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November 26, 1910.
RECORD AND GUIDE
879
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Cr W. SWEET
Publlsfied EVerff Satnrdag
By THE RECOKD AND GUIDE CO,
President, CLINTON W. SWEET Treasurer, F. W. DODGE
Vlce-Pres, & Genl. Mgr.. H, W. DESMOND Secretary, F, T. MILLBB
Noa. 11 to 15 Bast 24fh Street, Nen York City
(Teleplione, Madison Square, 4430 to 4433,)
"Entered at the Post Office at New York^ N. 7.. as second-class matter.'
Copyrigiited, 11)10, by The Record £ Guide Co,
Vol, LXXXVl.
NOVEMBER 26, 1910.
TAX TOTAL ;TO BE .GREATLY RAISED.
IT is staled oa apparently good authority that under in¬
structions from Mayor Gaynor the Tax Department is
going to make a thoroughgoing attempt to raise the aggre¬
gate ainount of the real-estate assessment to a very much
larger total. The sum of $600,000,000 is mentioneti as the
probable size of the increase, which will be disclosed when
the tentative list is publisbed early in January. Assuming
that this information is correct, tbe way in which the pro¬
posed increase will be distributed becomes a matter of the
utmost importance to the New York taxpayer. If the ag¬
gregate assessed valuation of real estate is increased by
$600,000,000, it will mean that the tax rate for the com¬
ing year will remain at about the same level as the tax
rate for the current year. The existing rate levied on the
proposed increase in valuation will bring just about enough
revenue to meet the $10,000,000 increase in the Budget.
Consequently, only those taxpayers whose assessment is
increased will have to pay an increased tax-bill. How, then,
is this larger assessment likely to he distributed? The
Record and Guide has no authentic information on this point,
but assuredly the justice of this action on the part of the
Tax Department will depend upon the method of distribu¬
tion. Probably a third or more of the $600,000,000 wiil be
represented by new buildings, which will appear on the tax
rolls for the first tirae on this occasion. The remaining
$400,000,000, more or less, will have to be added to the
ground value. Will the Tax Department merely make a
horizontal increase in all valuations, as was done during
ex-Mayor Low's adminstration? Or will it seek to raise
the assessment on certain classes of property, which in tbe
opinion of tke assessors are undervalued at the present
time? The first of these methods wouM be dangerous, be¬
cause there can be no doubt that a large part of the resi¬
dence and tenement house property is now assessed at prac¬
tically its full value. The second of the two proposed
methods should be, and probably will be, used to a large
extent by the Tax Department. The result will be a vigorous
protest from tbe owners of real estate in speculative dis¬
tricts, but they can better afford to pay than can the own¬
ers of improved property in non-speculative districts. Thus
the whole Fourth avenue section ought to yield a fat return
to the assessment rolls, and the same assertion applies to
certain outlying districts in the Bronx, Brooklyn and Queens.
It may be added that in case the assessed valuation of real
estate should be increased by $600,000,000, the result would
he an addition of $60,000,000 to the debt-incurring capacity
of the city, of which probably one-half could be used for
subway construction.
operate a modified Interborough system should not blind
either the Public Service Commission or the Board of Esti¬
mate to the fact that the proposed operating arrangement
constitutes a most drastic criticism upon tbe plans of the
Public Service Commission. Those plans have been .cut
all to pieces. The bid calls for the abandonment of the
Canal street branch, the construction of a totally" new tun¬
nel to Brooklyn, and the postponement for an indefinite
period of the construction or operation of subways into the
outlying district of Brooklyn and the Brorix. Yet, in spite
of the fact that tho proposed McAdoo system would run
only through densely populated districts, and would get the
cream of the Manhattan and Brooklyn rapid transit traf¬
fic, the city obtains only very poor terms from its proposed
operating tenant. The city is to invest $100,000,000 and
the tenant $50,000,000, but the $50,000,000 is secured by
the whole $100,000,000 invested by the city. All receipts
over operating expenses are used first to pay the interest
on the $50,000,000, after which the city takes what it can
get. In other words, the city assumes, all the risk, and
shares any possible profits with a tenant wbo takes- no risk
at all. It is an absolute certainty that the net earnings will
be sufiicient to pay the interest on Mr. McAdoo's $50,-
000,000. The men who will be putting up that money will
be taking as much of a chance as a man who invests in a
government bond- Yet in return tbey obtain the bulk of
all tbe profits and a largely increased trafiic for their New
Jersey tunnels, while they have a right to exact an addi¬
tional five cent fare. It certainly looks like a very poor bar¬
gain for New York City,
No. 222S.
