Section 710 : Motorway Service Areas/Major Road Service Areas

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Section 710 : Motorway Service Areas/Major Road Service Areas

1. Co-ordination

For the purposes of National Co-ordination, Motorway Service Areas and Major Road Service Areas have been classified as a Group A Class. Special Category Code 189 should be used. The suffix letter A will be automatically computer generated.

2. Description

2.1 Background

MSAs have been planned and controlled by the Department of Transport ever since motorways were first built. This was seen as the best way of ensuring that all motorway users had regular opportunities to rest during their journeys and to obtain essential services: fuel, lavatories, food and drink.

Until 1980 MSAs were let following a consideration of tenders which were invited from interested parties by the Department of Transport. The tender documents required offers to be submitted on the basis of a lease, usually for a term of 50 years (three sites let on 21 year terms), at a fixed annual rent plus a "participating rent" calculated as a percentage on a sliding scale of the annual turnover after deduction of petrol duty, tobacco tax and VAT.

Acquisition of the land, provision of access roads, landscaping, parking areas, lighting and basic services were financed by the Department of Transport. The operator paid for buildings and equipment. The leases initially required the operator to:-

  • Maintain the site and buildings in good repair, including those facilities provided in the first instance by the Department.
  • Provide services for 24 hours every day including toilets, food and drink, petrol and repair facilities (since relaxed).
  • Provide up to four brands of fuel.

The cost of provision of the free facilities, such as toilets, was heavy and 24 hour opening necessitated a three shift employment system. Because most sites are in rural locations site operators were obliged to convey staff from surrounding areas which added to their costs.

In 1980/81 the Government embarked on a programme of disposal of MSA sites to the operators following publication of a Report of the Committee of Inquiry into MSAs (known as the Prior Report) in 1978. The report recommended that existing contracts should be re-negotiated to achieve an equitable transition towards new consistent lease terms with the aim of redressing the imbalance of return between operators and the Exchequer, improving standards, removing unnecessary constraints and reducing fuel prices for consumers.

The existing leases were surrendered to the Department and new 50 year leases granted to the operators at peppercorn rents and a premium.

Since the 1980s the method of providing MSAs has been for the DTp to:-

  • identify gaps in the network;
  • select suitable sites to fill these gaps;
  • seek planning clearance;
  • acquire the land by agreement or, more usually, compulsory purchase;
  • offer the sites, usually by competitive tender, for design, construction and subsequent operation by private concerns (either oil companies or catering operators such as Granada, Trusthouse Forte etc). Operation is governed by fifty year leases (granted by the DTp in return for a premium payment and peppercorn rent) which ensure that specified quantities of parking and other required facilities are provided 24 hours a day;
  • avoid adjacent MSAs being operated by the same company;
  • sign MSAs, but not off-motorway facilities, from the motorway;
  • maintain landlord controls over the use of the site (but not its day to day operation which remains the responsibility of the operator).

Some sites have been, and are being, identified by the private sector as a "private initiative". In "private initiative" cases an MSA operator, developer, or land owner, obtains a suitable site which is sold, usually with planning permission, to the Department at market value ignoring the value as a service area. The site is leased back to the operator for a term of not less than 50 years at a peppercorn rent and a premium to reflect the right to put up a motorway sign and gain access to the motorway. In such cases the operator is responsible for building the access road, which can be a very expensive item. In cases where the Department of Transport already own the site it is usually put out to tender with the access road already constructed.

Under both of these methods the Department of Transport impose certain conditions on the operation of MSAs in order to secure basic services for all motorway users at all times. These conditions are that MSAs must provide:-

  • services for all motorway users 24 hours a day every day of the year;
  • at least hot drinks and cold food at all times;
  • leaded and unleaded petrol and diesel;
  • free lavatories with public access;
  • free parking for two hours (after which charges may be made) in quantities specified by the Department of Transport;
  • a picnic area of at least half an acre;
  • showers and shaver points for lorry drivers;
  • public telephones;
  • a tourist information point if required by the Regional Tourist Board;
  • a police post if required by the local constabulary;
  • all facilities to be made available and accessible to disabled people (eg. dedicated parking spaces to be reserved near amenities);

and they must not:-

  • allow the sale or consumption of alcohol;
  • allow rear access to the site to be used other than by MSA staff, delivery vehicles, and the emergency services;
  • be used for purposes unconnected with the use of the motorway. The MSA must not become a destination in its own right, generating extra traffic on the motorway. Its purpose is to serve the incidental needs of people in the course of a motorway journey.

