RECLAIMED LAND LEASES.

Evening Post, Volume LXVIII, Issue 89, 12 October 1904, Page 5

RECLAIMED LAND LEASES.

PUBLIC MEETING UPHOLDS THE BILL. BOTH SIDES OF THE QUESTION DISCUSSED.

The public meeting convened by the Hon. T. K. Macdonald, M.L.C., for tha purpose of discussing the Wellington City Leasing Bill, which the Hon. Mr. Macdonald opposes, was held last evening 1 in the Foresters' Hall, Tory-street, probably 300 people being present. Tha proceedings were fairly lively throughout, the lessees being strongly represented. The opponents of the Bill, who convened the meeting, failed to carry their motion directed against the BiH, the Noes being in a very large majority. Anticipating such a result, Mr. MacdonaJcf and the opponents of the Bill charged the lessees and their friends with packing the meeting, and declared beforehand that they would not accept tne vote, as representative of tho citizen* oi Wellington. The Hon. T. W. Hislop presided. RENTAL VALUES, AND LESSEES' GAINS. Mr. Macdonald, after referring to pre vious efforts of the .lessees to obtain from their landlord, the City Council, terms advantageous to themselves, said he did not object to their playing their own game as long as they played it fairly. When they played it unfairly, as in 18tf8 and now, he had taken action and convened public meetings. The public meeting heftl in 1888 passed a hostile motion, which resulted in the withdrawal of tha Bill then promoted by the Council — a Council of whom no less than 6even were interested in the leases. Coming to tho present issue, MA Macdonald said the lessees were of opinion they were giving enough if they paid the Council the market value of the ground rent. But the city was entitled to the market value of tho rental cf the buildings, as of the land. It was right that the lessees should have this and no more : that, at the end of their ten years' balance of lease, the market value of tho rental of their properties should be valued by a competent authority, and that the existing lessee should nave first right to take up a lease of his property at thatvaluation. But in giving this first opportunity to the lessee, the city must have, with surrender of the lease, tha rental value of the buildings. Mr. Macdonald proceeded to quote from two returns of valuations of the leasehold property, both made by the City Valuer (Mr. James Ames), the first return dated 1903, the second 1904, with' fifte'era months between. The second return was supplied by the City Council to the Legislative Council for the Upper House's information in dealing with the Bill. He quoted figures to show a large proportion of decrease in valuations as shown in the 1904 return. With regard to this return, it was important, in order to facilitate the passing of the Bill, that Parliament should be impressed with the notion that the buildings were rotten, and that this portion of the city was a slum. The Mutual Life Aesociation'x buildings had, he was informed, a life of 30 years. (Cries of "Dry rot.") Every building had dry rot according to tho tenant. The Mutual Life building was, in 1888, valued in the Corporation's books at £1200, and the then Mayor, Mr. S. Brown, who was engineering tho Bill through Parliament, stated that in 26 years (10 years from how) it would not be worth £300. Yet in the 1903 li6t the City Valuer, Mr. Ames, valued it at £1500, or £300 more than he had valued it at 16 years before. Yet again, in the 1904 list just presented to Parliament, the value of the building was set down by Mr. Ames at £1000. It had gone back £500 in 15 months. (Cry qf Take the building next door.") Tho Public Hall Company's property, Theatre Royal, and Club Hotel, were, in tho1903 list, valued at £4700; in the 1904 list presented to Parliament a month or two ago, the value suddenly depreciated, to £3000. For the benefit of Parliament, £1700 was knocked o£E! He did not say anything against Mr. Ames; he merely drew attention to the anomaly that in 15 months all this depreciation had taken place in the value of buildings that wern to be taken away from the city. Th« Union Company's building was, valued in the 1903 list at £4500, in the 1900 list at £4000. The building occupied hy his (Mr. Macdonald' s) firm, and owned by an absentee in London, came down from £1500 in 1903 to £1200 in 1904, though his firm had in the meantime expended £800 to £1000 to put the building in order. The Mayor's building wai, £750 in 1903, £500 in 1904. Mr. Ames'n returns clearly showed that 25 per cent, and one-third, and even more nad been struck off values during the uiteen months. The lessees would not admit that the city was entitled to the rental value of the buildings, which was far i« excess of ( the value of the buildings. (a Voice : 'Half the buildings are condemned.") Mr. Macdcuald again quoted the recently published figures as to tha Theatre Royal and the Club Hotel, and worked it out that the Public Hall Company would have a rental of £472 under the Bill, or £1278 less than the rentail the Company was deriving from ma licensees at the Theatre and the hotel. (Interjections were made that in each case the lessees' rental might fall through loss of license.) The Union Company's brick and stone building, valued at £17,300, was worth a rental of £1009 or £1200, and the rental tho city would receive u»der the Bill was £534. His (Mr. Macdonald's) landlord was entitled under the Bill to pay a rental of £117, and was 'receiving a rent of £400, a surplus of £283. The Mutual Life land and building, valued at £6200, had a rental value of £600 a year, and the ground rent under the Bill would be £216, a surplus of £384. He had shown that iv four cases, the total loss to the city was £3600. ("Give us four the other way.") They would have the chance later on t« quote four the other way. He was prepaicd to substantiate that _the rental value in ten years' time would be from £20,000 to £25,000. In 1888 the property tax rental return amounted ta £16,000 per annum — would any one say it would not be worth £20,000 to £25,006 in ten years' time? They were asked to give this rental away for what, according to the Council's own estimate, would be worth £3000 to £4000 per annum during the next ten years. Tin Wcllesley Club paid £1650 for the right to take up the ten years' balance of lease of land with "ramshackle" building? thereon worth only one-eighth of th« money. The reason was that such a# unexpired low-rental lease, if marketed, brought a very large sum, and that was what the city was asked to give away to the lessees. He moved :—: — This meeting of the citizens of Wcl lington is of opinion— (l) That tin provisions of the Wellington Leasing Bill now before Parliament arc calculated to inflict serious financial low upon the people of the city ; (2) that while desirous of dealing with th« reclaimed land leases upon a basis equitable to the leaseholders and the city, it desires to emphasise tie following points:— fa) mat it is not in the interests of the city to deal witk the tenants en bloc, but that eacb lease should bo dealt with on a separate valuation basw, (b) that th« Council (should have the right to. re fuse any application for a new lease, (c) that no BHI should bo passed by Parliament which does not include a power to take a poll ot the citizens a 8 to whether they aro content to [ change.th&.existinß contracts between

