Columbia University Libraries Digital Collections: The Real Estate Record

Real estate record and builders' guide: [v. 98, no. 2523: Articles]: July 22, 1916

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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- ■^ 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-