In August 1992 the Government announced that they were reducing the central regulation of motorway service facilities in favour of a greater role by the private sector. The new approach is designed to increase competition and choice for drivers and passengers and the main features of the arrangement include:-

  • responsibility for identifying new MSA sites, seeking planning permission and acquiring land will pass from the Department of Transport to the private sector;
  • the minimum interval between MSAs will be reduced from around 30 miles to about 15;
  • continued guarantee of 24 hour access, fuel availability, free parking and toilet facilities.

It should be noted that the deregulation proposals do not, in themselves, constitute a material change of circumstances (LGFA 1988 Schedule 6 para 2(7)). However, if executed, the principal changes that may result, ie. the opening of new facilities, are changes that need to be taken into account to the extent that they are valuation significant.

2.2 Motorway Service Areas

Most MSAs were constructed between 1959 and 1978 and by the end of that period 38 sites had been developed in England and Wales. That number has steadily risen and by the end of 1991 there were 44 MSAs in England, 5 in Scotland and 4 in Wales.

Department of Transport policy since the outset has been to build service areas at approximately 30 mile intervals with potential in-fill sites, where needed, at 15 mile intervals. In some cases, however, much wider gaps exist. For example, there is a gap of 56 miles between the Heston and Membury areas on the M4 with no service area at all.

MSAs are sited either at junctions between the motorway and the rest of the road system, or between motorway junctions with direct access from the motorway. There are generally four different types:-

  • Double sided, inter junction sites usually with communicating foot bridge (eg. Watford Gap).
  • Single sided, inter junction sites, ie. serves one side of motorway only (eg. Burton West).
  • One single sided site but with access from both carriageways (eg. Scratch Wood).
  • Junction sites with access from all purpose roads as well as the motorway (eg. Gordano).

The original MSA sites proved to be too small, occupying 10-15 acres compared with the 35-40 acres now thought to be needed for a service area with the full range of services. On the heavily used motorway routes such as the M1 and the M6 there has been difficulty keeping pace with the demand for services which is closely related to the amount and composition of traffic passing. A number of original sites such as Keele, Knutsford, Watford Gap and Newport Pagnell have been extended, refurbished or rebuilt, but only one "in-fill site", Sandbach on the M6, has been opened.

As older sites have become less attractive to customers, operators have undertaken substantial refurbishment programmes in order to maintain or improve trade. As profitability from catering and petrol fuel sales has increased many operators of existing sites have added "take away" food and retail facilities. Often shops have been added as part of a petrol forecourt redevelopment carried out by the petrol supplier.

Towards the later half of the 1980s many sites began to provide overnight accommodation, which has proved to be very successful. In 1990 Granada reported 80% occupancy rates in their travel lodges and this level is expected to continue to rise.

2.3 Major Road Service Areas

Major Road Service Areas do not come within the direct control of the Department of Transport to the same extent as Motorway Service Areas. However the Department do have certain powers to give directions restricting the grant of planning permission on trunk roads. The policy and the the principles which will guide the Department in exercising its power and offering views on planning applications are set out in Department of Transport: Circular No. 4/88 titled The Control of Development on Trunk Roads.

Major road service areas can be defined as follows:-

MRSAs provide comprehensive services to drivers and passengers of motor vehicles, similar to those found on MSAs. Although not situated on motorways they will be located at strategic points in the trunk road network.

A MRSA will probably be smaller than an MSA but is still likely to have a site area exceeding 10 acres and include a large petrol/diesel forecourt, forecourt shop, restaurant, snack bar, shops, video games machines, free short-term parking for cars and lorries, and toilets which may be used without obligation. It is anticipated that the forecourt throughput will substantially exceed 4.5 million litres (1 million gallons) per annum and that catering receipts will exceed £500,000 per annum.

Different parts of the MRSA may be in a different occupation and therefore separately assessed.

