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Airport share sales possible as council grapples with budget

Friday, 3 November 2023

Wellington mayor Tory Whanau said the outline of the long-term plan was “far from an austerity budget” but the sale of airport shares is one of the proposals.
Wellington mayor Tory Whanau said the outline of the long-term plan was “far from an austerity budget” but the sale of airport shares is one of the proposals.

Selling airport shares, deferring community projects and cutting back on maintenance are all options being considered by Wellington City Council as it tried to avoid skyrocketing rates.

On Friday, the council released information showing the many projects that could be cut in order to reduce the size of the city’s capital spending programme, which was projected to hit a financially unsustainable $566 million this year.

Wellington mayor Tory Whanau said the outline of the long-term plan was “far from an austerity budget” and people voted for her to continue investing in the city.

The Karori Events Centre remains unfinished.
The Karori Events Centre remains unfinished.

“Like other cities we're facing external pressures on inflation, rising interest rates and really rampant insurance costs. We've been considering how we can continue to have a resilient balance sheet that respect the rates paid by our citizens, while also delivering on the ongoing improvements for our city.”

The paper gave a range of forecast rates increases of between 5% and 8% for the next 10 years, with higher increases likely early on next year and in 2025.

It was the first look at the council’s plan for the next 10 years, after a series of workshops for councillors on how to deal with the escalating costs of projects like the Town Hall.

Wellington mayor Tory Whanau described revitalising the city centre as a mayoral priority. “It’s really important to me that we get our city humming again.”
Wellington mayor Tory Whanau described revitalising the city centre as a mayoral priority. “It’s really important to me that we get our city humming again.”

The broad outline includes dropping several projects that had been promised to the suburbs, the sale of assets including airport shares and land, and using financial tools like sweating assets to defer maintenance.

Whanau said her “laser focus” was on improving the inner-city, especially Courtenay Place. “Further investment is needed in our city centre. Not doing anything, I think, would be catastrophic.”

The local community is behind plans for Huetepara Park at the eastern end of Lyall Bay. The plan was to turn this disused patch of grass into a park, toilets and an accessible viewing platform.
The local community is behind plans for Huetepara Park at the eastern end of Lyall Bay. The plan was to turn this disused patch of grass into a park, toilets and an accessible viewing platform.

The plan for more trees in the central city receives a boost of $4.3m. Projects in “synergy” with the Town Hall, including the basement under Civic Square and the Capital E building, would receive funding of $240m.

Funding for earthquake strengthening the Michael Fowler Centre and Opera House were not included as they are not planned until later than 2027.

A large slip damaged Otari-Wilton
A large slip damaged Otari-Wilton's Bush, but regeneration of the area will be expensive.

Other than $130m for city housing upgrades, more retaining walls and decarbonisation of the swimming pool heaters, there are few other increases in budget planned.

The council is considering a significant number of asset sales ‒ with ground leases under waterfront land on the table along with the airport shares.

Waitangi Park’s skate facilities are extremely popular, but upgrades will likely have to wait.
Waitangi Park’s skate facilities are extremely popular, but upgrades will likely have to wait.

The 34% shareholding in the Wellington Airport, valued at $278m, could be sold and used to create a diversified investment fund for resilience in the face of earthquakes or other natural disasters.

Council financial assets are mostly local, meaning a large quake could have a devastating effect.

Among the projects that could be on the cutting room floor are the upgrade to the Khandallah Pool, funding for Zealandia, and funding for the community-led Huetepara Park in Lyall Bay.

Increased construction costs have also forced delays the upgrade of Begonia House until 2025, with a cost of $12m for the full maintenance.

A change in the roll-out of the Paneke Pōneke bike network, to use fewer temporary materials and avoid doubling up on work, will save $81m ‒ while still going ahead with the entire roll-out. In some places it will involve less separation between bikes and vehicles.

Even maintenance is not safe, with the deferral of $26m of roading costs and $13m of footpath upgrades. Maintenance at sports grounds be reduced too.

The council was also considering how to gather more revenue through parking, by increasing charges to $5 an hour and introducing charges at sports and recreation facilities.

The council was likely to exceed 225% of its self-imposed debt-to-revenue ratio for some years within the next ten, but will remain within the 280% cap imposed by the Local Government Funding Agency.

The council will vote on the priorities for its long-term plan next Thursday. A draft budget will be released in December and formal community consultation will begin in April.

Councillor Diane Calvert the paper provided limited information about the proposed financial status of the organisation.

“There are some basic core services which are being proposed to be cut or deferred … and I'm feeling very uncomfortable about that.”

Regarding the potential sale of airport shares, Calvert said she would be fine with them being sold as long as the council invested in something that paid a higher dividend and spread risk.

On Khandallah Pool’s upgrade, of which Calvert is a supporter, she said the proposal was “a bit premature”.

The small community engagement group for the pool hadn’t been spoken to and they were still waiting on the quantity surveyor cost.

Cycling advocate Patrick Morgan said Wellington was making great progress on protected cycling network and “any delay to the quality or the timing of that would be unacceptable”.

If the council could find savings without affecting the quality and time, he could “live with that”.

Morgan said if “lower grade separation of bike and vehicle lanes” meant paint would be used for cycle lanes instead of kerbs, he’d be be upset “because paint is not protection”.

He thought it would be unlikely councillors would support that as most had been strongly supportive of bike lanes, as they were climate action.

What’s being cut?