes of taxation –
https://mortapps.iucu.org/LoanComplete/library/dictionary.html - The value a public tax assessor assigns to a particular piece of real property for purposes of assessing the taxes owed by the property owner – privatemi.com/glossary/index.cfm
- The valuation placed upon property by a public tax assessor for purposes of taxation – sutterwest.com/glossary.htm
- The valuation placed upon property by a public tax assessor as the basis for taxes – com/c/category.php
- The value of the property for taxation purposes – investsf.com/Glossary.html
Levels of Asset Management System (IAM Institute of Asset Management, 2016)
Asset Management Wheel: Ark Housing Consultancy Example
Figure: A generic asset management system (Asset Management Primer, 1999, p.19)
The key stages described as follows:
Stage 1: Where we are now and where do we want to be?
Stage 2: What do our customers want and what options do we have to achieve these aspirations?
Stage 3: Given the likelihood that we will want to do more than we can afford to, prioritise and decide what we will do.
Stage 4: Analyse and decide how to deliver the most efficient outcomes, both the external procurement solutions and our own client function.
Stage 5: Now get on with it – procurement of external partnerships and internal change management to ensure that the client function is lean and focused.
Stage 6: Deliver what we have agreed to, but keep planning and improving.
The core principles of asset management
The core principles of asset management, according to NCHRP Report 551 (2006) are:
- Policy-driven: Resource allocation decisions are based on a well-defined set of policy goals and objectives.
- Performance-based: Policy objectives are translated into system performance measures that are used for both day-to-day and strategic management.
- Analysis of options and trade-offs: Decisions on how to allocate funds within and across different types of investments (e.g. preventive maintenance versus rehabilitation, pavements versus bridges) are based on an analysis of how different allocations will impact achievement of relevant policy objectives.
- Decisions based on quality information: The merits of different options with respect to an agency’s policy goals are evaluated using credible and current data.
- Monitoring provides clear accountability and feedback: Performance results are monitored and reported for both impacts and effectiveness.
The goal of asset management
In practical terms the goal of asset management is to provide an appropriate (not necessarily the best) level of service in the long term in the most cost effective way. This includes consideration of all service level aspects including financial, environmental, social and governance. By definition it involves analysis of alternative asset management and maintenance regimes incorporating different intervention points, treatments that in turn deliver different levels of service and whole of lifecycle costs.
Objectives of asset management
The objective of asset management is to optimise the service delivery potential of assets and to minimise related risks and costs and ensure positive enhancement of natural and social capital over an asset lifecycle. Good governance and the intelligent deployment of business systems, processes and human resources are key aspects of this endeavour. Asset management also enables an organisation to examine the need for, and performance of, assets and asset systems at different levels. Additionally, it enables the application of analytical approaches towards managing an asset over the different stages of its life cycle (which can start with the conception of the need for the asset, through to its disposal, and includes the managing of any potential post disposal liabilities) – IAM Institute of Asset Management (2016). Therefore, asset management objectives include:
- specific and measurable outcome or achievement required of asset system(s) in order to implement the asset management policy and asset management strategy; and/or
- detailed and measurable level of performance or condition required of the assets; and/or
- specific and measurable outcome or achievement required of the asset management system.
An effective asset management strategy entails a long-term optimised approach to management of the assets, derived from, and consistent with, the organisational strategic plan and the asset management policy. The asset management strategy converts the objectives of the organisational strategic plan and the asset management policy into a high-level, long-term action plan for the assets and/or asset system(s), the asset portfolios and/or the asset management system. The high-level, long-term action plans for the assets and the asset management objectives are normally the outputs of the asset management strategy. These elements together form the basis for developing more specific and detailed asset management plan(s).
Asset marketing entails dividing a portfolio into major asset categories such as cash, stocks, real estate, or bonds. In doing this there are three main strategies which are: strategic asset allocation, tactical asset allocation and market timing.
Different asset allocation strategies
- Strategic asset allocation: This focuses on designing a portfolio of investments that is suitable for your needs and sticking with that allocation through all market conditions. Once asset marketing to stocks, bond, real estate, and cash is set, it remains in place for a long period of time. Due to the market always moving up and down a strategic asset allocation will get off target over time. It is suggested that an investor should put their portfolios back on track with the original target mix from time to time, this is called re-balancing. Re-balancing keeps a portfolio in line with an investor’s goals and objectives, and helps control investment risk.
- Tactical asset allocation: Tactical asset marketing involved forecasting asset-class returns and increasing or decreasing commitment to an asset class based on the forecast. Return predictions may be a function of fundamental variables, for example economic variables, technical variables, forecast of inflation, recent price trends, earnings or interest-rate forecasts, or a combination of several variables. A tactical asset allocation is mainly based on these predictions. Tactical Asset Marketing is also known as Active Portfolio Management.
- Market timing: This is tactical asset marketing taken to the extreme. It involves forecasting asset returns and making “all or none’ asset-class bets. A market timing strategy may start the year 100 percent in Treasury bonds and end the year 100 percent in stocks. No one likes losing money, and no one likes to be out of a bull market. Market timing solves both of these problems. Although some investors may believe that there are strategies that will allow them to successfully weave into and out of the markets, the facts show that few people actually do so, and those people may be lucky rather than good. Market timing is not recommended by the professionals.
Since it might be difficult to know which of these three will work well, it is best to keep a well-balanced multi-asset-class portfolio that maintains a strategic allocation over time.
