THE RECLAIMED LAND LEASES.

New Zealand Mail, Issue 850, 15 June 1888, Page 33

THE RECLAIMED LAND LEASES.

Mr F. W. Frankland, Government Actuary (and Statist, lias presented, his, report on the subject of the Reclaimed Land Leases to his Woi-ship the : Mayor. It is as follows :—Sir,— I have the honor to inform you that I have made a valuation of the Corporation’s interest in the buildings erected cn the leasehold properties respecting which you have furnished me with particulars. I attach a schedule marked A, containing the results of this valuation, and also an estimate, founded on assumptions of a necessarily arbitrary nature, of the Corporation’s interest in buildings that may be erected on allotments at present vacant. 11l each case the valuation shows, not the present cash value of the Corporation’s interest, but the increase of annual rental . which is equivalent thereto. ■ It remains for me to explain the assumptions on which my estimates have been based. In the case of all brick buildings- I have taken the estimate ' both of present and of ultiihate (depreciated) value given by your valuer, Mr James Ames, except in those cases where h is estimate of the ultimate value fell below £3OO. In the lastnamed cases I have assumed the ultimate value to be £3OO. In, the case of wooden buildings'l have, after perusal of opinions expressed by the experts whose reports you submitted to me (Messrs Toxward and Turnbull, architects, Messrs Archibald, Barry, and McDowell, builders, and Mr G. S. Graham, manager of the Phoenix Fire Insurance Company) increased. the depreciation as estimated by Mr Ames by cue-sixth. As in tlie case of the brick buildings, however, no buildijjcr was assumed to have a .smaller termnial -value than L3OO. The reason of this assumption, will be made clear when I deal with the case of vacant allotments. The only remaining assumption, involved in the calculation is that relating to the rate of interest on. money during the currency of the present leases, a period of about 26 years. This I have assumed to be per cent. As any legislation in the direction proposed by the City Council would presumably give rights of compensation to all tenants at tlie expiry of their present leases, irrespectively of the question whether any buildings were now erected on their allotments, it becomes necessaiy to consider wliat increase of rent should be charged to those tenants whose allotments are at present unbuilt on. To leave their rent unchanged would be manifestly unfair, while the assessment of an increase equivalent to the right of compensation granted, or, wliat is the same thing, to the interest parted with by the Corporation, is necessarily very difficult, and involves assumptions of an arbitrary nature. A committee of leaseholders having, through two of their representatives,, suggested that vacant allotments should . be treated for valuation purposes as though each had erected on it ■- a building of the value of LSOO, I considered it fair to assume, in view of the probability that future buildings would be of brick, that, in'eacli case there would at the expiry of. the -lease be a building having then the value of L3OO. It was on this account, also, that I fixed L3OO as the minimum terminal value in the case of allotments already built on. The rents payable by the lessees are substantial, and theiefore it may be presumed that they will utilise their allotments, Hence, if an allotment has now no building on it, or has one of very small value, it may reasonably be assumed that the lessee will make some better use of his land than lie is doing at present. It seems to me, therefore, quite reasonable to assume, that the building which the lessee will erect will not be worth less than L3OO at the expiry of his tenancy. With the view, however, of enabling the City Council to correct itself, any' arbitrariness .it may consider to attach to my assumption, I have calculated the Schedules'marked B and C, which I enclose herewith. Schedule B shows, in the case of each allotment at present unbuilt on, wliat terminal value must be assumed in order to have the effect of raising the annual rent during the unexpired balance (usually about five years) of the first twenty-one years of tlie lease, by 50 per cent., i.e., to the same level as the annual rent which would have become, chargeable during the second twenty-one years of the lease. Schedule C will then show the effect on the uniform annual rental for the whole unexpirecl term of the lease-(usually about twenty-six years) of an increase or decrease of LIOO in the assumed terminal value of the building. ; F. W- Frankland, : Government Actuary and Statist. -Table showing amount per annum to be ~ paid by tenant, throughout the term, for each £IOO of assumed depreciated value, so that at the end- of the term' the buildings would bo the tenants’ own property. . r «. For leases dated Ist January, 1872.. ... ... R. £ll7. • 2 6. For leases dated Ist July, • ' 1872... ... ... ... 1 15 10 c. . For leases dated Ist January, ' ; 1873.. ... ... 1 14 7 Note. —The schedule A referred to in the above report shows a new uniform

rental of JL3396 3s 5d per annum for the next 26 years, being an increase of 66 per cent on the rental payable during the next five years, and an increase of 13 per cent on the larger rental payable during the second term of 21 years. —Thos. F. Martin, Town Clerk. ■■■-, The Leasehold Bill Committee of the Council report on the matter as follows - 1. That in the new leases to be granted under the Bill to lessees who come in under such Bill, the lessees shall be exempted from liability to repair, and from liability to rebuild in case of fire, and the Corporation to release its rights over any insurance fnoneys that may be payable in case of fire ; hut that, oil the other hand, the lessee shall covenant that if he does not rebuild to the extent of the value of the building immediately before the fire, he shall, nevertheless, continue to pay the same rates as were payable immediately before the fire. 2. That the . Actuary’s schedule showing wliat increased rent each reclaimed land leaseholder will have to pay, be annexed to the Bill by means of an amendment, instead of a separate valuation being required to be made under tlie Bill in the ease of each such leaseholder. 3. That for the purposes of the Bilk the existing buildings only he valued, but in cases in which the depreciated v<ilue of an existing building at the end of the term is estimated to be less than L3OO, such depreciated value be raised to that amount, aiid increased rent be, made payable in respect thereof. This latter provision also to apply to vacant lots. 4. That the terminal value now found for the purposes of the Bill shall be the minimum, amount to be received from the incoming tenant at the end of the term. ■: