SALE OF IMPORTANT CITY SITE COMES BEFORE COMMITTEE

Wanganui Chronicle, 28 October 1948, Page 7

SALE OF IMPORTANT CITY SITE COMES BEFORE COMMITTEE

Counsel Submits Unimproved Values Lower Than Selling Values

Contending that Government unimproved valuations of business property in Victoria Avenue were lower than the true sales value, Mr. B. C. ITaggitt, appearing for the Public Trustee before the Wellington Rural Land Sales Committee yesterday, showed how the unimproved value of Salek’s Buildings, at the corner of Guyton Street and Victoria Avenue, had dropped from £12,787, or £194 per foot, in 1928, to £7475, or £ll3 per foot, when the revision was made in 1947.

The committee was hearing an application for the approval of the sale of Salek’s Buildings to the T. and G. Mutual Life Assurance Society, the consideration being £16,500. The Crown valued the property at £13,255 made up of £5725 for improvements and an unimproved value of £7530. Decision was reserved.

Negotiations for the sale of the property have been proceeding between the Public Trustee, acting as executor of the Peter McWilliam Estate, and the society. When the hearing began Mr. Haggitt said the case was of considerable importance because it was the first contested sale before the Land Sales Committee of a business property in Victoria Avenue. Mr. S. G. Joll, who appeared for the Crown, said that Government valuers had a duty to keep values in line and endeavoured to do so. The committee should keep in mind that any increase allowed for Salek’s Buildings might affect the values of other property in the city. The committee, which reserved its decision after a hearing that lasted all morning, consisted of Messrs O. N. Campbell (chairman), R. Downes and G. A. Hansen. IMPORTANT TO CITY. “This case is of considerable importance from the city’s point olj view in that it is the first contested sale of a Victoria Avenue business property,” said Mr. Haggitt in his opening. The property in question contained a twostorey building with seven shops on the ground floor and rooms upstairs. For years past the whole of the building had been well let. The late Mr. Peter McWilliam, after acquiring the property, granted a 40-year lease, which contained ? building covenant, and in 1908 the present buildings were erected. The lease contained a provision for the payment after 40 years of compensation, at the rate of three-quarters of their value, l£r all improvements carried out. The value of these improvements was to be determined by agreement or by arbitration. When the lease expired last year the Public Trustee obtained a valuation from Mr. R. G. Taiboys, who valued the improvements at £6260 10s, a figure which was accepted by the lessee trustees without the matter going to arbitration. Mr. Taiboys had since made a further valuation of £6211 10s to bring the figure up to date, but was in Auckland and would not be able to give evidence before the committee, Mr. Joll said that the Crown’s valuation of the improvements was £5725. Mr. Haggitt: The question before the committee will be largely a matter of the unimproved value. The main contest will turn on that. It was a notorious fact that Government unimproved values in the city were considerably below true selling values, Mr. Haggitt added. In 1928 the city was rated on the ai> nual values, but in 1932 the system was changed to rating on the unimproved value. A revision was carried out in 1932-33 and in spite of the fact that values were generally reduced, practically every owner of property in Victoria Avenue objected to the new valuations and in 1933 the Assessment Court sat in Wanganui for a month. As a result of this and consequent events, values of property became completely out of line with selling values, a contention which would be borne out by comparisons between sales. SALES EXCEED VALUATIONS. Mr. Haggitt added that he would produce evidence to show that in every case of a sale of property between 1937 and 1945, the sale price was in excess of the 1933 Government valuation. This was important to the present case because the successive Government valuations of Salek’s Buildings showed a progressive reduction in the unimproved value. The tendency in Wanganui was for property to become more valuable higher up Victoria Avenue. Values of property on the western side of Victoria Avenue were very much higher than on the eastern side. In 1935, for the first time, values of property in the Maria Place-Guyton Street block became the highest in the city. After the 1947 revision, this block still remained the highest valued. This had been brought about largely because of the tram route’s, Guyton Street being the turning off point fQr Castlecliff and Gonville. People seem to gravitate to that end of the city,” said Mr. Haggitt. “During Hie slump period, most of the empty buildings were at the bottom end of Victoria Avenue.” In 1928 the Government unimproved value of the Salek’s Buildings property was £12,787, or £194 per foot. In 1932, the value was £12,,400, or £lBB per foot, ond in 1933 the. Assessment Court fixed the unimproved value at £11,355, or £172 per foot, but when the 1917 revision was carried out the value had dropped to £7475, or £ll3 per foot. The property had a frontage of 66 feet to Victoria Avenue, and 123 feet to Guyton Street. The. figures he had quoted, Mr. Haggitt emphasised, showed the extensive, decline in valuations which had occurred between 1933 and 1917. Mr. Imlay Saunders would say in evidence that in his view, based on comparable sales, the true selling value of the Selcks Building property, or the unimproved value from the selling point of view, was not Jess than £163 per foot in 1912. COMPARISON GIVEN ‘‘A salp which affords a good idea of how the Government unimproved value is lower than the true selling value is that of a property at the corner of Victoria Avenue and Maria Place, which was sold Io Wool worths. Ltd., in 1940,” Mr. Haggitt. added. This property was on a corner similar to that of Salek’s Building, hut one block further down. It had a Victoria Avenue frontage of 66.8 feet and a depth of 168 feet. When Woolworths bought the property in 1940 the Government unimproved value was £12,420, or £lB5 per foot, based on the 1933 valuation which was in force at the time. The property contained an old dilapidated wooden building which was practically of no value. Immediately after the purchase it was sold for

