Can Pōneke Wellington afford the Reading Cinema deal?

Saturday, 17 February 2024

Iona Pannett is a city councillor for the Pukehīnau Lambton Ward. Reading Cinema is located in her neighbourhood.

OPINION: The answer as to whether the city can afford the Reading deal is unfortunately, no.

There are confidentiality provisions around this deal which I have and will continue to respect, but I can talk about what is known so far publicly. In 2023, Wellington City Council discussed a proposal to buy the land under the Reading Cinema in Courtenay Place from Reading International Inc, which would then be leased back to the company at a cost. The money from the sale was proposed to enable the company to invest in the site.

I have no doubt that the council was attempting to act in the best interest of the city when it proposed this deal. The cinema complex is a blight on Courtenay Place and investment is needed.

An innovative solution was proposed and council should be congratulated on developing such a solution. However, I believe it must be looked at again, particularly given that the council now has a better idea of its financial position and infrastructure deficit.

The council is not wealthy. Whilst the council holds billions of dollars in assets such as roads and parks, most of it can’t be sold. What we do have for potential sale is a 34% stake in Wellington Airport, worth $278m as at 2023. We also hold a ground leases portfolio of 63 leases mainly in the central city with a total asset value in 2021 of $234m. It is not a lot.

Residents also face challenges. Many are finding it difficult to pay rates and it is likely in future years that our costs will further increase as we fight climate change, inequality and further invest in basic infrastructure like our pipes.

We are dangerously close to our debt to revenue ratio of 225% so there is very little headroom for the council to invest even more into these critical areas. Like other asset owners, our insurance is becoming increasingly unaffordable and our funding tools are very limited.

Topically, we know for example in the water area that there is a funding gap between what the council can afford and what Wellington Water needs. Given all of these considerations, we just can’t afford to buy land off a multi-national. The money should be used for core infrastructure.

It should not also be a surprise for any owner that Pōneke Wellington is a highly earthquake-prone city. Some buildings like the Reading also sit on reclaimed land, with potential for liquefaction.

Owners of the other 570 earthquake prone buildings (a significant number of them homes) in this city might well ask why Reading has been prioritised over their needs as they face massive and unaffordable costs to strengthen their own buildings.

Questions can also be raised as to why council is supporting a multi-national when it is the job of banks to lend money for redevelopment of buildings and how residents interests will be protected in this deal.

Furthermore, Reading is investing in other parts of the world so it could be argued that they can also afford to invest here. The deal was furthermore done without any policy framework and no standard for hardship has been set by which we can evaluate whether an owner needs assistance or not.

So what can you do if you want to invest in our future and put Wellington residents and businesses first? You can make a submission to the long-term plan, which will be consulted on from April. The matter will also be debated at council in the coming months.