CITY LEASES

Evening Post, Volume CII, Issue 40, 16 August 1921, Page 4

CITY LEASES

ON LAMBTON RECLAMA- • TION

VALUATIONS OBJECTED TQ

EFFECTS OF BUSINESS DEPRESSION,

( Much of the time of the Assessment < Court was occupied yesterday afternoon .< in considering 1 important questions re- 1 lating to the valuations of the city leases ', on the Lambton reclamation. Mr. V. G. Day, S.M., presided, and with him * sat Messrs. T. B. Dwan (City Council *, assessor) and Ewen Campbell (Govern- (1 ment assessor). Mr. F. E. Ward ap- « peared for tli£ Valuation Department, and Mr. J. O'Shea for the City Council. The first, case taken was that of the i D.I.C, which raised objection to the valuations placed or^,- certain leasehold ll land held by it. The ■valuations fixed were as follow :— -Lot 68a, unimproved value £8105,. improved £3125; lot 67a, unimproved value £9965, improved £3750; lot 66c, unimproved £7800, improved £1000; lot 65, unimproved ] £9715, improved £1560, VALUATIONS IN "BOOM" PERIOD. < Mr. G. G. G. Watson, who represented I the D.I.C. and other leaseholders on the ] Lambton reclamation, said that the argu- J ment he was going to advance would 'J : apply only to the mercantile area. It s | had to be remembered that the value of J residential property had been high dur- t ing and since the war because of the r high cost of building and the shortage of ; houses. However, in regard to mer- j cantile properties, it was submitted that * the conditions existing at 31st March ' last did not warrant the high valuations c that had been made. In some cases the j 1 increase, compared with 1914, was 40 ; per cent. The valuations would stand i for about six years, therefore some rea- , sonable standard should be fixed. • The } present was a period of depression, but the valuations must have been made in a period of "boom" and inflation. The * inflation came to an end suddenly in } November last, but the valuations were_ made before the turn of the tide came. , Prices were now falling rapidly, and the valuations placed on land should be looked at in that light. In valuing a j business site, what should be taken into ; consideration was the volume of trade ( likely to be done on that site. Mer- j cantile concerns were not making great r profits to-day, find business houses were c "carrying on" under extreme difficulty. r For that reason, it was unwise to in- s crease artificially the value of mercantile { properties. The "boom" had burst, and „ we were now on the edge of a low-price t cycle. During the war there was a, c centralisation of business in Wellington, >] but now the demand for city properties t had decreased. High prices realised at' t sales should not be taken as the true i test of the value of properties. In Wei- -v lington, isolated sales had taken place, f at which buyers had been willing to pay V high prices because they wanted the pro- 1 perties for special purposes. Latterly, \ there had been practically no big deals in city properties. The reason was i obvious—people did not have the money 1 to finance the sales. It was a well known economic proposition that as the s rate of interest rose values of property t fell, and the interest rates were higher 1 to-day than they had been for twenty r years. At the present time, the in- I terest rate was 7 to 8 per cent., as a against 5 to 5| per cent, for the past > number of years. Not only did present j trade conditions not warrant the in- i creases lhat had been made in the * valuations of city property, but the in- ' creases were going to affect future busi- ' ness transactions seriousty, aud might a lead to inflation in prices. In some s cases, too great a value had been placed c on the land and not sufficient on the im- a provements. The high price that had * been paid for many buildings was be- c cause tho cost of replacement had in- r creased to such a great extent. One '1 important factor in connection witli the c valuation of property was the incidence c of rating in a, city. The Wellington 1 city rates had always been among the highest in New Zealand, and 'last year ° the rates had been improved 10 or 15 | per coni;. Mr. J. O'Shea (City Solicitor) denied ? this statement. He objected to Mr. Watson making statements unless he was going to prove them. "FARCE OF THIS COURT." Continuing, Mr. Watson said the Val- > uatioit- Commission had found that the ! higher rates were made, the greater was \ the depreciation on the capital value of t 'property Holders of leaseholds deserv- I ed the greatest consideration from the £ Court, because they were in a different c position from freeholders, who could, if t they were dissatisfied with the valuations s placed on their lands, offer them to the { Government under eection 31 of the Act. c iA. leaseholder could not do 1 that. His Worship : "It is a most extraor- £ ■dinary position. It makes a farce of this c Court. AH taxpayers are not treated ..■* ,in the same way. Section 31 is in favour o of the freeholder." Mr. Watson : "It is a matter of common knowledge that maiiy freeholders J come to tliis Court to have their valua- ; tions sustained pro forma, in order { itha-t they may offer- their properties to c the Government. They succeed then in i getting their valuations reduced." . f His Woi-ship : "I say that section. 31 i is a most improper section to have in the 1 Act." • « Mr. O'Shea : "It is of value to a man J who has a lot of property, and can take i ■a risk with one. " ; Mr. AVatson said that city leaseholds were not sought after, because their. i tenure was not popular. ' The statement was made by Mr. O'Shea that the revenue to the city from the leaseholds was fa.r below the. Government valuation. Mr. Watson : . ''That is very illuminat- ] ing!" His Worship remarked that the fact ( that leaseholders suffered a disability be- ( 'cause they could not take advantage of section 31 of the Act did not have any j bearing on the value of improvements on Jeasehold land. j PROPERTIES UNLOADED. • J Gerald Fitzgerald, representative of financial institutions, stated that during the war period, and subsequently, a num- -. .her of the leading companies in Wei- \ 'lington unloaded all the properties they j icould, because they felt that the values , would not be maintained. He himself , had got rid of his own properties. Wit- j ness went into details regarding hie esti- r mate of the unimproved values of the D.I.C. leases. 11l answer to Mr. O'Shea-, witness said that the value of some of tho properties ■in tho city had increased 50 per cent, 'since- the 1914 valuations were made. In regard to Lot 68a of the D.I.C. J Jeases, the dopth of which was 65ft, witness assessed tlm unimproved value at t £240 per foot. [ Witness staled that ho thought the western side of Lambton-quay whs more c .valuable for business purposes than Uio a .reclamation area. More people- passed t along the western .sdo daily than'was I the. e^tis on the ullicr ciUo. 5 Mr. O'Shea : "Can you tell we of any jj

sale that lias been made since 1914, on iLambton-quay, at under the Government value?"—" Yes." His Worship : "There was one sale, that of George and Kerslev to the D.1.C." Mr. O'Shea stated that he had not the figures of the purchase price. Mr. Watson : "That was a case of one company buying another's shares as a going concern." Mr. O'Shea : "There was a very handsome profit." Mr. Watson : "Prove that!" Answering further questions by Mr. O'Shea, witness said that he had known of sales having been made of Lambtonquay property at "pretty close to £500 per foot." On parts of the Quay he had ,not known of sales having taken place .at under £300 per foot. Questioned by Mr. Campbell, witness .said he thoughtit quite conceivable that a. vacant section on the Quay, would bring £500. "It is quite extraordinary -what people will give for a freehold," he .said. "During the 'boom' ?" asked Mr. Campbell. Witness : "Oh, yes, that has stopped now." At this stage the Court adjourned iimtil 10.30 a.m. to-day.