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Section 715: museums and art galleries

Valuation Office Agency

July 28
07:57 2020

1. Scope

This section applies to all museums and art galleries and covers a range of property types from purpose-built National and Major City centre museums to small local museums run by volunteers in converted buildings. For rating purposes no distinction should be made between museum and art galleries as they are both effectively exhibition spaces vacant-andto- let and hereafter referred to generically as museums.

It does not apply to historic visitor/tourist attractions including those typically occupied by the National Trust, English Heritage or CADW these are dealt with in Rating Manual: section 6 part 3 - section 1000 (historic properties).

The mode or category of occupation for this sector is wide ranging as determined by the UTLC in Stephen G Hughes (VO) v Exeter City Council [2019] RA 73. The mode or category for museums, historic properties and leisure attractions was considered (paras 45-48). Here reference is made to the Court of Appeal in Williams [2001] endorsing the use of general categories for the purposes of the reality principle and a reminder that differences in categories of business may influence the valuation method used but valuation method does not determine the mode or category.

The Tribunal concluded at Para 204 stating that the VOs approach

.focuses too narrowly upon what he acknowledges to be a broad spectrum of heritage assets. The essential quality of such an asset is its cultural, artistic, historic or scientific value and significance. We do not think it is appropriate to categorise them too narrowly (and, at least in part, by inappropriate criteria) when undertaking a comparative exercise to see how they are valued in the market. We accept that differences between a specific museum such as RAMM and a specific visitor attraction such as Stonehenge may amount to relevant comparative factors, but we do not agree that there is a clear and material distinction between the two that warrants the one being, in effect, rendered ineligible to inform the type of broad analysis that is appropriate.

1.2 There are various types of museums

1.2.1 Traditional Museums

Usually public museums are set up for the public good. Run by government departments, local authorities, charitable trusts or universities.

The types of buildings vary markedly and include iconic architect designed purpose-built and Victorian statement buildings of their era, the latter category being the most common in major towns and cities. They may also be housed in adapted buildings of historic interest with the museum collection being the main attraction but with some, albeit a minority, of artefacts related to and/or contemporary with the host historic building.

Many have been extended in their history and include substantial ancillaries for research/and or educational use. They house collections of importance for present and future generations. They meet a wide range of educational needs within the context of life-long learning. They may also use the collection as a basis for study and scholarship, by the museums own professional curatorial staff and by visiting scholars and students.

They divide into four main types:

1) National and Major City Museums

These museums will house collections of national and international significance. They will normally be situated in major regional cities or may be sited in development areas and thereby helping to revitalise the surrounding areas.

National museums are generally free to enter, although some may charge admission.

2) Regional City and Large Town Museums

Purpose built or converted museums with significant local and regional collections including ancient and modern history, geology, archeology and natural history. May be local authority, charity or privately operated.

The occupation of these museums is usually for socio-economic, non-profit, reasons and as such an admission charge may not be levied, although there may be charges for one-off exhibitions and some conferences. Gift shops and cafes may also generate some revenue, if they are in the control of the parent company. Revenues are usually used to off-set costs, not to attain a commercial level of profit. As a result many of these institutions are run at a loss

3) Local Museums in Smaller Towns (excluding commercial art galleries)

These museum types are many and varied. They usually have collections relating to local history or personal collections of local significance. They may be in purpose-built buildings but the majority will occupy converted domestic, civic, commercial or industrial buildings, housing collections of local significance. Those local authority or charity operated are unlikely to be operated commercially. Those that are run by families, individuals, or special interest groups will usually have an admission charge.

4) Transport, aviation and military vehicle museums

These museums are often housed in former industrial units or former hangers, usually located on fairly large and sprawling sites with a range of building types and ages. The bigger sites will have well laid out parking facilities and admission charges are usually levied.

2. List description and special category code

Museums - Contractors basis

  • List description: museum (or art gallery, or both) and premises
  • SCAT code: 195

Museums - non-Contractors basis

  • List description: museum and premises (or art gallery, or both)
  • SCAT code: 196

3. Responsible teams

This is a specialist class and responsibility for valuation will lie with the specialist teams within the National Valuation Unit (NVU). Queries of a complex nature arising from the valuation of individual properties should be referred to the NVU class facilitator via the class co-ordination team (CCT).

4. Co-ordination

The CCT has overall responsibility for the co-ordination of this class.

The CCT is responsible for the accuracy and consistency of valuations of museums and art galleries and will produce practice notes outlining the valuation basis for revaluation and provide advice as necessary during the life of a rating list.

Caseworkers have a responsibility to:

  • Follow the advice in this section and in the relevant practice note.
  • Not to depart from any subsequent advice given in relation to appeals or maintenance work during the life of a list without approval from the CCT or NVU technical advisor
  • Seek advice from the CCT or NVU technical advisor should issues arise which are not covered in this practice note.

5. Valuation Methods

With such a wide range of properties within this class it is essential that all valuation methods are fully considered.

  1. Rental Comparison - The VO should at all times have regard to the principles laid down by the Court of Appeal in the case of Garton v Hunter (VO) 1969 RA 11, and where rental evidence is available, its significance should be weighed. Extremely limited rental information is available as there are a relatively small number of occupiers who compete with other mode or categories of occupation, agreeing the market rate. A storage value (+) approach may fall under this head (see practice note for details).

  2. Receipts and Expenditure following recent litigation this is likely to apply to the majority of museums as outlined within this guidance. This can include nuanced versions of the method such as a percentage of gross receipts, straight overbid/Local Authority overbid or a percentage of outgoings.

  3. Contractors Basis (CB) following recent litigation this will apply to a minority of properties within this class as outlined within this guidance, mainly museums which occupy modern buildings.

The leading cases are Stephen G Hughes (VO) v York Museums & Gallery Trust [2017] RA 20 (aka the York museums case) and Stephen G Hughes (VO) v Exeter City Council [2019] RA 73 (aka the Exeter museum case).These cases related to historic museums and galleries and considered whether a Receipts and Expenditure (R&E) approach or a Contractors Basis (CB) was appropriate. In Exeter the VO (appellant) put forward a CB valuation (690,000) in contrast to the respondents R&E valuation of 1.

Exeter museum fully endorsed the York decision and confirmed that on the evidence before it R&E was appropriate even where the motive for occupation was not for profit and clearly for socio-economic benefit. Para. 121 - For example, are social or socio-economic benefits attaching to the occupation of the premises only capable of being taken into account by using the CB, or could they also be reflected by using the R & E method? Can the CB method sometimes overstate the annualised sum derived from capital costs unless substantial reductions can be made at stage 5 to reflect other factors of the hypothetical letting, such as lack of commercial motive, affordability of rent and high operating costs? It could be said that for loss-making properties, just as the R and E method always results in nil valuations, the CB method always results in positive valuations, unless in either case, valuation judgment is applied by making adjustments, if appropriate, to reflect all relevant factors not otherwise take

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