AN ENCOURAGING DEVELOPMENT.
THE offer of Mr. MjcAdoo to operate a very much modified
Triborough route is a most encouraging development
in the rapid transit situation. The city has absolutely noth¬
ing to gain from competition in the operation of subways,
or the huilding of merely competitive subway routes; but
it may have a great deal to gain from competitive bidding
for the privilege of operating proposed subways. It is in
this respect that the offer of Mr. McAdoo contains such
promise for the future. Already it is announced that the
Interborough Company is going to submit an alternative
proposition; and possibly other bidders will also enter the
field- The fact, however, that Mr. McAdoo has offered to
THE MOTIVE NOT CRITICISED,
T^ HE Record and Guide in making the assertion that the
â– f, bargain is a very poor one for the city is not criticising
Mr- McAdoo's motives. He has every right to make the best
terms he can for the corporation he represents. But there
can be no doubt that if the city cannot get better terms
for the system proposed by Mr. McAdoo, the building of sub¬
ways is a very poor business. He is doing what the Public
Service Commission criticised Mr. Shonts so severely for
doing a year or so ago. He is taking all the fat and none
of the lean. He proposes to lease a subway running through
the heart of Manhattan and into the heart of Brooklyn
without assuming any responsibility for the subsequent
operation of less profitable extensions. We wonder how our
friends in the Bronx, who have been so enthusiastically in
favor of the Triborough route, like their prospects under the
proposed lease. The Bronx extensions under Mr. McAdoo's
offer cannot even be started for seven years—unless they
are built on an assessment basis. It is stated that Mr.
McAdoo is willing to make an additional bid for the Fourth
avenue subway in Brooklyn; but if he does do so his bid
can be fitted into present offer in only one way. He may
be willing to equip and operate the Fourth avenue subway
on condition that the city adds the cost of that subway to
the security for his investment. But if the Fourth avenue
subway is included in the operating contract on these terms,
it merely means that the city assumes tbe additional risk.
All trafiic experts agree that this subway will scarcely pay
operating expenses for a good many years, so that its inclu¬
sion in the contract will merely mean an indefinite postpone¬
ment of the time when profits accrue, and the whole system
will be put on a self-supporting basis. In the meanwhile
the amount of city credit tied up in the system will be
ggo-i-egated and cannot be used over again for new transit
routes. If no cheaper alternative can be found for the
construction of the Triborough route, it may be necessary
to make a bargain of this kind, but in that case the city
ought to retain more than half of the eventual profits. In¬
asmuch as it puts up twice as much money and assumes all
the risk, it should be entitled to the major portion of any
possible surplus—particularly iu view of the fact that the
contract would uUmately increase the value of Mr, McAdoo's
tunnel franchises by many million dollars.
THE INTERBOROUGH'S CHANCE.
-THE Interborough Company remains to be heard from,
i but the directors of that company have always exhibited
such a happy faculty of making utterly unacceptable pro¬
posals that presumably they will continue in the sarae course.
Why should they not repeat Mr. McAdoo's offer upon slightly
most favorable terms to the public. They could assuredly
afford to do so, because as we have already pointed out,
the bidder wants all the fat and leaves all the lean to
the city. But there is no use trying to anticipate what the