CITY, AS''LANDLORD.

Dominion, 24 February 1913, Page 6

CITY, AS''LANDLORD.

ENDOWMENT LEASES. COMPENSATION FOR BUILDINGS. TENANTS DISSATISFIED. • It the .present moment the members of the'WellihgtoA'' Leaseholders' Association aro waiting.for a'roply to a letter which has been Sent to the.City Council, asking for,an inquiry into .the conditions of ten- .,. ancy upon.' tho, city endowment lands. Those in touch with tho leaseholders have no doubts' whatever that the agitation .which las arisen will be pressed on to a . conclusion. The city, tenants are plainly of opinion that they have, a real griey- : ance which'entitles them to tho inquiry for which they have applied, , A statemont in. regard to tho position' that now.exists,was made to a Dohmion ■reporter on Saturday by Mr. Gerald Fitz-gerald,-an acknowledged authority en the ■valuation of city.properties and kindred 'subjects.- -:. : '. ;. ■ Tno exact methods adopted by the City Council, in assessing tho rentals of its leasehold endowments, could not well be ihado- known, Mr. Fitzgerald explained at 'the .outset, because arbitrators are bound to .regard as confidential tho proceecSugs ' .leading Up .< to'.the revaluation of -a lease. 'The great blot upon the present system, however, was the absence of a provision , giving compensation for improvements. The'renewal period of 14 years, in. the '..- absence of a proyision for compensation, ,<va9 undoubtedly too short. Granted un- ' -disturbed'possession for forty years, a. '■ business man might be able to make and determine what rent he-couhi afford to pay., He could not jo. 60,where a lease was'to run for only fourteen, years, or even for twenty .years,;-, ■ no' compensation for improvements .'at the end of that period. ■It was accepted, Mr. Fitzgerald remarked, .'that a., building in the business' quarters ' of the city, to give good returns, must '. be four stories high. Such a building, if well and substantially erected, as it must ■bo -according' to -the'eity by-laws, would Ijb good'for'a'hundred years.'■ At the end • of fourteen years it would be only at the beginning of its period of usefulness. No •'"man would • erect ■ a building of this kind .while he' was subject ;to :a lease; which made no provision; for improvements, and was liable to the'imposition of additional heavy' liabilities of.' uncertain magnitude at the*end of every fourteen years. "Not a single leaseholder," said Mr. Fitzgerald, '."has'built; 60 far as I know, who does .not 1 regret;it. I believe that it is'also • a faot that there 'is "not' a single lease- -j holder who, under this lease, will.renew bis building., They will muoh prefer to lot their leases go. 1 , ; A: singular fact, mentJsned by Mr. Fitzgerald,- is that tho"existing leases, were granted at the request;of a committee of some of the; best business-men in the city. "I can only account for this," he remarked, 1 "by supposing '~ that- they were entirely wrong as.-to. the meaning of the lease., J.| have lieen told'by. some' of them that they, believed'that in some way or other they would got compensation .'for their build-; . ings if. they did not, renew their leases. ' It; is now known, of course-, that if they do not accept tho rent, they get no compensation." -.'.-.'■■'-

