Reading Cinemas deal will go ahead, council decides

Thursday, 29 February 2024

The Wellington City Council has voted to proceed with the Reading Cinemas deal.

It looked very likely the deal would continue when Labour councillor Ben McNulty – probably the only swing vote on the deal, in his words – decided after sleepless nights he would support proceeding with the first $6m stage of the deal.

Reading had to be aware that a future notice of motion from council could kill the deal at any point, McNulty said. There weren’t many sticks the council could use to encourage redevelopment so he would take a “gigantic punt” on the carrot of low interest rates working.

Nine councillors voted in favour and seven were against the deal.

Mayor Tory Whanau said not going ahead with the deal would kill Courtenay Place further. She rejected the idea that there was a choice between spending on the deal and funding the pipes.

“It's not an either or thing. We are investing in order of $1.8 billion in water, and I reject that narrative that people think we're not going to invest in water just because we invest in this deal.”

Councillor Iona Pannett moved her motion to stop the deal, decrying it as “corporate welfare” and saying “cinemas come and go … there is nothing sacred about this particular outfit”. She was disillusioned with the plan for a left-wing council to fund a private redevelopment.

“This is the worst commercial deal I’ve ever seen,” said Ray Chung.

Tim Brown was on the other side, saying Courtenay Place was in a “dire shape”.

“The carbunkle on the nose of Courtenay Place is the Reading. This is an extremely low-risk, cost-efficient way to facilitate the redevelopment of this facility.”

If the council was going to put millions of dollars into upgrading the street through the Golden Mile, it needed to address the empty complex which brought it down, he said.

“If we don’t do this deal, the big deals that are coming down the road will not happen. If we can’t do this deal, we can’t do anything else.”

Deputy mayor Laurie Foon said it would bring the vibe and the buzz back to the city, rather than becoming a backwater.

The council needed to show it could innovate in deals and be a good partner for developers to get the city thriving, she said.

Councillor Tony Randle questioned why the council would use this money on a cinema if its priority was the pipes. “We’ve made a commitment to prioritise three waters and yet here we are today.”

Chief financial officer Andrea Reeves told the council the deal would address safety concerns for Courtenay Place and would be “at no cost to ratepayers”.

Whanau said the information released on Wednesday evening showed the deal was “fiscally neutral” and would not cost ratepayers.

But Sir Mark Dunajtschik, speaking to councillors before the meeting, said the deal was “doomed to start with” if the only way Reading could fund redevelopment required a marginally cheaper loan from the council.

“If I was in the shoes of the council, I would run away as fast as I could. If I was in the shoes of Reading, I would laugh all the way to the bank,” he said.

Local economist Sam Warburton said the deal was not fiscally neutral. The council was giving Reading Cinemas a loan rate it could not get on the open market and selling assets – understood to be ground leases under other buildings – to fund the deal.

“If council wasn’t involved and ratepayers were looking for an investment, we’d want at least a 15% annual return from Reading because we could get that from loaning to any other business in a similar situation, and with similar risks, to Reading.”

According to the documents, the $32m purchase by the council will be split into two phases – the council will pay a $6m deposit at the start of the agreement, followed by the balance of $26m when Reading Cinemas meets the council’s conditions.

Residents showed up earlier to share their thoughts about the deal.

Victoria University student president Marcail Parkinson said most university students had never seen the cinema complex in action, and just viewed it as an eyesore which sat in the middle of Courtenay Place.

Students didn’t have places where they could hang out without drinking or spending a lot of money.

“We've got so many spaces protected by things like heritage or ruined by earthquake strengthening that are sitting there, left to rot, because the council or whoever else is in charge don't make it a priority to make a city that truly fits the needs of those who currently live here.”

Justin McKenzie, owner of Hawthorn Lounge, said he saw the investment in Reading as very important to the area. The site was currently like a “scar through the city”, he said.

While other measures like the Golden Mile upgrade would improve the footpaths and make the area prettier, they were not enough.

“On a Friday night, no one’s coming to look at a tree … We’re wanting people to come into the city to be entertained and actually enjoy the precinct.”

Libby Dearnley from the Welly Collective, one of the few remaining tenants in the Courtenay Central complex, said Reading had been a great landlord who had supported the shop throughout Covid.

The redevelopment would support the whole area of town, she said. “We will notice people coming back to the city, we will notice other businesses get that confidence to set up their spaces.”

Whanau said she saw the deal as an extremely good solution to the Reading Cinemas problem.

“The alternative is we walk away from this deal and leave the Reading Courtenay complex as a huge eyesore.”

Councillor Iona Pannett brought a notice of motion to stop the deal, saying the deal was akin to corporate welfare. Owners of other buildings requiring earthquake strengthening had a far greater need than a large American company, she said.

Council staff wanted it to be kept under wraps when it was first discussed in October, only labelling it “City Activation project” on the agenda and refusing to release further information.

But details revealing the proposed land purchase were leaked to The Post.

How they voted on stopping the deal

For: Nureddin Abdurahman, Diane Calvert, Ray Chung, Sarah Free, Iona Pannett, Tony Randle, Nicola Young

Against: Mayor Tory Whanau, Deputy Mayor Laurie Foon John Apanowicz, Tim Brown, Rebecca Matthews, Ben McNulty, Teri O’Neill, Nīkau Wi Neera, Geordie Rogers