TRUST ESTATE

Wairarapa Times-Age, 12 July 1940, Page 4

TRUST ESTATE

SURVEY BY THE CHAIRMAN DEVELOPMENT IN RECENT YEARS. RENTAL & OTHER RETURNS. A comprehensive statement concerning the affairs and management of the Masterton Trust Lands Trust was made at last night's meeting by the chairman, Mr H. P. Hugo. Mr Hugo’s statement was as follows:—■ “In view of the position that arose at the last meeting of Trustees, I have taken Jhe opportunity of going back into past records of this Trust. For the purpose of my examination I have gone back into the year 1907. From the inception of the Trust up to this period the Trust was managed by a board of six members. In the year 1906 the members were the late Messrs C. E. Daniell, E. Feist, J. Hessey, T. B. Michell, J. A. Renall and T. Wagg, all men of vision and men who have shown ability in the workings of the Trust. In the year 1907 the Trust Act was amended and representation was increased to nine members. The Trustees in 1907 were Messrs T. B. Michell, chairman; D. Caselberg, C. E. Daniell, E. G. Eton, J. Hessey, W. H. Jackson, R. Krahagen, T. Wagg and E. McEwen. It is pleasing to me to see Messrs Eton and Krahagen still with us as members of the Trust.

“It is from this period that the development of the Trust estate really . commenced. Authority' was taken"<„ through empowering Acts to permit the Trustees to borrow moneys against income for the purpose of erecting buildings, etc. The rental income in the general account for the year 1907 was £1224 5s 6d. In the year 1908 the rents had increased to £1314 19s Id. Out of this income the sum of £462 Is 5d was expended on property, the sum of £3OO 9s 4d went in miscellaneous expenditure and £573 17s went in grants. “In 1909 the ‘Age’ building was completed and the sum of £l3OO was borrowed for the purpose of its erection. In 1909 fire destroyed old buildings in Queen Street. The Trustees continued with their borrowing and the sum'of £3BOO was borrowed to erect a new building which is now known as the Dental Clinic building. The new building was completed in the financial year ending March 31, 1910, at a cost of £4223. In order to show how a Trust of this nature can be upset, the fire loss in 1909 caused a drop in Trust rents of £l4O. The rental income for the year ending March 31, 1911, was £1434 3s Id. NEW BUILDINGS. “The year 1912 saw the Trustees further developing the Trust properties by the erection of the building known as the Trust building. The erection of this building completed the expenditure of the £lO,OOO loan authorised in 1907 and from these loan moneys the ‘Age’ building, Dental Clinic building and Trust building were erected. The result of this forward policy is reflected in the rentals for the year 1913. The rentals totalled £2257 17s 7d. The main expenditure for this year is as under: —Property, £1506 16s 7d; miscellaneous, £395 Is 3d; grants, £4jW 14s.

“It will be seen from these figures that the rental income has almost doubled itself between the years 1907 and 1913, brought about by the development policy of the then Trustees. The Trust rentals showed a steady increase year by year. By the year 1916 rents had increased to £2703 Is Bd. In 1916 the Trustees saw fit to erect a new building in Chapel Street known as Maxwell’s'Garage at a cost of £B5B ss. By the year 1921 rents had increased to £3OOO. It might be fitting if I repeat here the remarks of the late Mr C. E. Daniell, chairman in 1921 when the Trust was entering on the fiftieth year of its history: “ ‘The past year has been somewhat uneventful. Gathering in the benefits of earlier work has been the pleasant task of those who today report. We still have some vision of the work before those who may be honoured with the task of the future. The High School project which the Trustees have been fostering has now made a definite step forward by the election of a Board of Governors who control twenty-nine and a half acres recently

