A note about values and opportunity costs

Words of caution..



There is some need for caution when it comes to valuing community assets.


Where a building complex is designed to fulfil a particular need, its valuation may present some difficulties in reconciling different interests. To the bank manager who may be providing an overdraft, the value offers some guarantees in the unlikely event of a default. The economist may be interested in the economic and social value of the asset; what it may have cost to build and what social value a community may be deriving from it. On the other hand, a decision to build a large prayer hall may be reflected in the opportunity cost of foregoing a convenient parking facility.


It could also be argued that the value of the property is determined largely by its purpose. A large prayer hall with related facilities could only be of value to its current users. Notice the number of old churches which have been purchased by Sikh communities; the task of valuing those premises offers interesting challenges if the buildings are going to be radically modified to meet different sets of needs. A community with a large congregation and many sources of donations may move on to more modern and custom built premises. How would one cost the old temple complex? One guideline is how the old premises may be marketed to offer value to new users.


The purpose of this discussion is not to arrive at hard and fast rules for the valuation of community assets. It is more to highlight the challenges which lie in valuing community owned buildingd and how, as this programme develops, there will be a need to seek expert advice on valuation. Any comments on this issue are most welcome. They will help to inform future attempts at valuing community assets.