Typical assets within the health and education sectors
(Source: Wareham Cameron & Co Ltd, Rider Levett Bucknall & The Treasury, 2007)
Health sector | Education sector |
Land – usually large holdings beneath campuses and also that accommodating standalone buildings | Land – usually large holdings beneath campuses and also that accommodating standalone buildings |
Buildings – comprising functions such as: · In-patient care · Specialist in-patient care · Diagnostic and treatment · Specialist procedure areas · Ambulatory care · Administration · Support services · Staff amenities and training · Maintenance facilities · Residential accommodation (staff or student) Basement areas | Buildings – comprising functions such as: · Classrooms · Laboratories · Libraries · Specialty teaching (e.g. health or hospitality clinics) · Lecture theatres · Administration (including student recreation) · Gymnasiums · Maintenance sheds · Relocatable classrooms · Practical trade tuition · Residential accommodation (staff or student) · Basement areas |
Other site works – such as: · Sewer and storm water drainage · Site services (electrical, water, fire) · Emergency electric generators · Parking areas · Roadways/footpaths · Fencing · Landscaping · Covered walkways | Other site works – such as: · Sewer and storm water drainage · Site services (electrical, water, fire) · Emergency electric generators · Parking areas · Roadways/footpaths · Fencing · Landscaping · Covered walkways · Playing fields · Farm areas |
Plant and equipment – such as: · Specialist medical equipment · Medical furniture and fittings · Computers/information systems/software · Catering/kitchen equipment · Vehicles · General engineering and maintenance equipment · General furniture, effects and fittings · Libraries and special collections | Plant and equipment – such as: · Teaching furniture and equipment · Administration equipment · Computers/information systems/software · Specialist equipment (such as catering, industrial or scientific) · Vehicles · Accommodation equipment · Libraries · Special collections |
Strategic modelling and asset management planning
The elements to strategic asset management include the following (AAMCoG, 2011):
- Environment: Greater appreciation of the interaction between built assets and the natural environment.
- Sustainance: Ensures that the social, economic and environmental needs of a community are met and kept healthy for future generations (Sustainability Victoria, 2010)
- Resilience: Increased emphasis on the asset, environment and the community to respond to and recover from external impacts.
- Whole of life asset management: Requires that decisions and actions across the entire lifecycle of the asset from design to disposal be considered.
- Increased community demands: information and communication technology (ICT) advances have led to higher citizen expectations for immediate and localised services. Closer alignment of policies, resources and projects will deliver better quality, more efficient and timely built assets.
- Information management: Information needs and capabilities are more demanding and complex.
- Expanded governance arrangements: Assets are now owned, governed and operated by an expanded set of decision-makers. Thus alongside conventional governance forms, there is now an array of hybrid models such as public-private partnerships, alliance and relational contracts. More innovative and variable governance approaches are required for these different models to manage the unique risks and opportunities associated with them.
Asset management services
Asset management services are financial services offered by professionals in which the value, financial health, growth potential and investment opportunities of various assets are identified in order to manage them successfully. The function of the asset management firm is to set financial goals with the investor, create projections, analyse data, and come up with a strategy for asset management and portfolio building.
Effective asset management systems include:
- Asset acquisitions
- Asset disposals.
- Asset evaluations prior to acquiring, maintaining or improving a significant asset
- Asset maintenance
- Asset management strategic planning
- Asset security, and
- Consortium consultancy
- Impairment testing
- Neighbourhood reviews
- Option appraisals
- Partnership advice
- Process re-engineering and performance improvements
- Procurement services
- Project and programme delivery
- Recording and appropriate accounting treatment of agency assets
- Revaluation schedules
- Reviewing the performance of completed significant assets
- Service and contract reviews
- Stakeholders’ consultation
- Stock performance and sustainability reviews
- Stock rationalisation
Benefits: The benefits flowing from the implementation and operation of effective internal controls covering agency property, plant and equipment would include:
- management has an effective platform from which to manage and secure all property, plant and equipment
- ready access to full and accurate records relating to the purchase, location, maintenance and disposal of agency assets
- asset values, depreciation and impairments are correctly calculated, and
- property, plant and equipment values are correctly disclosed in agency financial reports.
References
AAMCoG (2011). Guide to integrated strategic asset management. (www. aamcog.com).
Ark housing consultancy. Asset Management. www.arkconsultancy.co.uk
Asset Management Primer (1999). Federal Highway Administration, Washington, DC. http://www.fhwa.dot.gov/infrastructure/asstmgmt/amprimer.pdf
Financial reporting requirements for Queensland Government Agencies http://www.treasury.qld.gov.au/office/knowledge/docs/fin-reporting-req/index.shtml
IAM Institute of Asset Management (2016). What is asset management? https://theiam.org/what-is-asset-management
Information Sheet 3.8 – Property, plant and equipment systems. https://www.treasury.qld.gov.au/publications-resources/financial-accountability-handbook/3-8-property-plant-equipment.pdf
Joan Young, http://www.buzzle.com/articles/asset-management-dividing-portfolio-categories.html
Levels of an asset management system. http://www.theiam.org/en/knowledge/Asset_Management_Diagrams/index.cfm
NCHRP Report 551 (2006), Performance measures and targets for transportation asset management, Vol. I, Research Report, 2006, p. ii.
- S. Domestic Scan Program (2007). Best practices in transportation asset management (NCHRP Project 20-68).. http://onlinepubs.trb.org/onlinepubs/trbnet/acl/NCRHP2068_Domestic_ Scan_TAM_Final_Report.pdf
U.S. Department of Transportation (2007). Asset Management Overview. Federal Highway Administration, Office of Asset Management. Website: www.fhwa.dot.gov/infrastructure/asstmgmt
Wareham Cameron & Co Ltd, Rider Levett Bucknall & The Treasury (2007). Valuation guidance for property, plant and equipment, including specialised items in the health and education sectors. http://www.treasury.govt.nz/publications/guidance/reporting/accounting/property/val-guidance-property.pdf