SURVEY BY THE CHAIRMAN

purchased by the Government as a site for the High School. The Trust I funds have not been used in this connection, but in the development of higher education in Masterton the Trust Lands Trust must be prepared to take a leading part.’ “In the year 1922 the Trustees took the opportunity of buying from the Heron Estate the leasehold situated at the corner of Dixon and Church streets. The cost of this property was £llOO. Situated on the property was a large eight-roomed house and bulk store. The eight-roomed house is still on the property while other buildings there are Hyde’s Chapel and A. J. Briden’s workshop. The bulk store was moved and is now occupied by the Reliance Tyre Co. For many years this building was used by the Technical School. FOSTERING EDUCATION. ‘’During all these years Trustees have been doing all they possibly could to develop the Trust Estate and foster education in Masterton, particularly primary and technical. The year 1923 saw further progress in educational facilities for Masterton in the opening of the High School. During this financial year the Trustees contributed £lOOO for ground improvements at the College, the Trust also entered into an agreement that they pay the sum of £520 per annum for three years as interest on £lO,OOO raised for the purpose of building the hostel for boys. “During the years up- to 1923 a separate account had been kept for the Town Hall. On April 1. 1922, . the Town Hall Account was in credit to the extent of £2171 13s 4d. During these years the sum of £2O per annum had been credited to the No. 2 Account by way of rent. During the year 1922 the credit on the Town Hall account was transferred to the No. 2 account. The No. 2 account at this period was £836 14s 3d in debit. In the year 1925 rents had increased to £4475 10s sd. During this year the Trustees saw fit to purchase the Hall Street properly now occupied by Pool and Long. For this purpose a reserve fund of £2OOO invested in inscribed stock was called on to complete the purchase. The year 1927 saw the completion of the Trustees contract with the Government regarding Wairarapa College. Up to this date the total sum found by the Trustees for the College was £5075 as under: —Interest school buildings, £1100; interest hostel. £1575; furnishings hostel. £1000; ground improvements, £l,400. - “In the year 1927 the'brick cottage in Lincoln Road was erected by the Trustees from revenue. By the year 1928 rents had increased to £4894 18s 4d. During this year Trustees acquired the property occupied by Messrs Barber Bros'at'a cost of approximately £2000.. This and other expenditure had the effect of putting the General Account in debit to the extent of £3542 15s Bd. By the year 1931 trust rentals had increased £5199 16s 6d. During this year the sum of £2214 17s Gd was expended on property; miscellaneous expenditure was £594 8s Gd and grants totalled £1945 Gs 7d. The No 1 account was in debit to the extent of £1457 17s sd. RENTALS INCREASED. “Up to this period rentals had been showing a steady increase year by year. In the following years the Trust began to feel the effects of the slump period, and particularly the effect of the Rent ' Adjustment Act passed in 1932. As previously stated the rental in 1931 was £5199 16s 6d and in 1934 it was £4002 14s 7d. This was generally brought about by the compulsory reduction of 20 per cent in rents. This compulsory reduction is still reflected today as the Act is still in operation and until leases fall in no adjustment can be made. -In 1934 the accounts of the Trust were adjusted. Up to this period sep--1 arate accounts had been kept for inj ternal working but all moneys of the Trust were at credit of one account in the Bank. In 1934 by order of the Auditor General, separate accounts* were opened, the sum of £450 was funded to the No 2 account and the balance transferred to the general account. This had the effect of putting all the accounts of the Trust in credit. Also the Trust proceeded with the erection of seven dwellings in 1934 and for this purpose the sum of £5OOO was borrowed. The erection of these dwellings has had the effect of materially increasing the Trust rentals. It will also be remembered that in 1934 the Trust suffered serious loss through earthquake. “In 1935 the only grants made by the Trust totalled £265. From 1935 onwards Trust rentals again show a steady increase. In 1935 rents were £4194 4s 2d and at March 31, 1940, £5388 15s. Grants in 1935 were £265 and. in 1940 £904. The reading of these figures over all the years has impressed on me the necessity of an Estate of this nature having substantial reserves to meet unforseen contingencies. I think the result of the years between 1932 and 1940 has also impressed this fact on the majority of Trustees. It has been borne home to me that a Trust of this nature can only be operated by taking a long view. Substantial reserves have to be created for protecting properties and for the development of the Trust. If something of this kind is not done, in my opinion Trustees will be lacking in their duty as Trustees, in that they will not be able to develop the Estate, maintaining ! present assets and continue .to make grants to the schools and other institutions.

