20.6.1 The two main options for determining amounts payable by the Authority at the expiry of the Contract in respect of Assets with an alternative use (and which are owned by the Contractor) are:
• the market value of the Assets in their existing use; and
• an amount bid by the Contractor when negotiating the original Contract, indexed through the duration of the Contract.
These amounts are referred to as "Terminal Payments".
20.6.2 The market value of the Assets is the more valid basis for a payment to be made at the end of the Contract. If, however, there is a possibility of an extraordinary increase in market value during the duration of the Project and the Assets are critical to the Authority's needs (i.e. the Service cannot be obtained without them) then a cap on the amount payable may be prudent (for example, to guard against excessively inflated property prices).
20.6.3 The mechanism for arriving at the market value must be specified in the Contract to avoid a dispute over the valuation. The final amount will reflect the condition of the Assets.
20.6.4 The alternative method (bid amount) referred to in Section 20.6.1 is unlikely to be appropriate. The value paid should reflect the actual value of the Assets (for example, their condition) and a fixed sum transfers no risk in this regard.