Left to die: No help for businesses
Desperate owners urge PM to save their enterprises from failing as a result of the work on the City Rail Link project,
‘I’m hanging on by my teeth,” says Ann Hewlett with a grim determination not to become the next victim of the City Rail Link works in central Auckland. The restaurant owner is not kidding when talking about the heavy financial and mental toll leaving business owners along the route of the rail project on the brink of ruin.
It’s cruel, heartless and so unfair how the Government and Auckland Council are not taking responsibility and helping central city businesses, says the owner of the oldest surviving restaurant in downtown Auckland.
Tony’s Lord Nelson restaurant in Victoria St was started by the late Tony White in 1963 and Hewlett has been part of the story, on and off, for 35 years, beginning as a waitress before buying it from the previous owner three years ago.
Hewlett doesn’t own a home. Everything she owns is tied up in the restaurant with a dark, old country pub feeling of comfort and carpet-bag steaks that have been on the menu since day one.
Who wants to come to a fenced-off “war zone” of dust, dirt and noise for a nice evening out, asks Hewlett, who is doggedly determined to keep the steakhouse open.
In her view, the Government and council should have set up funds to support businesses before work started on the CRL in June 2016, and not leave it until several years into the $4.4 billion project.
A fear of setting a precedent of compensating businesses affected by a major construction project is a big reason behind the decision not to put aside any money in the budget, jointly funded by the Government and Auckland Council.
In fact, it was only after the Weekend Herald started reporting harrowing stories of desperate business owners in 2019 and Newstalk ZB host Mike Hosking hounding the Prime Minister on the issue that the Government set up a hardship fund, albeit with strings attached.
The business hardship programme only covered construction delays on the first stage of the project along Albert St and excluded many businesses only metres outside the zone. The fund paid $617,178 to 25 businesses. Payments ranged from $5500 to a cap of $100,000.
Since then, the Link Alliance building the main works for the 3.4km rail tunnel has moved further up Albert St. This, plus the closure of the Victoria St intersection for two years, has captured many businesses hit hard by the first round of works.
Antony Ariano, who became the face of the battle for compensation after he closed his Da Vinci’s Italian Restaurant last Saturday, has a message for Prime Minister Jacinda Ardern, who represented Labour and had an office in Auckland Central between 2011 and early 2017 when National’s Nikki Kaye was the local MP.
“I know you are busy dealing with a lot of problems, but please act quickly before more businesses are destroyed, and treat us fairly. We are part of society.”
When the Weekend Herald sought comment from Ardern about the plight of businesses and the chances of compensation, her office batted away the questions: “This is Minister Wood’s delegation.”
After Ardern became the MP for Mt Albert in February 2017, Kaye became a strong advocate for financial assistance to Albert St businesses, saying in 2019 she had never witnessed “the level of life wrecking, unfairness and stonewalling”.
Chloe Swarbrick, the new MP for Auckland Central, has picked up where Kaye left off, saying what matters now is not who dropped the ball
in the past, but supporting businesses and keeping them well informed.
“At the very least, civil leaders have a role in fronting up to the very real stress, rolling up their sleeves and ensuring this doesn’t happen again,” she said.
Ariano remains a broken man, seven days after closing his restaurant of 10 years and handing over the keys to his landlord on Thursday.
“I feel sad. That’s all I can say. It’s very strange. I try to control myself but I feel like something has been taken away from me unfairly.”
The final nail for Ariano came with the closure of the Victoria and Albert St intersection, boxing in his business with metal fences, hoardings and the daily noise, dust and smell of sewage from the construction works.
“When that happened I realised ‘that’s it, I’m finished’,” said Ariano, who has been prescribed sleeping tablets, medication for depression and diagnosed with diabetes.
Many other businesses in the path of the CRL have gone the same way, including the well-known Mai Thai restaurant not far from Da Vinci’s on Albert St. Others are on the brink.
Transport Minister Michael Wood and Auckland mayor Phil Goff are unwilling to answer the three big questions on the minds of business owners: will they get any compensation? If so, how much? And when?
Wood, who has been considering a $50 million compo proposal from Heart of the City on behalf of businesses since January, said no decisions have been made but hopes to know the outcome and provide some certainty in the “relatively near future”.
“We do acknowledge it is a difficult period for some of these businesses,” he said.
Wood said there were a number of issues to consider: It is public money, no money was set aside for compensation at the start of the mega project, precedents being set for future construction projects and the role of landlords.
“Many landlords will make large windfall gains out of this huge public investment. I do think there is an important role for them to play here in supporting tenants where they can.
“We’ve got to make sure if we do have a compensation scheme we don’t effectively have a public subsidy thrown to landlords who don’t step up,” said Wood, who acknowledged some landlords were helping tenants and others were not.
Goff shares the view that landlords stand to make big financial gains after the CRL opens in late 2024, saying if the council provided rates relief there was no guarantee it would be passed on to struggling businesses.
Instead of rates relief, the mayor anticipates the council will have to contribute unbudgeted money to any hardship fund the Government sets up.
