NEW LEASES FOR OLD.

New Zealand Herald, Volume L, Issue 15307, 21 May 1913, Page 4

NEW LEASES FOR OLD.

HARBOUR BOARD'S TERMS. COMMENTS BY 'AN EXPEKT. ' THE BOARD TOO GENEROUS. The Auckland Harbour Board's scheme for the termination of its existing leases of properties near • the foot of Queen Street, in order to.institute a new system of lease, designed to encourage the ; erection of good buildings, was the subject of a long letter received by the board yesterday from the Valuer-General (Mr. T. W. Flanagan). Mr. Flanagan stated that the Act was passed to enable the board to arrange with lessees for the surrender of their leases of certain allotments and to. grant new leases for a period not exceeding 50 years, on such conditions as to encourage the erection of buildings of a value and design approved by the board. The question to decide was how far beyond the strictly equitable 'equivalent the board should go in encouraging the lessees to effect the desired object, bearing in mind the spirit and intention of the- Act. The factors' which he had to consider in determining what was a fair and adequate rental were the value of the lessee's interest in the lease to be surrendered, and the value of any ; buildings which the lessee may be obliged to erect under the new lease. To properly effect this it was necessary that there suould be an understanding between him and the board as to the terms of surrender of the leases. The board, continued the- writer, proposed to negotiate upon these terms : lessee to Spend a stipulated sum upon improvements, including a building not-less than four storeys and 70it above the pavement, to plans approved by thr board; and to surrender the present lease and receive a new lease for 50 years. Rental for such new lease to continue as at present for the unexpired part" of the existing lease; thereafter to be on the basis of 6 per cent, of the present unimproved value, less the amount required at 5 per cent, to wipe off in that time the sum agreed on to be spent oil improvements. His conclusions on these terms were that the rental should remain as at present for the unexpired portions of the present leases (31 years). But the proposal that . for the remaining 19 years the rental should be 5 per cent, on the present unimproved value, made the : balance of advantage too much in favour of the lessees. It should not be forgotten that the unimproved value of the land in question entered, on the district valuation roll was assessed in 1911, at about £.500 per foot— an under estimate. The present selling value of the lands varied, he was assured, from £600 to ; £650. : If the strictly equitable principle were applied, the rental for the balance of the term would ) be based upon a revaluation, made at the end of the term of the existing leases. But as the lessee would probably not bind himself to pay a rental not till then ascertainable, he considered that the rental should be based upon a revaluation, made "■■ by (the Valuer-General at the beginning of the new lease. ,(■'-"■/• S''/ '- : '-' : l''' •■". ■^■•'-■/:,'. ;:: ;;i" If The proposal for compensation buildings and improvements was a departure from the usual practice, he continued. The deduction from the rental during the last 19 years would be about 3£ per cent., or close upon one-half of the rental to which the board was entitled;' and the board would be paying; full value for a building which would be SO years old when it came into the board's possession, / and which would be worth much less than; what it cost. The proposal appeared ultra-liberal *.when compared 'with what was; done in regard to an allotment forming a part of O'Neill's Estate, in Queen Street, in which the rental was 6 per cent., and the Jessee had to erect a £4000 building, for which he , was ;to receive no •( compensation." -t;He was inclined (s to think /that if - the \ lessee ; was refunded • out % of; the ' rent( durinf the last 19 years, to the extent -of/ half the cost of the building, he. would be receiving more than equitable' treatment.:/; He would be pleased to reconsider any point on which the board did not agree with him. As the total ; capital (value of the property concerned ; was ■ • about / £138,000/ extreme caution in directing its disposal was necessary. The letter was referred to the board in committee. ■ ;? :j• ■-"'.■ //Ti. r ,;.■:'*.■:('■