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REAL ESTATE
AND
NEW YORK, JULY 22, 1916
THINKS RESOLUTION WILL WORK HARDSHIP
Sig. Cederstrom Makes Protest to Board of Estimate—George
T. Mortimer, as Member of Commission, Makes Reply
"T^HE Board of Estimate and Appor-
â– ^ tionment will hold a special meet¬
ing on Tuesday ne.xt for a hearing on
the Building Zone Resolution prepared
liy the Commission on Building Dis¬
tricts and Restrictions. Under legisla¬
tion secured in 1914 this resolution be¬
comes part of the municipal law as soon
as it is adopted by the Board of Esti¬
mate. The Commission, of which Ed¬
ward M. Bassett is chairman, has held
numerous hearings and has made drafts
and redrafts of its resolutions and the
accompanying maps regulating height,
area and use, and hearings have been
held before the Board of Estimate. Prac¬
tically no opposition has developed to
the scheme in its broader aspects. But
there has developed, as the time for defi¬
nite action by the Board of Estimate ap¬
proaches, serious minority opposition to
several details of the plan.
The underlying theory upon which the
commission has done its work is that re¬
striction of height, use and area will
stabilize values.
Manhattan Would Suffer. '
li this theory is at fault, it is plain
that the scheme will be a serious mis¬
take, and will affect not only the prop¬
erty owner but the city. For any wide
recession in values, due to restrictiohs
imposed which would cause a marked
change in use from that for which land
was bought, at a price justifying its use
to its best economic advantage, would in¬
cur an appreciable shrinka.ge of taxable
values. This shrinkage would, of course,
apply in the main to the Borough of
Manhattan, from which the city gets the
bulk of its ta.xes.
Opposition to the plan draws a clear
distinction between its reasonable appli¬
cation to residential districts and its ap¬
plication to the solidly built up portion
of the cty, notably lower Manhattan,
where land bou.c;ht at high price with a
view to its improvement unrestricted as
to height would compete with land al¬
ready improved ^to its highest economic
power.
Because of these widely divergent
views on this and other phases of this
important subject, expressed on the eve
of definite action by the Board of Esti¬
mate, the Record and Guide today pub¬
lishes in detail the followin.g correspond¬
ence between Sig. Cederstrom, a real
estate expert and adviser to the Public
Service Commission, and George T.
Mortimer, president of the Equitable
Office Building Corporation, and a mem¬
ber of the Commission on Building Dis¬
tricts and Restrictions:
Mr. Cederstrom's Letter.
To the Board of Estimate:
Referring to the final report_ dated
Tune 2, 1916, of the Commission on
Building Districts and Restrictions to
the Board of Estimate and Apportion¬
ment, wherein it is recommended that the
board adopt what is termed a districting
resolution, a copy of which appears on
page .'il, entitled:
"A Resolution Regulating the Height and Bulk
of BuildinKB. the Area of Courts and Yards, the
Location of Trades and Industries and the Loca¬
tion of Buildings designed for Specified Uses and
Establishing the Boundaries ot Districts for
Such Purposes."
I respectfully desire to call attention
to and submit for your consideration
certain facts, points and elements rela¬
tive to this matter, which I deem of im¬
portance to the city's interest as a whole,
from a real estate standpoint.
The spirit and intent of the law in
reference to this matter is clearly stated
in the charter provisions under which
the Board of Estimate and Apportion¬
ment may legally impose restrictions
and other conditions on real estate lo¬
cated in this city, and unquestionably
the objective point sou.ght thereby is the
conservation of property values and the
enhancement of land values throughout
the city.
After makin.g a study and thorough
analysis of the tentative report dated
March 10, 1916, and the final report
dated .Tune 2. 1916, of the Cominission on
Building Districts and Restrictions, it is
my opinon that should the final con-
clusons, as recommended and embodied
in its final report, be adopted by the
Board of Estimate and .Apportionment,
that the immediate effect will be an
enormous decrease of taxalile land values
throu,£;hout the city, resultin.g in a seri¬
ous reduction and impairment of the
city's borrowing capacity and its debt
limit, followed by an increased prohibi¬
tive tax rate which will necessarily com¬
pel the city to at once find new sources
of revenue.
