Council fronts up with cinemas deal details
On the eve of a motion to stop the Reading Cinemas deal in its tracks, the council has finally released information about its arrangements with the multi-national cinema company.
New information released yesterday reveals that the $32 million purchase by the council will be split into two phases – the council will pay a $6m deposit at the start of the agreement, followed by the balance of $26m when Reading Cinemas meets the council’s conditions.
Mayor Tory Whanau described the deal as “an extremely good solution”.
“Quite frankly, if we shoot this down I don’t see any reason why officers would try and find creative solutions in the future for the problems we face.”
The deal would lead to Reading investing in a redevelopment including a cinema, dining and entertainment options. It was a crucial step towards creating a vibrant, safe Courtenay Place, Whanau said. “I’ve heard over and over again from Wellingtonians that they want something done about it and are frustrated by the lack of action. This deal seeks to deliver that,” Whanau said.
“The alternative is we walk away from this deal and leave the Reading Courtenay complex as an eyesore looming glumly over Courtenay Place for years to come.”
The conditions for the council to pay the bulk of the purchase price ($26m) include Reading getting a resource consent, showing they have funding capacity for the construction plan, and design specifications including pedestrian access through the building, publicly accessible toilets on the ground floor, and accessibility. There would be an option for the council to lease space in the building.
The deal has already been agreed in principle and the deed is well advanced, according to the slides presented to the council yesterday afternoon.
The land under the cinema complex would be leased back to Reading Cinemas for a term of 21 years or until the land is sold, with the rent set at a level that would see the council recoup its interest costs. After 10 years, the council has the right to sell the land at market value. Until year 15 Reading Cinemas has a right of first refusal, but after year 10 would have to pay the higher of either $32m or the market value of the land.
Today’s council meeting could be the end for the controversial Reading Cinemas deal, after councillor Iona Pannett put forward a motion to stop the deal. Councillors are split on how to vote – the $32m deal is being discussed at a strained financial time for the council when small community facilities like the Arapaki Library and Wadestown Community Centre are facing closure.
Pannett said the information released yesterday did not change the fundamental fact that the deal was a financial deal with a property owner who should be going to a bank instead of the council.
“The deal does not stack up. I expect the city will lose money on it and the benefits are very minimal.”
Although the deal had previously been treated as confidential by the council, more and more details have entered the public realm. Most recently it was revealed that a $1400 seafood dinner with the mayor, senior council staff members and the millionaire Reading Cinemas owners was paid for by the council.
A shareholder took to posting on Twitter last week in an attempt to convince Wellingtonians and councillors the deal would be a “win-win”, while a local economist describing the council’s attempt to stop the cinema from landbanking as a “hostage situation”.
This week Whanau admitted secrecy about the deal went on for too long and suggested she would vote for an open discussion of Pannett’s motion today.
The release of information yesterday evening came as a surprise, with councillors only briefed earlier in the afternoon.