Philanthropist offers Wellington a charity Reading

Thursday, 29 February 2024

Philanthropist Sir Mark Dunajtschik has offered the Wellington City Council an alternative Reading deal – one that could put $2.2 million a year into charity hands and eventually see the prime inner city land be handed back to the city.

The Wellington City Council, led by mayor Tory Whanau, is looking to spend $32 million buying the land beneath the Courtenay Pl cinema, closed due to structural issues since 2019, then lease it back to the US owners under the agreement they will fix the building.

But in a council meeting on Thursday there is a vote on a notice of motion led by councillor Iona Pannett to scuttle the deal, which has been describe as corporate welfare while the city struggles under immense costs.

Dunajtschik, a property developer knighted for his philanthropy which included funding a new Wellington children’s hospital and a new mental health unit, had representative Nick Wareham put an alternative deal to the council ahead of the vote.

That deal, dependent on the notice of motion passing, would see him approach Reading directly to buy the land but he would only put up his own money once Reading had put up its money.

The ground rent from Reading would go to the Nikau Foundation, which he had already left his estate to, to support people living with physical and intellectual disabilities.

Fifty years later, it would be handed to the people of Wellington. If Reading wanted to buy the land back, it would be at the market rate of the day.

Wareham listed Dunajtschik concerns that the council was putting up its money “with no guarantees that the redevelopment project will proceed and no ability for the Council to recover the money”, and that the council would borrow the $32m and use up its borrowing capacity.

“He believes that the ratepayers are on the raw end of the deal,” Wareham said.

Dunajtschik told the council the ground lease could conservatively return 7% — more than $2.2m a year — of the initial investment. The council should “walk away as fast as it can” from the current deal, he said.

“However, if I was in the shoes of Reading, I would laugh all the way to the bank,” he said.

The deal has been cloaked in secrecy to the extent that, when details were leaked to the post, Whanau launched a $43,000 investigation in a failed attempt to weed out the leaker.

More recently she said the leaked information had led to “misinformation” and on Wednesday night released details of the deal, most of which had already been reported.

The deal was for the council to buy the land for $32m based on a $31.9m valuation, then lease it back to the cinema chain on a 21-year perpetually renewable lease.

The rent would cover borrowing and other costs, making it “cost neutral” to the council, she said. Reading would have the first right to buy back the land any time within the first 15 years, but after the first 10 years, the council could sell the land to someone else.

“The deal provides that WCC will only complete the agreement and pay the balance of funds to Reading once we have been satisfied that the new building design meets the civic outcomes we want and has resource consent.”

Whanau said 80% of the deal had been agreed to and released the information with Reading’s agreement.

“A lot of what has been said about this proposal with Reading is inaccurate and misleading, such as the assertion the deal will have an impact on rates,” she earlier said.

“It is a fiscally neutral proposal.”

The Post has previously reported that the proposal is meant to be cost-neutral or better, but also that the deal would see the risk of the project carried by the city.