themselves and tne lessees, (d) that it is advisable the Bill should either be amended in the- above direction or withdrawn till nest session of Parliament. The leases could not be dealt with en bloc— all under one lease and rental, as proposed by the Bill — because the conditions differed. Powei for the Council to refuse application -for new lease- was required, because the Bill Made it compulsory on the Council to accept a surrender of lease. (City Councillor Devine disputed tnis, saying the Bill was permissive.) If the lessees were honest in their intention, they could not object to me popular vote. The Bill could not go through in its present shape — (cries of "Oh!") — the- common sense of the Legislative Council would not allow it. It was absurd to talk about new and beautiful buildings under the rebuilding conditions of the present Bill. Any lessee had the right to come in under the Bill within two years ; af trr that, if he chose to pay twice the present low rent, he had five years before he was compelled to build, or altogether seven years to play with. If he chose to pay two and a-half times the present low rent, he need not build till one and a-half years after the expiry of the ten years' balance of lease, If he chose to pay four times the present low rent, he need not build at all. Then, as to the building, the Bill did not (specify the amount to be spent. Mr/ F. Loudon seconded the motion. MR GIBBS IN REPLY. Mr. A. E Gibbs, who is connected with the Wellesley Club, said this was the last occasion on which satisfactory legislation for conversion of leases* co.uld be passed. -It was th& lessees^ not the citizens, who were giving up 'their rights. Mr. Macdonald had stated that the leases, buildings and land, were now worth £192,000, which at 5 per cent, meant an annual rental of £9600, against which t,he lessees were now, paying a total rent of £1636. For the next ten years, therefore, the lessees wer-e admittedly entitled to the difference, £7964 per annum, or a total of £79,000. This the lesses were giving up, in order to secure more permanent tenure. If was true' that the Wellesley Club paid over £1600 for its lease. It was also true that it might pay speculators to buy leases in view of rack-rentals during the ten years. But ■what would happen after ten years 1 Mr. Gibbs- differed with Mr. Macdonald in that he estimated tfiat not more thaji two or three buildings would be good after ten years. He had been informed by the agent for the building occupied by Mr. Macdonald's firm that it was so damaged by the earthquake that he doubted whether it would stand during the remaining ten yeais. (Mr. Macdonald : That statement is untrue.) A Legislative Councillor had told him that his foot went through the floor of the Club Hotel, and the Mutual Life building was rotten as a pear inside. Even assuming that the sanitary authorities allowed such buildings to remain, the increased ground rental of the properties would be so big that scarcely any of these buildings could be made to pay, and lessees would have to erect substantial buildings in order to make the leases profitable. The rental of £150 per annum mentioned by Mr. Macdonald would average out at £7 10s a- foot. He instanced leases which, with a 33ft frontage, would pay £230 per annum. These could not pay except by rebuilding, as their rent now was only one quarter that. If the Council allowed all the leases to run out at one time and be rushed into the market at once, they would not be all taken vp — (cries of dissent) — and the Council would lose. The building term was altered from three to five years because it would be impossible to have fourteen large buildings all erected within a stone's throw of one another ■within three years. T6 rush the building market and the land market would be equally disadvantageous. The city was nob going 'to be robbed; the enhanced grouud rent was not being taken away. If the Council did dare to retain the buildings and rack-rent them, Mr. Macdonald would convene a public meeting to protest against filthy hovels. .Possibly loss of license would cut down the rents of the Club Hotel and Theatre Royal. MR. WRIGHT'S CASE. Mr. R. A. Wright, who said he had nr>t been associated with other lessees in their meetings, considered the bargain a fair one to both parties. To show that the lessees were not getting unduly advantageous terms, he stated that as a lessee he did not think it would pay him to accept the terms of the Bill. His ground rent Was £30 a year, and his building could not possibly last longer than the ten years. By paying douo'e rent — that is, £300 more for the ten years — he could* get a now lease and rebuild. But he thought it would pay him better to save his £300 in order to bf better able to bid against a po.ssible com petitor when the lease, with its firewood, fell in to the Council. EN BLOC DEALING IMPOSSIBLE. City Councillor Izard was of opinion that the leases, differing so mucli in conditions, could not be dealt with en bloc, but thought that each ■ should be dealt with separately, on its merits, by a valuation tribunal. Valuation by arbitration had been the principle of earlier Acts, but unfortunately the valuations were too low. To show the impossibility of dealing with the leases en bloc in the manner proposed by the Bill, he pointed out that if the last speaker might come in under the 300 per cent, (non-building) section, the city would gain the 000 per cent, increase of rent, and would not lose much, as the buildings were poor. But in the case of the Union Company the city would lose a valuable brick building; while the Union Company, in return for gaining its valuable building, would only have to pay the same ratio of increased rent as Air Wright would have to pay in order to be secure in his inferior building. Therefore, to get renewals of lease on an equitable basis, each case Avould have to up dealt with on its merits, by independe.it valuation. If that could not be done by an arbitration system as provided in the Acts of 1899 and 1900, it would be better to refer each individual ease to a Court consisting of a nominee of the Council, a nominee of the lessees, and a Supremo Court Judge; and let that Court decide what is a fair rental on condition that tho city gets the building. The Bill could be easily amended in the Upper House ta provide such a Court, and it would re .move the friction. Many members of Parliament had assured him that such nowu.* for individual dealing would be given. DOES LAND OR BUILDINGS MAKE THE RENTAL? City Counc 'lor Devine replied first to Mr. Macdonald's point as to the rental value. It was, he said, admitted that the Council w.us getting more than the value of the surrendered buildinge, and was also getting a fund to rover any loss by absence of 'competition for the new leases. But Mr. Macdonald said (he city was Losing £20,000 a year in lental value; while admitting that the buildings would not bo Avorth £25,000 in ten years' time, he still said th&y would yield £20,00U a year rent. What Mr. Macdonald had clouded ■was that it w»8 the land, and not the buildings', that produced the rental ; and the city was not giving away the ground rental. The city should not squeeze out rent by rack-renting. The Legislature did not give the Council power to accept surrenders and deal with each case on its merits ; if it would do so, there would be no necessity "for the present Bill. It only gave the Council power to accept the surrender of a lease and put it up for public auction, which competition was unfair to the lessee. Therefore, special legislation was needed. As to whether the Bill would be effectivo in securing rebuilding, they had the ab■olute signature of fourteen lessees that.

