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Welcome to the International Right of Way

Association’sCourse 408

The Valuation of Native Lands in Canada

408-PT – Revision 2 – 04.30.08.CAN

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Introductions

Who we are…What we do…

Where we do it…

How long we’ve been doing it…

Our goals for the course...

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Objectives (1)

At the end of the two days, you will...

• Know more about the nature of Native lands and the reserve land regimes structure

• Understand better the main featuresof First Nation land management

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Objectives (2)

At the end of the two days, you will...

• Learn more about information sources relating to First Nation land management

• Appreciate better reserve lands procedural requirements

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Housekeeping

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Schedule (1)

Day One

8:00 - 8:30 Introductions, Etc.

8:30 - 11:30 The Nature of Native Lands

12: 30 - 2:30 Reserve Land Regimes Structure

2:45 - 4:15 First Nation Real Estate Perspectives

4:15 - 4:30 Recap Day One

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Schedule (1)

Day Two

8:00 - 8:15 Recap Day One/Introduce Day Two

8:15 - 12:00 Valuation of First Nation Lands

1: 00 - 3:45 Specific Claim Valuation

3:45 - 4:00 Summary and Review

4:00 - 5:00 Exam

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Native Lands

Aboriginal title landsComprehensive claim settlement

landsReserve lands

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Native Peoples

Native peoples

(eligible under a comprehensive claim settlement)

Status Indians

Non-status Indians

Metis

Inuits

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Native Land Categories

Aboriginal Title LandsTreaty Lands

Reserve LandsLands set aside by the Crown

Lands acquired by Native Peoples

Metis and Non-status LandsComprehensive Claim Settlement

Lands

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DefinitionsA reserve is land with title vested in Her Majesty and set apart for

the use and benefit of a band and … includes designated lands.

A special reserve is land, the title is not vested in Her Majesty and

set apart for the use and benefit of a band.

A band is “a body of Indians for whose use and benefit in common,

lands the title to which is vested in Her Majesty, have been set

apart … or for whose use and benefit in common, moneys are held

by Her Majesty, or have been declared by the Governor in Council

to be a band for the purposes of the Indian Act.”

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Judicial Guidance onValuing Native Lands

Guerin, 1984Musqueam Indian Band v. Glass, 2000Wewayakum Indian Band v. Canada,

2002Ross River Dana Council Band v.

Canada, 2002Osoyoos Indian Band v. Town of Oliver,

2003

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Guerin

“… Indians have a legal right to occupy

and possess certain lands, the ultimate title

of which is in the Crown.”

“… Indian title as a beneficial interest...”

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Musqueam

Current land value is interpreted to mean

the fair market value of fee simple title.

There are different legal constraints anddifferent market conditions on reserve lands.

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Wewayakum

“… in conflicts, government must

consider the interests of non-Aboriginal

groups.”

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Osoyoos (1)

... regular expropriation rules might not apply including the adequacy of compensation.

… it is inappropriate to apply commonlaw real property rules to Indian lands

… the transfer cannot be treated as aregular, commercial transaction.

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Osoyoos (2)

... reserve land does not fit neatly withinthe traditional rationale that underlies the process of compulsory takings in exchange for compensation in the amount of the market value of the land plus expenses.

The Aboriginal interest in land will generally have an important cultural component.

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Evolution

Aboriginal title and Indian land interestshas evolved from a vague concept to anapproximation of a fee simple estate.

Reserve and Aboriginal interests have special

characteristics and utility, which are not fullyvalued by determining current market value.

Any taking of reserve land must be for theminimum interest required for the project.

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Indian Act

… provides a separate and complete

reserve land administration system.

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Interests in Landand Assets (1)

Aboriginal title is a root title subsumed in part by the Crown and based in a group’s communal use and interest. It must be surrendered and compensated when granted or used for non-traditional uses.

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Interests in Landand Assets (2)

Reserve land is a communal interest, with the general attributes of Aboriginal title. It may be unallotted to members as locatees by certificates of possession or allotted by custom, surrendered for sale or for a specified use, taken for public purposes or committed for specific periods for uses through permits, leases and easements.

