The shift to market rents was designed to encourage pastoral lessees to enter tenure review, it was acknowledged before the Land Valuation Tribunal yesterday.
During questioning by Nick Davidson QC, representing the Wallis family at Minaret Station, Land Information New Zealand (LINZ) policy manager Kevin Kelly acknowledged a relationship between the rent policy, in which some rents were increased substantially by the inclusion of amenity values, and a move to encourage leaseholders to enter tenure review.
The tribunal was sitting for a second day in a case between the Commissioner of Crown Lands and Minaret Station, at Wanaka, over the methodology of setting rents for Crown owned pastoral land.
Quoting from a Crown document, Mr Davidson said part of a Government strategy to grow the high country conservation estate was to promote tenure review success stories, but if that did not succeed in getting greater lessee participation, then rents were increased to reflect market value, to which Mr Kelly agreed.
The Government then instructed LINZ to review the rent setting formula, after which valuers were told to include amenity values along LINZ's definition of Section 131.
Asked by Mr Davidson if pressure from the public and non-government organisations about the Crown's return from rents had a bearing on the review, Mr Kelly said the Government was aware of those concerns.
Mr Davidson also questioned the way lessees learnt of their new, substantially higher rents.
Minaret Station's rent review was due in 2004 but it was not until 2006 the occupiers were told of their rent based on the new formula, which included amenity values.
"Put bluntly and accurately, from a lessee's perspective, it was a bombshell."
Mr Davidson said in many cases the new rents were not affordable and in some instances exceeded the earning capacity of the business, which Mr Kelly acknowledged as "possible."
Tauranga valuer and valuation methodology specialist Graeme Horsley said there was little disagreement among valuers that amenity values should be included in capital value.
Appearing for the commissioner, he said there were two types of amenity values, typical rural amenity values, such as sealed roads and access to services; and X-factor amenity values were lake and river frontages and mountain views, for which some buyers would pay a premium.
