Valuing public land in land policy: The role of accountancy regulations

Land values change in planning processes. Accountancy regulations define the book value of land held by local authorities. This affects the evaluation of alternative lines of action in land development, and in this way, the land policy of local authorities. This paper reflects on the case of the Netherlands, which has a well-established tradition of public land development. Traditionally, valuation has been based on historic costs: the prices for acquisition and costs of infrastructure provision paid in the past, and not the current exchange values. Losses foreseen must be taken immediately; profits can only be booked after they have been made. This paper analyses the changes in these accountancy regulations over time and studies their impact on the economic position of local authorities. It considers both regulations as the outcomes of these as being found in administrative records and the practice in the City of Enschede where there was a difference between the official value as recorded in the books and the value that was the basis for decision-making. The paper discusses the impact on land policy. There is a tension between regulations that more-and-more aim for a direct reflection of property market volatility in the books and the aim of local authorities to present financial stability. This may contribute to less financial involvement in land policies.