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Auckland City votes to strengthen property role

13 May 2004

Auckland City votes to strengthen property role and defer marina decision

The Auckland City Council voted tonight to implement a new policy that would see the council taking a greater role in encouraging quality urban development throughout the city.

The decision on whether to purchase Westhaven and Hobson West marinas from the government has been deferred due to continuing discussions on some commercial issues. The final decision on the marina purchases was delegated to the Waterfront Working Party.

Tonight’s report from council officers outlined the results of public consultation and recommended that the council adopt the new policy entitled Development with Vision.

“The council and the government agree that it is in the best interests of Aucklanders that these marinas belong to the people of Auckland city,” says Councillor Scott Milne, chairperson of the Waterfront Working Party. “However, if Auckland’s ratepayers are to stump up more than 85% of the cost of the marinas we need to make sure they’re getting a fair deal.

“We hope to wrap this up in the next couple of weeks but we feel there is more work to be done on some commercial issues.”

The new policy adopted tonight sees the council setting up a new development enterprise board, which would implement a 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.

Under this new policy the council will be looking at the future of strategically important areas of Auckland including the remainder of the waterfront from west of the Harbour Bridge to Queens Wharf. Opportunities at Tamaki Edge, near the University of Auckland’s Tamaki campus, will also be considered under this new policy. Details of these projects are still under discussion.

The report considered tonight recommended that the council’s shares in Auckland International Airport Ltd would not be necessary to fund the proposed marina purchase.

However, 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.

Updated questions and answers sheet.

What is the new Development with Vision policy?

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. The council has voted to set up a new development enterprise board, which would implement a 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 that would have environmental or community benefits but doesn’t have the full commercial return to make them attractive to developers without council support.

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.

What was the outcome of consultation?

The council received a total of 124 submissions on its Development with Vision 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.

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, it is better that underlying ownership lies with the city council.

If the council does decide to purchase the marinas, when would it take possession?

June 1, 2004

How would they be managed?

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

What would the final purchase price be?

The council has not decided whether to purchase the marinas as they are still in discussions about some commercial issues. If the council does purchase the marinas the price will be approximately $46 million as previously announced plus some additions for, for example, book debts. In total, Auckland City would be paying approximately 85% of the total purchase price.

Would the council be purchasing the marinas from the Crown or would Auckland City be the appointed nominee on THEIR purchase?

To simplify the sales process Auckland City would be the government’s appointed nominee. This means ownership would transfer directly from POAL to Auckland City.

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.

What other areas of Auckland will the development enterprise board be purchasing land in?

Westhaven and Hobson West marinas would be the first projects to benefit from this new policy and its development 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.

Would Auckland City be selling its airport shares to fund the marina purchase? No

Can’t Auckland City back out of the agreement with the Crown now that the marinas are secured in public ownership?

Following public consultation, verbal hearings and discussion at the council meeting, the final decision on the purchase of the marinas has been delegated to the Waterfront Working Party. The working party will be continuing discussions with the government about commercial issues before it is confirmed.

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.

Would rates be used to fund the purchase or maintenance of the marinas?

No, the council’s initial due diligence indicates that the marinas would be self-funding so we don’t believe funding from rates would be necessary. However if in the long-term we developed 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.

ENDS

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