Examples of MRSAs include:

Grantham/Colsterworth A1/A151

Great Gonnersby A1

Blyth A1/A614

Peartree Roundabout A40

Sutton Scotney A34

Warminster A36(T)

The above definition gives general guidance and VOs may be aware of premises which they consider should clearly be classified as a MRSA but which do not exactly meet the definition. It is most important that there is a logical pattern of assessments from the large petrol filling stations, through petrol filling stations with roadside catering facilities to MRSAs and MSAs. In cases of doubt, full details should be forwarded to the Group A valuer who will decide upon the correct classification of the particular site.

3. Survey Requirements

3.1 Basis of Measurement

In accordance with the VO Code of Measuring Practice, MSAs and MRSAs should be measured to NIA. However, because of the wide range of uses often found on the site, GIA measurements may, in some instances, also be required. The following additional information should be noted:-

Petrol Forecourts

GIA. NIA of shops to be calculated separately. Reference should be made to the guidance contained in RM5:770.

Catering Facilities

NIA. The referencer should note the number of covers in the restaurant area, opening hours and occupier.

Shops

NIA. Opening hours, range of goods sold.

Travel Lodges

NIA. Note should also be made of the number of bedrooms. If bedrooms are not of similar sizes, no measurement of individual bedrooms need be made. Details of the tariffs and occupancy rates, if known, should be noted.

ATMs (Cash Points)

Site area of machine. NIA of any ancillary service/storage area. The person or company who services the machine needs to be identified.

Police Garages

NIA, but GIA measurements should also be taken in case hereditament is to be separately assessed.

Breakdown Garages

NIA, but GIA to also be taken in case hereditament is to be separately assessed.

Advertising Hoardings Size of sheet/poster panel and structure.

4. Basis of Valuation

4.1 Background

The business of MSAs may be divided into five main categories; catering, fuel, retail shops, overnight accommodation and other. The last category covers principally takings from amusement machines, advertising revenue, and fees from overnight lorry parks. There may also be income from "let outs" such as RAC/AA boxes, workshops and repair bays which may form separate units of occupation, and therefore such receipts may have to be excluded from the total gross receipts of the MSA hereditament.

Receipts have continually risen during the 1980s with catering and shop sales rising faster than fuel receipts. In 1981/82 the proportion of sales from catering was around 30-31%, petrol sales were around 50-53% (exclusive of VAT and duty) and shop sales were around 15%.

As at 1988 fuel sales represented on average 42.1% of receipts (range 37%-48%), catering had increased to an average of 33.5% (range 27%-38%) and shop sales had grown to represent an average 21.7% (range 19%-26%). (Figures based on analysis of 14 Granada run MSAs. Receipts from accommodation not included.)

As a result of rising receipts and because the Average Gross Profit on catering and retail sales is higher than on fuel, the profitability of MSAs has grown steadily. In the late 1980s an increasing number of MSAs and MRSAs started to provide overnight accommodation which has proved very successful.

4.2 Rental Evidence

The change in the Department of Transport policy, that took place in the 1980s, has led to MSAs no longer being let on turnover rents with the result that assessments can no longer be determined on the rentals basis.

4.3 A Profits Basis

The preferred basis of valuation is a profits basis. Full details of this method of valuation can be found in RM4:6. For revaluation purposes it is likely that this class will be the subject of central negotiations and that the appropriate percentage, or percentages, to be applied to the gross receipts will be agreed by CEO(R2) with agents representing the motorway operators.

The gross receipts split between fuel, shop, catering, accommodation and other receipts will be provided by the site operators on a form of return.

Gross receipts are defined in the tender documents but for this purpose they should be taken to be those in respect of the provision of services, and of any other business activities in or in connection with the premises, excluding only such sum as is attributable to petrol and diesel duty, VAT (output tax) and tobacco duty or deriving from separate hereditaments. (The original royalty rents were similarly adjusted so that no additional rent was paid on the "tax element" of gross takings.)

Operators frequently do not now have separate figures for petrol duty so that it is possible that turnover figures supplied may be given gross of petrol and diesel duty. It is therefore necessary to make an adjustment based on the rates of duty applicable in the relevant year and also to check that VAT and tobacco duty have been deducted from the figures supplied.

4.4 The 1990 Revaluation

Details of the basis agreed in central negotiations for the 1990 Rating List are set out in Appendix 5:710:1.

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