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Interests in Landand Assets (3)

A certificate of possession establishes a member’s right to possess and use a specific parcel of reserve land. A certificate holder may lease the parcel unconditionally, sell, transfer or will the interest to other band members or lose the interest through reversion or resumption, with compensation for improvements by the Band Council.

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Interests in Landand Assets (4)

Absolute surrender

Conditional surrender

Permitted interest

Internal allotment/taking

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Real Estate (1)

land is a fundamental element of life not a medium of exchange

the reserve land base and resources are limited and need to be expanded not diminished

the anticipated community impacts must influence any response to a real estate transaction

cemeteries, religious, social and cultural sites have special status and usually there are no equivalent substitutes

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Real Estate (2)

there are potential negative tax, rent, employment consequences if businesses relocate from the reserve

member opportunities can be part of any real estate transaction

negotiations is an important part of any real estate transaction

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Real Estate (3)

hospitality is an important part of any interaction

fairness and respect are essential in any transaction

there may be ideological changes with electoral changes

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Appraisal Contrasts (1)

Value in use and some apparentnon-economic uses must be considered.

Restoration is important and covers disturbance, injurious affection

and special difficulties.

There may be no or only a limitednumber of comparable reserve

sales and other transactions.

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Appraisal Contrasts (2)

There is a need to consider Aboriginal interest and cultural attachments

to land when valuing interests.

There is a need to consider the uniqueand inherent value of reserve

land to the community.

There is a need to understand and appreciate the traditional attachment

to plants, trees, animals and fish and natural features that add value.

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Appraisal Contrasts (3)

The valuation impact of reducing reserve privileges/benefits and revenues (e.g., taxes, rent, wages,

employment) must be considered.

The complex and costly process to maintain and expand reserves, as a consequence of real estate

transactions/takings is a valuation concern.

Consideration needs to be given to different interpretations of planning activities and understanding

environmental issues.

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Recap Day One

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Day Two

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Valuation ProcessAppraisal Problem Definition

Scope of Work

Data Collection and Analysis

Land Value Opinion

Three Approaches to Value

Reconciliation and Final Value Opinion

Defined Value Opinion Report

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Valuation Process

Highest and Best Use

The reasonably probable and legal use that is physically possible, appropriately supported,

and financially feasible, and that results in the highest value.

• Physically possible?

• Legally permissible?

• Financially feasible?

• Maximally productive?

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Valuation Process

Additional Highest and Best Use Considerations (1)

• Current or traditional or non-traditional uses

• Special features

• Cultural components

• Future reserve status

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Valuation Process

Additional Highest and Best Use Considerations (2)

•other political or market factors

• Supply and demand differences

• Community, social and cultural factors

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Valuation Process

Land Valuation Methods

• Allocation

• Direct comparison

• Extraction

• Ground rent capitalization

• Land residual technique

• Subdivision development analysis

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Valuation ProcessAppraisal Problem Definition

Scope of Work

Data Collection and Analysis

Land Value Opinion

Three Approaches to Value

Reconciliation and Final Value Opinion

Defined Value Opinion Report

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Valuation Process

Cost Approach• Develop a value opinion for the land

• Estimate the cost new of the improvement

• Deduct depreciation

• Add land value opinion to the depreciated improvement value

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Valuation Process

Direct Comparison Approach• Research the market for comparable data

• Develop relevant units of comparison

• Compare the sales to the subject and adjust for dissimilarities

• Reconcile the value indications intoa final value opinion

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Valuation Process

Income Approach

The conversion of income intovalue through a rate or a ratio.

• Direct capitalization

• Yield capitalization

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Reconciliation andFinal Value Opinion

Valuation Process

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Valuation Process

Defined Value Opinion Report

• Narrative

• Short narrative

• Form

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Valuation Process

Appraisal Problem Definition

Scope of Work

Data Collection and Analysis

Land Value Opinion

Three Approaches to Value

Reconciliation and Final Value Opinion

Defined Value Opinion Report

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Objectives (1)

Now, you...

• Know more about the nature ofNative lands and the reserve land regimes structure

• Understand better the main featuresof First Nation land management

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Objectives (2)

Now, you...

• Know more about informationsources relating to First Nation land management

• Can appreciate better reservelands procedural requirements

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Thank you!

408-PT – Revision 2 – 04.30.08.CAN