Call for second vote on cinema deal
One of the most-ardent Wellington City Council supporters of the $32 million Reading deal says new information has come to light meaning the “subsidy” may need another vote.
Tim Brown wrote to council staff on March 7 to check the council had the right to pull out of the deal if Reading did not deliver as promised and to find out “what is council buying”. He said he was yet to get full answers yesterday, 10 days on from sending the questions.
With the council doing due diligence on a $32m deal to buy the land under the long-shuttered Courtenay Place complex, in an effort to get the US-based owners to reopen it, a key disagreement has become apparent.
Council chief executive officer Andrea Reeves told The Post the redevelopment had to include a cinema, but Brown now says the only guarantee is that Reading would replace the cinemas with an unspecified “entertainment precinct”.
He called on the council to show at least some councillors information, or get legal advice, on what the city was buying with the $32m and how the council money was protected if Reading did not deliver.
Without satisfactory answers to both, he believed the deal needed to go back to another vote. He confirmed the council was “subsidising Reading”.
In late February, councillor Iona Pannett brought a motion to the council to stop the deal, which she labelled “corporate welfare”. Seven councillors voted for her motion while nine, including mayor Tory Whanau, voted against.
Brown, who voted against it and labelled opponents “despicable”, said this time was different because “new information” had come to light.
He was speaking after Wellington company director Paul Ridley-Smith, a director of Arvida Group and former manager of majority Wellington Airport-owning Infratil, wrote to councillors and Audit and Risk Committee chairperson Bruce Robertson saying the deal would effectively mean Wellington ratepayers were subsidising Reading by at least $10m.
Ridley-Smith, who worked alongside Brown as a director of Wellington International
Airport, called for the council to get an independent auditor or accountant to take a look at the deal.
The deal could not be financially neutral – as the council claimed it was, he said. The council was looking to sell money-making land to find the $32m. Because Reading could buy the land back for $32m in 10 years, the council would lose any capital gains.
The lease to Reading could be renewed in perpetuity, locking out other developers and effectively slashing the real value of the land, he said.
Whanau said Ridley-Smith was wrong and she remained “satisfied with the terms of the proposed arrangements and that the arrangement will not cost the ratepayer” while Brown said he was “barking up the wrong tree”.
A spokesperson for Whanau said the council’s draft long-term plan, of which the Reading deal gets a one-line mention, was going to be audited. She could not say whether the initial $6m would be handed over before that audit.
A council spokesperson said councillors had been “briefed on the council’s broad intent and the financial parameters of the proposed deal – noting that some parts of it remain confidential”.
There were several points where the council could exit the deal if conditions were not met.
Pannett said she would not put forward another motion to stop the deal unless “significant” new information came to light. However, if someone else put up a motion she still believed it was “not a good deal”.