Wellington Mayor Tory Whanau says the plan is fiscally neutral, but Photo: RNZ / Samuel Rillstone
Wellington Mayor Tory Whanau is confident the city council will agree on a $32 million deal to fix what they had described as a major eye sore in the capital's CBD.
The council has proposed buying the privately owned land which the Reading Cinemas shopping complex sits on at Courtenay Place, and then leasing it back to the cinema company.
But talks about the deal had been under wraps to protect commercial sensitivity, which led to some frustration and speculation in the public after details were leaked last year.
The building has been closed since January 2019 because of its quake risk.
Councillor Iona Pannett filed a notice of motion to revoke decisions the council has made on the cinema, the Herald reported. No information about the motion has been provided in the agenda and council officials have recommended it be considered in a public-excluded part of the meeting.
Demolition of Reading Cinema car park in 2022. Photo: RNZ / Rebekah Parsons-King
However, most councillors, including the mayor, now wished for the meeting to be public to avoid speculation, the Herald reported.
Whanau told Morning Report she was confident the "fiscally neutral" plan would be approved by the city council.
"It forms part of a wider plan to revitalise the city center, Courtenay Place ... [the deal] will allow Reading to initiate some design work which we would approve and develop it over the next couple of years so that it's ready to open by 2027."
The idea was for the complex to be redeveloped and strengthened, bringing back the cinema and creating an "entertainment centre" with food and retail businesses.
"So, they will lease the land back from WCC and any rent will cover the council's borrowing and other costs. They have the first right to buy back the land anytime within the 15 years of the lease, but we also can sell the land to someone else any time after the first 10 years of the lease. So the intention is to sell the land back at a profit," Whanau said.
She believed this was a "creative way" to get development in the city during a financially tight environment.
Councillor Iona Pannett says Reading Cinema should go to the bank, not the council. Photo: RNZ / Samuel Rillstone
However, Pannett disagreed, saying it was not fiscally neutral.
"If it is sold within 10 years, it will be sold at the present-day price, which is $32 million," Pannett said.
"It doesn't take into account any property gains or inflation. So essentially, the ratepayers are having to pay for this at a huge opportunity cost when we have such a strong need for investment in core infrastructure."
The city council could not afford the deal because it had a "very, very limited realisable asset base" of $512 million, she said.
"It's also a kick in the face, of course, for other owners, particularly homeowners who could legitimately benefit from us for our own people."
Also, they could not force the owner to act on the building unless it reached a very high threshold under the dangerous and insanitary provisions in the Building Act, she said.
"We just have to play hardball, we're not a bank, we're not a charity. We need to invest in our city. It is their job as a property development company to look after their own assets."
While the cinema company could go to the bank, Whanau said she preferred this deal so that the council could get some revenue too.
"At its simplest, it's essentially, I suppose, like a loan but we'll be gaining once it's ready and set, we'll be generating over a million dollars in revenue for the council and that's a good thing.
"Anything we do, especially with developments, there are going to be risks, but we have strong mitigations for all of those as well and that's exactly what we're discussing today in our meeting."
Reading Cinemas is owned by an American-based corporation.
