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Land Acquisition: What if my Land in the CBD is Designated?
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If you have land in an area to be used for one of the anchor projects, your land may be acquired by the Crown. The CCDU will very soon be sending affected land owners a letter explaining what is happening and asking them to answer some questions about their properties. The Crown’s agents (The Property Group or others) will then contact the land owners about the next steps.
The Crown has said it would like to acquire land by negotiated agreements with land owners. However if it cannot do that with particular owners, it has the power to compulsorily acquire their land. Therefore the Crown's right to compulsorily acquire land will form an important backstop in the Crown's negotiations with land owners.
If the Crown does need to compulsorily acquire land the steps will be:
The Crown will issue a notice of intention to take the land. That notice will then be registered on the title. The notice will apply for up to three years (and can be extended).
The Crown will then issue a proclamation and this will be published in the Gazette. The land will then vest in the Crown 14 days later and the Crown will own it from that point onwards. Interests shown on the title, such as mortgages, will be automatically removed at that time.
Within 2 years after the land is taken the land owner can make a claim for compensation for the land owner's actual loss. However the Canterbury Earthquake Recovery Act limits what the land owner can claim for. For example a land owner cannot claim for things like business interruption losses or downstream losses.
The Minister for Canterbury Earthquake Recovery will then decide the amount of compensation that has to be paid to the land owner. The Minister will have regard to the current market value of the land at the date it was taken as determined by a registered valuer. The Minister must also have regard to Part 5 of the Public Works Act 1981 which also deals with the compulsory acquisition of land.
Before deciding the amount of compensation, the Minister has to give the land owner a reasonable opportunity to make representations about their compensation claim.
If the land owner disagrees with the Minister's decision, the land owner can then use a Court process to try and get a greater amount of compensation.
There are quite a few things to keep in mind with all this. First, and importantly, the Crown has said it would prefer to acquire land by a negotiated agreement. Compulsory acquisition is a backstop. However, it is a very important backstop and the Crown could use it quite quickly if it cannot achieve what it needs to by negotiation.
Next, just because land is in an area where an anchor project will be carried out, it does not necessarily mean that the land will be acquired. For example, the "campus" type development in the area called the "South Frame" may be able to be carried out by owners complying with development standards and granting easements and covenants over their land rather than selling land to the Crown.
Determining compensation based on current market value will also be tricky. Probably some form of the “willing seller to willing buyer” approach will be used and the compulsory nature of the acquisition will be disregarded. However, at least initially, there will not be much market evidence to go on and it will be difficult to say what weight (if any) will be given to the change or potential change to the CBD which is going to take place.
To complicate the compensation question even more, the Minister has to have regard to the Public Works Act 1981 compensation provisions as well as the Canterbury Earthquake Recovery Act compensation provisions. The Public Works Act 1981 deals with “full compensation” whereas the Canterbury Earthquake Recovery Act deals with compensation for "actual loss". So quite how this works is still unknown.
If a land owner's land is compulsorily acquired there may be other people who can also make a claim for compensation. For example tenants can also claim for their loss. Working out compensation in those cases will be more complicated.
The timeframe for the various steps in the compulsory acquisition process are potentially very long or very short. During the negotiation phase land owners will want to carefully consider the effect that timing might have on the current market value of their land due to the valuation date varying. This could be a good thing or a bad thing for some land owners.
There are rights of appeal under the Canterbury Earthquake Recovery Act against the Minister's decision about the amount of the compensation. However, appeals about compensation will not delay or prevent the Crown actually acquiring land. To do that a land owner would need to make an application to the Court for judicial review. To succeed, the land owner would need to show that the Minister had not acted in accordance with the Canterbury Earthquake Recovery Act, had made some sort of error, or had acted unreasonably.
When the Crown compulsorily acquires land it will also get the benefit of the land owner's insurance entitlements. So when a land owner is negotiating with the Crown it will be important to ensure the Crown understands the insurance position so it can be properly be taken into account in setting the price of the land.
It will be important for land owners to get their own valuation and legal advice to ensure they are well prepared before proceeding with negotiations with the Crown.
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