demolition purposes for £2OO. The purchase price of this property, Mr. Haggitt added, was £20,000, so that if £2OO was deducted for

the building demolished, the unimproved value of the prouerty for the purpose of a sale was £19,800, or £290 per foot. Another pointer to show that the 1947 revision figures of unimproved value were too low was that in 1933 portion of Victoria Avenue objected, but in 1947, when this committee sat as an Assessment Court, only one objection was heard for the whole of lhe area between the old Post Office building and Salek’s Buildings, this objection being merely a matter of an adjustment.

William M Falconer, public accountant. said that from his knowledge and experience he considered that Government unimproved values in the city were lower than the true selling values This position had been brought about by the rating system and objections raised by property owners. The tendancy was for values to move from the lower portion of Victoria Avenue to the middle block He quoted particulars of actual sales in which higher prices were obtained than the 1933 valuations. “STATE OF CHAOS” Imlay Saunders, valuer, said in evidence that repeated objections were made by property owners in the business area in order to reduce their rates and a state of chaos existed. In 1933, after the revision, a concerted attack was made before the Assessment Court, with the result that the valuations were reduced, but the rating authority still had to obtain the same amount of money from rates. The position was further aggravated by repeated objections, with the result that there was a revision in 1947, when unimproved values were reduced considerably below the 1933 figures. In 1942, witness added. £163 per foot was the true selling value of the Salek’s Buildings property. Had the property been on the market then it would have been readily sold. He had several enquiries for it, but the lease still had several years to run. Witness gave evidence of other property sales in Victoria Avenue in support of the contention that unimproved values in the city were lower than actual selling values. Wilfrid Henry Hartnell, valuer for the Valuation Department, said that he had assessed the unimproved value of the land on which Salek’s Buildings stood at £7530. After the 1933 revision the department had received objections from all owners in Victoria Avenue from Taupo Quay to Ingestre Street, with the exception of one. The unimproved values were reduced by various percentages, ranging from 25 to 50 per cent. They were nowhere in line and when witness started on the 1947 revision he took these factors into consideration He looked very closely into the sale of the Maria Place-Victoria Avenue corner block to Woolworths in 1940, but came to the conclusion that it would not be reasonable to value the whole of Victoria Avenue on that transaction. The only sale that he could use as a reliable guide for a starting point was that of a property on the western side of Victoria Avenue, between Maria Place and Guyton Street This property was sold for ,£7155, the buildings being valued at £3330 and the land at £3920. or £l4O per foot. For revision purposes he added another £5 per foot and took £145 as the starting point when working out other valuations CORNER INFLUENCE When valuing the Salek’s Building property for the purposes of the present sale, witness said that he added £1690 for corner influence, which brought the unimproved value to £7530, or £ll4 2s per foot. Had any evidence been available to substantiate a higher value for that corner he would have used it. “I also had in mind objections raised in the past by other property owners in the locality, who had claimed that their valuations were too high,” witness added. In making valuations of property in the business area it was necessary to adopt figures which were forced on valuers by people making objections. In reply to Mr. Haggitt, witness agreed that when the Assessment Court sat in Wanganui in 1947 only one objection was heard from the business area of Victoria Avenue. Mr. Haggitt: Do you agree that the Government unimproved values are lower than lhe selling values? Witness: They are lower than they should be. That position has been brought about by continual objections made in order to bring rates down?—“l think that is the correct answer.” In reply to a further question by Mr. Haggitt, witness agreed that the four most valuable corners in Wanganui were Perrett’s, Woolworth’s, Earle’s and Salek’s Buildings Corner. Witness said that if the value of the Salek’s Building Property was increased by the committee this may have a real effect when the next revaluation of Wanganui took place It might mean that if the value of this particular section was raised, other properties in Victoria Avenue may in the future be valued on a higher basis, with the result that they would have to pay more in rates. The chairman commented that the question of grading of values in Victoria Avenue might have to be considered. “Crown valuers have a duty to keep values in line and endeavour to do so,” said Mr Joll. “The committee must keep in mind that any increase may affect the values of other properties.”

The committee reserved its de cis j on.