Reasons behind grant revealed

Palmerston North city councillors were convinced Toyota New Zealand’s ‘‘unique’’ contribution to the local economy could be lost if they did not help cut the development costs of its warehouse extension.

The council has finally released reports that went to councillor-only meetings in 2017 prompting decisions to make a $391,000-plus-gst grant.

The grant was kept secret until January this year when the council had to answer an Official Information Act request from the Taxpayers’ Union, which damned the grant as corporate welfare.

Acting chief executive David Wright outlined in the first of those two reports the prospect that the planned $20 million warehouse extension might not go ahead in the city.

‘‘At this stage Toyota New Zealand Ltd does not have approval from Toyota’s head office in Japan to proceed with the development.

‘‘Toyota has been asked to look at how the development costs can be reduced.’’

Without cost cuts, Wright said Toyota might be forced to lease space rather than build.

‘‘Indications are that if they are forced to lease as opposed to build, they will need to consider other locations in New Zealand.’’

The council explored whether it could help by cutting the development contributions bill then calculated at $593,000.

Wright said Toyota had expected to pay $50,000 to $100,000, and was surprised the total was so high.

Development contributions are a method used to ensure developers pay a fair share of the costs of providing roads and other council services to support growth, rather than put all of that burden on ratepayers.

Wright said the ‘‘do nothing’’ option for council carried the risk the development would not happen.

He did not recommend a sitespecific approach to reviewing development contributions for the building, as that would set a precedent prompting all developers to seek special treatment.

Reducing the effect of the development contributions through a grant was recommended as the most transparent way for the council to show it was making a deliberate decision to recognise Toyota’s unique contribution.

He pointed out that once a grant was negotiated, it would have to be made publicly available if an Official Information Act request was received.

A week later, the council revoked a range of resolutions and replaced them with a single resolution: ‘‘That council delegate to the chief executive to negotiate with Toyota New Zealand Ltd to provide an economic grant of up to $518,000.’’

All mention of development contributions was dropped.

Toyota later paid its development contributions bill of $593,442.67, including GST.

Mayor Grant Smith said the grant included conditions that the warehouse extension went ahead and Palmerston North remained the company’s national base.

Stuff has asked to see that document, but is yet to receive it.