they would come in and rebuild ; and the Bill provided that the leases should contain covenants as to rebuilding. Durable material was specified. If only a certain number of lessees came in under the Bill, the rebuilding by these—especially if they were those with the worst buildings — would appreciate the whole property, and the city would therefore get a proportionately higher ground rent, at the revaluation ten years hence, and from those who did not come under the Bill. The fact of a portion coming under the Bill would reduce the number of leases to fall in at one time, and thus reduce the danger of surfeiting the market. Mr. Mncdonald and Councillor Izard approved the 1900 Act (valuation by arbitration). He instanced a case where a lessee, who would ha^e paid £274 10s under that Act, would pay £366 under the en bloc proposal in this. Thus the en bloc proposal gave the Council better terms, and they were sure of fourteen leases under it, while only three came in under the Act of 1900. Councillor Devine also touched on the pi - esent fire risk among old buildings. MOTION LOST. In reply, Mr. Macdonald ridiculed the idea that the leases, when they fell in, would remain on hand for lack of lessees. He could put 49 of them up to-morrow, and get 100 people to compete. Councillor Devine said it was the land, not the buildings, that produced tho rental. What was the Council's ground rent from the 49 leases? It was £1686. (A voice: "An old valuation?") And what was the rental derived from the buildings? Nearer £20,000 to-day than £10,000 or £15,000. ,("Rot.") The discussion had amply justified the calling of the meeting. On a show of hands being taken, the motion was rejected in the ivtio of t'bout 5 to 2. In the course of the proceedings, questions and interruptions were constantly fired at ipcakers, and one gentleman became greatly irritated at a retort made to him by Mr. R. A. Wright. He insisted on mounting the platform and issuing a solemn injunction to Mr. Wright to avoid personalities, also a protest against the packing of the meeting by interested parties. The "personality" complained of was of a very harmless order — an inference that the gentleman referred to was not fully awake. This and other incidents gave rise to unbounded laughter. The quick-fire of interruption and retort was full of repartee at once pertinent and diverting.