I am one of the seven Wellington City Councillors who opposed the deal for the Council to give a loan to Reading International to help them with earthquake strengthening their Courtenay Central cinema building. I have looked into this deal very closely – including talking to property developers and having two meetings with the WCC CFO in the week before the Notice of Revocation vote.

I understand the deal is still going ahead (the NoR was lost 7-9), but I wanted to outline the multiple reasons why this is not a good decision for the council.

Firstly, and in some ways most importantly, this is an unprincipled deal. No Council should be using its special privilege to tax its residents (which is why we can borrow at much lower interest rates) to help individuals or private for-profit companies.

This disadvantages all the other individuals and private companies who also “need help” to redevelop their business. That there is no agreed council policy covering this deal and that Reading International has lobbied the Council for years to finance them only makes this deal even more unprincipled.

I note supporters claim that Courtenay Central being closed for over 6 years makes Courtenay Place a less attractive destination for many. This is true.

But the Johnsonville Mall has been promised to be developed for over 30 years yet the Council has never offered any similar deal to Stride Properties (in fact, Stride must pay the council some millions if/when they choose to rebuild the Johnsonville Mall).

There are clearly other projects which are arguably more important than getting a multiplex cinema building earthquake strengthened. This Reading deal sets the precedent that this Council is in the business of providing corporate welfare.

Secondly, this Council is facing much bigger financial problems in fixing water, waste and transport.

Reading is simply not on the priority list.

Our infrastructure deficit is largely because previous councils diverted tens of millions of infrastructure depreciation funding towards projects they deemed as “needy” such as Tākina – our impressive new but loss-making convention centre.

Even before this deal, the WCC Long-Term Plan includes borrowing to 245% of our rates income. This is over our own financial policy limit of 225% … so why are we even considering non-essential projects when we cannot properly fund our essential ones? This Council is just as guilty as previous councils in being unable to make the hard decision to prioritise vital but boring infrastructure investment over supporting yet another “needy” project.

Thirdly, the Council is already planning to spend $10s of millions on revitalising Courtenay Place as part of the Golden Mile Project. This will include:

removing cars and narrowing the road for buses only
further widening of pedestrian pavements
adding a cycleway
locking off the side streets except for Tory Street.

Courtenay Place is the one part of Wellington City with a fully planned and funded revitalisation project. This investment improves the public space and benefits all businesses including, of course, the Reading cinema multiplex.

No other part of the city will get this level of investment in the next few of years, but this is not enough for Reading to do what many other building owners are doing which is getting on with fixing their own buildings.

[By the way I do not agree with the Golden Mile Plan for Courtenay Place partially because it includes removing the bus stops literally outside the Reading Cinema … yes, the WCC plan for Courtenay Place is to remove the bus stops outside the same Courtenay Central building we plan to give $32M to reopen and become a key entertainment centre … you can’t make this stuff up!]

Fourthly, this deal will cost the city’s ratepayers tens of millions in lost land value.

You would think getting a $32M loan at significantly below market interest rates (by my estimate worth over $10M) should be enough for Reading International to get on with their strengthening project. But no, this council has also agreed to give Reading the option to buy its land back any over the next ten years for the same price! Wellington CBD land roughly doubles in price every decade which means this land in 10 years’ time will likely be worth over $64M. In ten years, Reading can give us the $32M back and then immediately sell the same land for $64M walking off with the extra money.

Because the Council plans to fund this deal by selling $32M of other CBD land, this loss of the land capital gain is real money … hell, we haven’t even got the buyback price inflation-adjusted so we lose on a decade worth of inflation on our loan principle!

It is bad enough that the WCC are providing a very cheap loan to an American multi-national property developer to strengthen their own building. It is totally irresponsible (and I can think of worse words) for this council, which is so short of funding, to agree to also subsidise them by tens of millions.

There are other issues as well including significant risks with this project outlined to councillors “In-Confidence” that I cannot discuss in public. One officer said that, in this respect, the Reading decision is similar to the Town Hall decision – it’s officers’ job to outline the risks, which they did for both projects. It is the councillors’ job to weigh up the risks and make the decision and if, in the next few years, one of these risks comes about, it is the mayor and the eight supporting councillors who must bear responsibility for the cost.

All of the above means that, despite it potentially helping a key part of the city, I remain firmly opposed to a Reading deal that, IMO, never should have brought before us.

Tony Randle is a Wellington City Councillor for the Takapū/Northern Ward