In addition thereto, the restrictive
uses and other conditions which would
be imposed on real estate would create
an absolutely definite and concrete basis
for the successful institution of innum¬
erable damage suits against the city bv
owners of real estate for actual injury
suffered, whereby millions may be re¬
covered as liquidated damages for the
diminution of real estate values due
solely to the restricted nresent and
future use imposed by the city.
Chaotic Conditions Would Follovir.
The ultimate result would be that
chaotic conditions would follow with
reference to city finances and real estate
ownership.
The Department of Taxes and Assess-
metits when computing the valuations
for purposes of taxation on ordinary real
estate, adopt methods whereby the high¬
est possible value may be .given to each
separate assessed parcel of real estate,
considering it as a whole in one owner-
shio.
The fundamental basis for its methods
is primarily that all ordinary real estate
(land and improvements') for purposes
of taxtion is in fee simole ownership
and as such is unrestricted as to its use,
and being unrestricted, the land is capa¬
ble of being utilized to its fullest extent
for residential, commercial or other pur-
noses, taking all the potential features
into consideration.
The adoption by the Board of Esti¬
mate and Apportionment of the district¬
ing resolution as submitted, would of it¬
self ncccRsitafe a comnlete changein the
fundamental basis of the valuation of
ordinary real estate for purposes of tax¬
ation. The courts certainly would not
permit the city to impose restrictions
and then ignore them in its valuation for
taxation purnoses. The new basis would
have to take into consideration the
restrictive features of districting reso¬
lutions, with special refereiice to each
individual ownership, as ' it may be
affected by:________________________
1. liegulating the height and bulk
of buildings.
2. Increased area of courts and
yards.
3. Location of trades and indus¬
tries.
4. Location of buildings designed
for specific uses.
5. Establishing the boundaries of
districts for such purposes.
6. The destruction of many poten¬
tial elements.
7. The certainty of further restric¬
tions being imposed.
8. The remoteness of any modifi¬
cation of any restrictions imposed.
The present assessed valuations of real
estate could not be sustained were this
method in practice and, as a matter of
fact, enormous reductions would have
to be made under such changed condi¬
tions.
Were this basis for assessed valua¬
tions to be created, those who make a
specialty of protesting taxation assess¬
ments would, in my opinion, experience
little or no difficulty in securing reduc¬
tions a.ggre,gating millions by certiorari
proceedings.
500,000 Parcels in City.
Real estate located in the various bor¬
oughs of the City of New York, con-
sistin.g of over SOO.OOO separately as¬
sessed parcels of real estate on the tax
books, totaling about $8,000,000,000, are
owned in fee simple; the few parcels that
have been purchased or are otherwise
owned are negligiljle.
The owners of these various properties
have a perfect right to assume that the
ownership of real estate in .fee simple
carries with it a legal right to utilize
their individual properties as they see fit
and in such manner as will best suit
their purpose, be it residential, invest¬
ment, speculation for building purposes
or otherwise, or a mere gamble in the
future enhancement of value, or a whim
to own a piece of mother earth and pay
taxes to the city, subject only to a rea¬
sonable regulation in the interest of pub¬
lic health," etc., under the police power
of the city. IJeal estate va'lues in the
City of New York are predicated on this
state of facts, and it is substantially the
basis adopted for taxation purposes.
Compensation Necessary.
With the exception of land ^ under
water in navigable water over which the
United States has the supreine control,
should any owner of real estate or any
one else, not excepting the United
States Government, the State of New
York, or the City of New York, have
need or use for all or the least possible
part imaginable of any real estate_ for
any purpose, and such real estate is in
private ownership, such real estate_ or
use of same cannot be obtamed with¬
out compensation to the owner, except
by consent of the owner.
The Commission on Building Districts
and Restrictions in its reports dated
March 10, 1916, and the final report
dated June 2, 1916, have made no pro¬
vision, nor even suggested that any
owner of real estate who may have a
just grievance shall receive any redress
or compensation kv reason of a reduc¬
tion of the market value of any property
on account of the limitations as to its
use caused by the restrictions, li _im-