The Cayman Islands government now has a good idea of what some of its properties and buildings may be worth, but it appears the full value of all lands the public sector owns remains out of reach at present.
Officials with the auditor general’s office confirmed in a recent report that government’s 2013 land valuation – the first effort undertaken in more than 12 years – used appropriate methodologies in determining values for those properties.
However, the valuation did not include properties owned by the separately operating statutory authorities and government companies.
“Except for the Health Services Authority, statutory authority and government company properties had not been recently valued,” the auditor general’s report on government land management, released in late July, stated. The report added that an inventory of roads was not complete and that some 80 pieces of property classified as “heritage assets” had an arbitrary value of $0 assigned.
Additionally, a 2011 review by the government Lands and Survey Department found that 279 parcels of Crown owned land – valued at about $60 million – were not being used in government operations.
“Some of these properties constitute a liability to the government as they have been encroached upon or used for dumping trash,” the audit found.
The Ministry of Planning is now evaluating the 279 properties, including 69 considered “available for sale” and will be making recommendations to Cabinet regarding how government can dispose of the land.
“We noted that [government agencies] receive little direction as to what principles should be used to manage real property,” auditors reported. “We found no central manager in the government responsible for setting real property management policy overall.”
Financing, insurance concerns
One example of the problems of not having valuations for land and property assets was revealed in 2014 financial statements for the Cayman Turtle Farm.
The West Bay tourism and research facility, as it has reported for the last few years, noted that it could not state a “recoverable amount” due – for insurance purposes – if its buildings or other assets were damaged “due to the size and complexity” of the Turtle Farm’s plant, equipment and exhibits.
Prior to the 2013 government valuation, which has not been made public, government had not known its properties’ current values since 2001. Successive reviews by the Cayman Islands Auditor General’s Office have revealed the issue is one of the key problems in annual public sector financial reports being disclaimed.
For instance, an audit evaluation for the government’s 2010/11 fiscal year received a disclaimer of opinion from Auditor General Alastair Swarbrick’s office – which means the financial statements for the entire public sector contained in government records could not be relied upon for accuracy – largely because government did not have “sufficient or appropriate evidence” of assets, liabilities, revenues and expenses.
The lack of up-to-date values of relevant government properties can also impact a number of other areas of public finance, including whether the government is paying enough, or paying too much, for annual insurance premiums. Former Auditor General Dan Duguay flagged this as a problem in 2007 and recommended that government seek to address the issue immediately. Mr. Duguay said the last valuation of government properties was done in 2000, and stated his concern that government assets might be significantly under-insured at the date of his report in early 2007.