Goff said a financial contribution from the council was the right and fair thing to do, saying disruption from the CRL works had been an incredibly challenging and difficult time for businesses.
Goff this week met a group of affected businesses for the first time. By all accounts it was a fiery affair with businesses telling their stories and venting frustration at the Government and council’s lack of action.
Goff said the meeting was “pretty challenging”, dealing with people under stress and hearing their stories, saying he probably responded robustly several times to fill out the picture and the challenges facing the Government that might be delaying a decision.
Heart of the City chief executive Viv Beck is appalled at the lack of progress in getting financial relief for businesses, saying the Government, Auckland Council and its delivery arm, City Rail Link Ltd, keep going round in circles and passing the buck.
“This is not right. People’s lives and livelihoods are at stake. Some have been impacted for five years and there are still three and a half years to go.
“We need to see some leadership now to resolve this quickly. We don’t want to keep hearing excuses,” she said.
Beck said the issue was not as hard as the politicians made out. There was cross-party support on the issue at a parliamentary select committee in March last year, Heart of the City put a proposal to the Government in January at the request of Small Business Minister Stuart Nash and offered to work with officials on a solution.
She said small businesses affected by a light rail project in Sydney got $200,000 on average from a budget of $60m and listed support packages of $50m, $16m and city-guaranteed loans on public transport projects in the American cities of Seattle, Minneapolis and Cleveland.
The Heart of the City proposal is for up to $10m a year over five years and based on assumptions.
“We have seen nothing. We have seen no urgency. This is devastating that this has gone nowhere, businesses are closing and they are distraught. The delay is inexcusable,” said Beck.
Craig Presland, chief operating officer at Evolve Education Group, said businesses who were severely affected by a revenue loss of 50 per cent or more should receive half their rent in compensation.
At Lollipops Childhood Centre on Albert St, owned by Evolve, Presland said the roll has dropped from 100 preschoolers five years ago to about 50 as parents found it increasingly difficult to drop off and pick up their children.
What’s more, the landlord has refused to reduce the annual rent of $483,000 in a largely disused building and Presland believes the company will rack up losses of $1.25m over five years.
His message to the Government and council is to be fair, reasonable and show leadership to the 200 or so business owners in the vicinity of the Albert St and Victoria St intersection.
“It’s the little guys I feel the sorriest for,” said Presland.
One of those little guys is Sunil Kumar, who owns a foreign-exchange money transfer business at the Wellesley St end of Albert St, which reopened in June after being closed for 15 months.
Kumar, who works 65 hours a week and employs five staff, said he would have been “long gone” if not for the commission he receives on a money-transfer agency he holds.
The construction works, he said, had put people off coming to his business. Combined with Covid-19, foot traffic was down from up to 500 customers a day to about 100. Within 1km of his business, customers had a choice of 25 players offering the same service.
“The Government has not hesitated in printing billions of dollars for Covid and pumping billions into a rail project that is only going to benefit 5 per cent of the public. It needs to look after individuals who are struggling to run their businesses and earn the bread and butter for their families,” Kumar said.
Property owner Grant McRae has watched the CRL works destroy the businesses of three of his seven tenants in the past few months.
He has owned the heritage Armishaw’s Building at the epicentre of the “war zone” for 25 years, but wonders if he can survive the eightyear rail project.
His income has shrunk 85 per cent after halving the rent for some businesses; the backpackers business, which comprises the upper floors of the four-storey building, is only paying 10 per cent of the normal rent; and he has stopped charging rent to a liquor store owner to help him survive.
I feel sad. That’s all I can say. It’s very strange. I try to control myself but I feel like something has been taken away from me unfairly.
Antony Ariano (above) closed his Da Vinci’s Italian Restaurant
“While leases provide for insurance and rates expenses to be recouped from the tenants, when times get tough, operating expenses are the first things tenants stop paying. So it is the landlord who takes on the burden of that suffering.
“All the while Auckland Council continues to put up the rates for the building. In the last four years, while the CRL construction has been going on, rates have increased by $16,133. Rates for the building are at an astronomical $81,038.88. We are paying an absurd amount in rates for a building that is unusable,” McRae said.
A cafe in Armishaw’s Building fronting the fence and hoardings on Albert St has been vacant for two years and there is “zero hope of attracting new tenants”, says McRae.
Melina Lam, a tenant in the building for 25 years, is extremely worried her business will not survive the recent closure of the Victoria and Albert St intersection.
“I will see what happens,” said Lam, who applied for financial help through the hardship fund but got turned down because her shop was 5m outside the zone.
McRae said complaints to City Rail Link Ltd about the muck and disruption and requests for compensation had been dismissed and ignored.
“We have been told to wait it out and things will come right in a few years. However, in the meantime it has become unaffordable to hold on to the building. Nor can we sell the building because the extremely diminished rent roll would result in the building being significantly undervalued.
“They are killing all these small businesses and crucifying people’s lives,” he said.