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Auckland City to decide on property role & marinas

12 May 2004

Auckland City to decide on property role and marinas

The Auckland City Council will decide tomorrow whether to purchase Westhaven and Hobson West marinas as part of a proposal to take a greater role in urban development throughout the city.

After a month of public consultation, officers, at a special council meeting at 6pm Thursday 13 May, will recommend that the council adopt a new policy entitled Development with Vision. The report recommends that the first project to benefit from this policy be Westhaven and Hobson West marinas.

The policy outlined in the report would see the council setting up a new development enterprise board, which would implement a development strategy set by councillors. This could include purchasing blocks of land and selling or leasing it to developers with conditions that require quality urban development.

It could also include investing in urban infrastructure, which would have environmental or community benefits but which won’t deliver a full commercial return, thus making them less attractive to developers without council support.

The Government announced last month that it would purchase the marinas from Ports of Auckland Ltd for $54 million to ensure they remained in public ownership. This arrangement was on the understanding that Auckland City would then buy the marinas from the Government. The council’s final purchase price for the marinas is not confirmed. It will be $46 million plus payments for the book debtors and inventory the council will be acquiring.

The report says that initial due diligence indicates the marinas are essentially self-funding so recommends Auckland City not sell the airport shares or use rates funding to buy or maintain the marinas.

Auckland City has had approaches from a number of parties interested in managing the marinas.

“The council’s tender for the marinas was always contingent upon us going out to the public and asking for feedback,” said Councillor Scott Milne, chairperson of the council’s Waterfront Working Party. “There has been a huge amount of public debate about the future of the marinas and, through the formal consultation and other channels, we’ve received a lot of support and feedback from a wide range of stakeholders.”

The marinas are only one project that the report says would benefit from this stronger property role. The council will also be looking at the future of other areas of Auckland including the remainder of the waterfront from west of the Harbour Bridge to Queens Wharf and Tamaki Edge, near the University of Auckland’s Tamaki campus. Details of these projects are still under discussion.

If additional land is purchased under this policy the council will need to consider funding options including debt, income from the property purchased and equity including possible asset sales. It is possible that the airport shares, currently valued at around $250 million, may be used to fund future property purchases to facilitate quality urban development in the city. This will depend entirely on the properties the council purchases.


Development with Vision
Officers recommendations to Auckland City Council, 13 May 2004
Questions and answers

1. What are the officer recommendations?
Between March 22 and April 21 Auckland City asked for submissions on its proposal to take a more active role in property. Verbal submissions were heard on May 4. At special council meeting on Thursday 13 May officers will recommend that the Auckland City Council adopts a new policy, entitled Development with Vision, of having an enhanced property role in order to have a greater role in facilitating quality urban development throughout the city.

2. What does this mean?
The council would set up a new development enterprise board, which would implement a development strategy set by the council. This could include purchasing blocks of land and selling or leasing it to developers with conditions that require quality urban development. It could also include investing in urban infrastructure which would have environmental or community benefits but don’t have the full commercial return to make them attractive to developers without council support.

3. How do Westhaven and Hobson West marinas fit into this?
The purchase of the marinas would be the first project to benefit from this new, stronger approach to development. It’s an important part of Auckland’s waterfront real estate and any development needs to take place with the needs of Aucklanders taking top priority.

4. What was the outcome of consultation?
The council received a total of 124 submissions on its proposal and these were generally supportive of the council taking a stronger role in property including the purchase of key waterfront areas. Less than half of these (51 in total) commented on the proposed purchase of the marinas. They were fairly evenly split on the proposal to purchase the marinas from POAL (14 in support and 15 against). After the announcement that the government would purchase the marinas the council received 26 submissions stating the council should not purchase the marinas from the Crown as they were already in public ownership.

5. Now that the government is going to buy them why does the council need to?
The government stepped in to ensure Auckland City would be the eventual owner of the marinas as they agreed with the council that this was in the best interests of Aucklanders. In addition, Auckland City, the government and the Auckland Regional Council feel strongly that the marinas need to form part of an overall strategy for development of the waterfront and that in order to guide that development, underlying ownership needs to be with the city council.

6. When will you take possession of the marinas?
June 1, 2004

7. How will they be managed?
The council is still working through the long-term management structure but immediately following settlement the marinas will be managed by the council’s property group.

8. What is the final purchase price?
The price Auckland City Council will pay to the Crown will be approximately $46 million as previously announced however there are some factors like book debts which are still to be calculated.

9. Are you purchasing the marinas from the Crown or is Auckland City the appointed nominee on THEIR purchase?
To simplify the sales process Auckland City Council is the government’s appointed nominee. This means ownership will transfer directly from POAL to Auckland City.

10. Did the mayor attempt to use the Electoral College’s powers to prevent the sale of the marina?
Infrastructure Auckland, which owns 80% of Ports of Auckland’s shares, is governed by a board that in turn is governed by the Electoral College. Auckland City’s mayor does have voting rights on the Electoral College however it is not within the powers of the Electoral College to veto the marina sales. Its role is to set the Statement of Corporate Intent and appoint the directors to the board.

11. What other areas of Auckland will the development enterprise board purchase?
Westhaven and Hobson West marinas are the first projects to benefit from this new enterprise board. As stated in our consultation we’re also interested in purchasing additional waterfront land from POAL and looking at developments in strategically important areas of Auckland like Tamaki Edge surround the University of Auckland’s Tamaki Campus.

12. Will Auckland City be selling its airport shares to fund the marina purchase?

13. Can’t Auckland City back out of the agreement with the Crown now that the marinas are secured in public ownership?
If council agrees to buy, the agreement will be signed following the council meeting. In the meantime we have a deal in good faith with the government but this is subject to public consultation and council approval.

14. When will the council be purchasing the rest of the waterfront land from POAL?
Auckland City is very keen to secure Auckland’s gilt-edge harbour real estate from POAL. This encompasses all the land from west of the Harbour Bridge through to Queens Wharf and includes the marinas. However we have no control over whether POAL will sell this land to us. Auckland City, POAL and the ARC, which will be inheriting Infrastructure Auckland’s shareholding in POAL, are discussing long-term plans for the waterfront.

15. Will rates be used to fund the purchase or maintenance of the marinas?
No, our initial due diligence indicates that the marinas will be self-funding so we don’t believe funding from rates will be necessary. However if in the long-term we develop some of the public areas eg by increasing the size of walkways or developing the small beach area there may be a call on rates.


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