On Thursday, nine [Wellington] city councillors voted to bung corporate welfare to foreign millionaires in order to breathe new life into the city’s grubby party strip.
The shuttered Reading cinema site had became a symbol of a general malaise settling over the threadbare city.
Now it is an allegory of the broken system of local government: opaque budgeting arrangements, questionable spending decisions and ultimately ratepayers footing the bill and paying a lot more for a lot less. […]
With breathtaking naivety, the council has agreed to stump up $32m to buy the land under the mothballed complex.
In the council’s telling, the NASDAQ-listed entertainment and property giant will use the cash to renovate the quake-prone building, reopen the theatre, and the city’s grateful residents will throng in the doors, magically reviving the precinct and restoring the Hollywood of the South Seas back to its former glory.
In the Netflix era…
The council has also failed to explain why it didn’t explore other options that didn’t involve shovelling cash to a large overseas corporation at a time when it is threatening cuts to community facilities and proposing to sell off the public stake in the city airport. […]
Contrary to its specious insistence that the corporate handout is cost-neutral, the council is considering selling off ground leases to fund it. […]
[Wellington Mayor Tory Whanau] is out of her depth. She has drifted into local body governance with an impatience for business, finance and economic calculations. The politics she practices are moored in identity and symbolism […]
Her motivation in clinging to the Reading deal is understandable. She needs to deliver something tangible to meet at least some of her campaign promises. Odds are she will be long gone before the chickens come home to roost on this reckless transaction.
Sunday Star Times
That was Andrea Vance’s opinion piece published yesterday and paywalled. However, published on Thursday, by RNZ (and not paywalled), was this:
Earlier a wealthy Wellington property developer and philanthropist offered to buy the complex.
Sir Mark Dunajtschik’s lawyer presented his plan to the council.
Lawyer Nick Wareham said Sir Mark would negotiate directly with Reading to purchase the land and offer it a lease.
“He will make payment to Reading for the land on a progress built completed basis, and he will contribute his funds after Reading have first invested their own money.”
The rental proceeds will ultimately end up in Sir Mark’s foundation, which would then gift the land back to Wellington citizens in 50 years’ time.
If Reading wish to buy back the land prior to this gifting, they can negotiate to do so at market rates. […]
Wareham said Sir Mark was urging the council not to go through with the current plan, saying “ratepayers are on the raw end of the deal”.
He said the council would be risking ratepayers money up front, with no guarantees that the redevelopment project would proceed.
It would be putting ratepayers in before Reading did, affecting the amount of leverage the council had, he said. […]
“It is unlikely that this will match a normal commercial ground rental and therefore the citizens of Wellington will not only be subsidising a commercial entity, they will also be foregoing a normal commercial return on land.”
He said the deal could reduce the council’s borrowing capacity.
RNZ
Discuss it on The BFD.