y'i : ~A Fatal Defect, : '.-. j The'absence of.,a. provision, .for compen'satioDv Mr. ■Fitzgerald 'stated emphati- . cafly/.was'.most'uni'air.V-''lt • binds two people who wish' to/separate-to,continuo ':;• their; business," he remarked, "and that is ; on unfair basis -for any -contract. If tho ■ lease ft compensation provision, and an unsatisfactory award were , givonj - either party could.say; 'I,do not agree, ';. and a separation would be,' effected on the understanding that -\ the 'value of the; building should be'paid over, to the retir'■ing tenant.{'This arrangement/ would be fair.- to the corporation, /Mr. Fitzgerald remarked, if it, as,the landlord,,had a right to scrutinise the plans of a building ; before it was erected, .for instanoe, tho corporation should have' the to insist upon a shop,or office block instead of '. a warehouse,'or vice versa. , ' .'•'. .'•'•■ .-; ■:.-?.'.Y.'-»-- v ;'A Municipal' Desert. , As'lto "the' state!, of -affairs that ; is dethe present administration ■■ : "of the.corporation endowments, 'Mr. Fitzgerald has no doubts whateyor.. "The corporation leaseholds will be a municipal . desert'in; the ;hear.t of tho town,"'he.remarked, ; "unless the lease is altered. ,1 am' attorney, for ah '.' absent leaseholder ■';■'now",..and would not dream, of renewing. . the lease: when -it falls in., ,1, shall drop. .it like' a hot brick. The building, I for-. . . tunately for us, is not worth much. The ' 'goodwill -of the lease is worth nothing. The,;posifion of'this leasehold site," Mr. Fitzgerald added, Vis right opposite-7 the: ' General, fost Office.. There is not a,better 'position, in the whole of Wellington." ■ '.■ to' its /present policy, .Mr. Fitzgerald remarked, the corporation ■ might' dolthe, greatest.possible injury 'to the city. '•'An idea seemed to have grown up that :the thing to do was to' squeeze ';■, the tenanfs. to the utmost possiblo extent, ; but this,had resulted /in filling, every business man in, the city with a' desire to get off the corporation leasehold and on to i freehold -.property. Allowance had to be made for the fact that some firms had ' erected big stores and similar establnsh- / ments onnho outskirts,of the city/simply , because land in -the heart of the business area was now too . expensive to. bo used for such purposes. V This apart, 'however, a number of firms had already effected ' a Temoval from leasehold to freehold sites 'simply because they found tho conditions ■ /attaching to the.leasehold, unbearably' op-^ pressive.'."Numerous other, leaseholders,' / Mr. Fitzgerald: added,Would,be only too glad to follow the example thus, set, but were tied down-by. the value of : their buildings,.which they could not afford to abandon. It would bo a most evil disaster for the city if it -found 'itself left with /a large amount' of land 'and worn-out buildings lying .on ; its, hands, as dead -stock-in-trade, y

*::',. The Effect on Freehold, 1 "I foresaw this kind of thing from tho •very first)"- continued - Air. -Fitzgerald, "and I suggested;,, the .'formation of the Leaseholders? Association. I told them that tho thing ought to bo arranged on a basis fair to both parties, and I still think so. I am-an owner,'with others, of some of tho'most valuable freehold in this city, and 1 believe that our property has been appreciated by this misfortune. Much as I deplore the state of affairs, I believe, that the value of our property will bo increased very considerably in consequence. In'the present circumstances no business man will, take a leasehold. Inevitably he will look for a freehold." , The basis of valuation upon which rents should he assessed is necessarily intricate. Mr. Fitzgerald »is of opinion, however, that if a provision giving compensation for iraprovenientsLwero inserted in the city leases tho grievance of tho leascholdjrs would to a great extent disappear. Rents would then. be"'<!etcrmincd by competition, and in the process of competition each party would be free to accept or reject tho offered conditions.

"The, Happiest Leaseholders" FarthMjnqiiJries'bore outyinevery way tho Istafements made by Mr. Fitzgerald. /'The happiest leaseholders," one prominent business. man remarked, "are those 'whoso buildings are old and pf little valuo. : They can get out. In sonioHowns of the Dominion business men prefer a corporation leasehold to a toehold. ifytost decidedly this position is reversed in Wellington. Questioning other business men, H reporter was informed that several corporation leasehold sections, bearing old : buildings, wero about to foil in, and would bo allowed to lapse by their present holders, who'would gladly abandon the .goodwill of their leases. -Another statement made was that one: firm now .has its building in the market, and is 'willing to dispose of it for considerably less than it cost to eTeot, in order that . it may bo enabled to get rid of its lease from the corporation. It was stated, further, that two corporation leaseholds carrying buildings were offered by auction during tho last six -week9,"nnd_ that in neither case were.any bids received. A feature.of theVposition-is that it is easy enough, to rent portion's of biisiriessbtiildings at reasonable rentals. 'The'rents in such cases' aro'.'determined- by demand and supply,-ami ono business man who was interviewed estimated that there ore at present some two hundred individual rooms and suites of Tooms vacant in business blocks in, the heart of the citv.