“For the further purpose of comparison I have taken two of the town acres which are situated opposite one another: T/A72 (Queen and Hall streets): The lessor's interest in this acre is valued at £29,297 9s Bd, and the gross rent return is £2270 9s Bd, or approximately one third of the gross income received by the Trust last year. The income from this acre in the year 1907 was £492 Ils 6d. T/A7l (Queen and Church streets): The lessor's interest in this acre is valued at £14,742 and the gross rent return is £528 9s 3d, or approximately one twelfth of the gross income of the Trust last year. In the case of T/A7l the bulk of the land is held under perpetual leases. In the case of T A 72 the bulk of the improvements are held and owned by the Trust. I am of the opinion that this block lends itself to considerable development. The whole area is now covered by buildings but they are buildings of the wrong class. T/A72 still retained by the Trust of an unimproved value of £13.690 is carrying improvements of only £15,607. Ninetynine per cent of the rent return is from first floor buildings only. When the time is opportune, buildings of several floors will have to be erected in order to get a proper return from the land.

RETURN IN INTEREST. “Dealing with the Trust lands belonging to the General Account as a whole, the present Government valuation is approximately £90,000; unimproved value £57.649; improvements £30,463. The gross rent return for the year ended March, 1940 was £6.095 3s 8d or 61- per cent over ail. Trustees Rent Interest, for year. £ £ % T/A72 Queen and Hall St 29,297 2.276 7.7

St 4.765 382 5.9 “In the No 2 Scholarship Account income has been almost stationary for many years. The unimproved value of these lands,,.. together with improvements owned by the Trust (other than the Opera House), is £4004 and the rental return is £lB6. Apart from the Drill Hall, which is a very old building. the lands are all held under perpetual lease by the various lessors. There will be little improvement in the income in this part of the estate for many years to come. , LONG VIEW NECESSARY. “In this review of the Trust Estate it has been impressed on me that any improvement than can be made will be gradual and a long view will have to be taken in order to provide for future development. To develop the estate, funds are required and these funds can only be obtained in two ways: 1, by savings; 2, by borrowing. It is my opinion that the Trustees should endeavour to carry on with the general policy which they have inaugurated in, the past few years of endeavouring to live within its income and gradually to build up a reserve fund. This reserve fund together with judicious borrowing could then be utilised in bringing the undeveloped lands of the Trust into profit. This cannot be done without funds. "I would further stress the fact that we are passing through very unsettled times. There is the prospect of the Trust having to contribute to the compulsory war loan. Further, our only source of income is from rents, and prevailing conditions may cut oil' a substantial part of this income at any time. YEAR’S FINANCE. “Dealing with the income and expenditure for the financial year ending March 31, J 940. the gross income was some £6lll 13s lOd. This amount was expended as under: —Repairs and maintenance £998 16s 5d or 16.4 per cent: rates, insurance, land tax, interest on loans. £1573 13s 4d or 25.8 per cent: paid in redemption of loans. £lOlO or 16.5 per cent: sundry expenditure and administration. £709 Ils 7d or 11.6 per cent: reserve for depreciation in buildings or 1.3 on value of buildings of £30.463. £4OO or 6.5 percent; grants and allocations. £904 or 14.8 per cent: added to the credit balance. £270 12s or 4.4 per cent; expenditure Opera House over receipts. £245 0s 6d or 4 per cent; totals. £6,111 13s lOd or 10 per cent. "It is very interesting to note that the unimproved value of the lands held by the Trust in 1920 was £42.694. New borough valuations were completed in March. 1921. and these valuations increased the value of these lands to £62.894. an increase of £20.200.“

T/A71 Queen, and Church St 14 742 628 3.7 T/A89 Dixon St .. 6.327 403 6.3 T/A88 Dixon St .. 4.076 314 7.7 GO Kuripuni .. .. 545 26 4.7 70 Kuripuni .. .. 100 4 4.8 1C2 Archer St .. 380 15 4.0 103 Archer St .. 290 4 1.4 119‘‘Trustee St .. 593 23 4.0 120 Coradine St 1.922 95 5.0 84 Ewington (King St) .. 1,419 56 4.0 87 Ewington (River) .. .. 1.228 48 4.0 121 Bruce St .. .. 1,001 32 .3.2 85 Queen and Bruce St .. .. 970 37 3.8 43 Queen and Dixon St .. .. 763 38 5.0 49, 51. 53. 55 Queen and Dixon St .. .. 2,776 123 4.4 56. 58 School .. 1 55G 1 GO Queen St .. 879 65 7.4 4G, 48 Russell St 2.912 159 5.4 2 Trust Bldg 10.800 956 8.8 ' Rural 20 Bownail St 3.093 75 2.4 27. 20 Macara