A dubious bit of how’s-your-father in Lower Hutt is worthy of a wider public airing because it involves decisions made behind closed city council doors to use public money to help make private profit.
The Hutt News flushed out the gist of what’s going on and published its findings on 3 February –
Hutt city councillors last week gave approval in principle to a secret deal to help finance a $22 million apartment tower.
Councillors met last Tuesday behind closed doors to discuss an application by Merge Property Group for a loan for Twelve Daly, the 12-storey complex first unveiled in July 2007.
The Hutt News understands that councillors agreed to the request by a majority of one.
The proposed loan will be made via council-owned property company Urban Plus.
Although the Local Government Act requires councils to state the purpose of meetings, the agenda made no reference to the proposed loan and afterwards no-one in the council would comment.
Oh dear. Naughty, naughty, by the looks of it.
The Hutt News understood the loan was supported by Mayor David Ogden and council chief executive Tony Stallinger. Councillors David Bassett and Max Shierlaw are credited with leading the opposition and with having good support –
The council’s senior financial officer, Matt Reid, was present during the non-public meeting and urged caution as he felt it was a risky enterprise in the current economic climate.
Councillors in favour of the loan bandied arguments typically advanced in these circumstances: they have an obligation to encourage growth in the central business district and the apartment block will create growth in a part of the city which is currently run-down.
Opponents of the scheme argued that lending money to a private enterprise is not a core council activity and is a significant risk in tough economic times.
The apartment block is being marketed by The Professionals Lower Hutt, owned by a John Ross who – surprise, surprise – doesn’t mind a dollop of dosh from the council being used to keep the scheme afloat. He told the Hutt News –
that in tough times, the council has a role to play encouraging economic growth. He is aware of a number of developers who want to build apartments in the CBD and he says they are just waiting for one to be built before making a commitment.
The apartments will cater for the top end of the market and he says they will bring people into downtown Hutt.
Cars will do that, too, Alf points out. Maybe the city council should get into the business of lending money for car purchases.
Some citizens inevitably expressed their disapproval of the loan on the Hutt News web site (but Alf puts his money on the voices of property developers over-riding those of ratepayers).
“Stephen” contends –
This is a commercial building being built for purely commercial gain by the developer and not for the benefit of the council.
However more to the point why does this make a good loan risk if the main financier (ANZ) will not extend the loan amount nor will a second tier financier put up the
money? How does the Council consider itself more financial astute than a bank?
Good question, especially since part-public financing of the Hutt development seems at odds with information about Merge on the Capital Property Investors Association website.
Chaired by Fran Wilde, Merge Property Group raises funds privately, invests them in property investment and development projects.
Fran Wilde? Not the former Wellington Central MP (Labour) and Mayor of Wellington?
Probably.
But why should Alf take up the cudgels?
First (one of the reasons he started blogging), he reckons the Dom-Post is falling down in its civic duty by paying too little attention to what’s going on in its Hutt backyard.
Second, he worries that the Merge Property Group before long will be wanting to knock up high-rise apartment blocks in the middle of Eketahuna. The buggers won’t care much about which long-time residents have their sun blocked out.
Those who scoff at this concern should note that Merge has already edged into the Wairarapa with a “development” at Lake Wairarapa.
If your dream is to live in a native forest park, overlooking tranquil water, but within easy reach of New Zealand’s best wine and food, this is your lifetime opportunity.
Western Lake Road subdivision offers five unique lakeside sites, featuring native bush and views across Lake Wairarapa to the Huarangi Ranges.
The site is directly adjoining Department of Conservation land and near to the boundary of the Rimutaka Forest Park.
These are the only lake front properties currently available in South Wairarapa and provide an extremely rare prospect to build a lifestyle home in a pure, natural environment.
Further north from here, Merge last year was aiming to move into Napier.
Developers are fighting to save the $50 million Boathaus project planned for Napier’s inner harbour.
Launched in May, the project aims to turn the old NJ Price Engineering building, on the corner of West Quay and Customs Quay, into a four-storey development with cafes, stores, offices and apartments. The apartments were to sell for up to $2.2 million each.
But Wellington’s Merge Property Group failed to complete the scheduled purchase of the site in May and the family trust that owns the property has now put it on the market again.
Trust spokeswoman Joy Price said she had lost patience with Merge, which had not paid a deposit and had asked for an extension till January.
However, Merge development manager Martin Price said yesterday that he would continue negotiations with the trust and hoped to secure the prime site.
The development would have needed favourable council treatment.
Merge will be asking permission to erect a building 1.5 metres above the maximum height allowed in the district plan.
Merge also wanted to avoid a public hearing, apparently. As an NBR report explained in October last year –
Merge recently abandoned plans for $50 million worth of apartments on the Napier waterfront called Boathaus. Merge had been seeking resource consent for apartments, commercial and retail outlets on the former NJ Price Engineering workshop site on the Napier waterfront.
But then Merge learned that the resource consent application would have to be publicly notified, and submissions considered, creating delays.
Vendor NJ Price Engineering cancelled the contract and is marketing the property for sale.
The NBR story was focused essentially on Merge’s successes, describing it as a company swimming against the economic tide.
Merge Property Group is progressing three apartment buildings in the capital.
Next week it will launch a marketing campaign for its latest apartment offering with an official launch to be held at the Metropol showroom on the corner of Leeds and Ghuznee Street at on Wednesday.
At the same time, the property development company is finalising construction and funding for two other Wellington development projects – the $46 million, 11-level, 108-apartment Te Aro Towers near the central city, and the proposed $22 million Twelve Daly Street in Lower Hutt.
Director Campbell Venning said the Te Aro Towers and Twelve Daly Street were 98% sold down and he expected to announce the start date of construction in a couple of weeks.
The NBR writer was especially struck by environmental considerations.
Metropol will feature all the latest green-thinking features such as a wind turbine to generate energy for common area lighting, regenerative lifts, solar panelling, sustainable building materials, solar panels, thermal efficient cladding, and a 10th-level rooftop garden. Mr Venning said it will be one of the first of its kind for the apartment sector in the capital, even surpassing the Meridian building on the waterfront, which has set new green standards.
The Dom-Post reported on the same scheme at the same time, suggesting good PR was involved, but oddly it did not mention Merge’s involvement –
A new apartment building planned for central Wellington will be equipped with the latest green features …
Metropol, a 15-storey apartment block due to be finished in late 2010, will sit near Cuba Mall on the corner of Leeds and Ghuznee streets.
Metropol was designed by British architect Huw Parslow, who has been part of the sustainable building boom in Europe.
So how does Alf know this is a Merge job? Because he was steered to the Dom-Post article (and the NBR’s) from Merge’s web-site where the project and news media mention of it is proudly featured.
The Metropol publicity burst even led to the project being discussed in Chris Laidlaw’s Sunday programme on Radio New Zealand National. The emphasis there was on “sustainability” in the building business.
Laidlaw and Wilde are fellow councillors on the Wellington Regional Council, by the way, and Laidlaw succeeded Wilde into Parliament as member for Wellington Central.
Alf reckons Laidlaw should revisit the issue, and focus on Hutt city councillors’ positions on sustainability.
A majority of them are so eager to sustain a controversial project in the centre of their city, they will dip into the public trough to help fund it.
But if this is such a great idea, Alf reckons, they would be willing to sustain their arguments for it in public. And not make their decisions behind closed doors or refuse to explain themselves to the local newspaper.
Alf Grumble 