Reading $32m deal cancelled, Wellington City Council confirms

Tuesday, 23 April 2024

Months of controversy and a $1400 ratepayer-funded dinner later, the Wellington City Council has confirmed it has pulled out of the $32 million Reading deal in Courtenay Place.

Tuesday’s confirmation comes following months of controversy after the council hatched a deal with the foreign owners of the Courtenay Place complex.

Leaked details showed that the council was going to buy the land under the complex for $32m which Reading would put towards fixing and reopening the building, closed since 2019. It had the option of buying the land back from the council in the first decade at the original $32m price.

The council has only offered vague reasons about not being able to reach the best outcome for Wellingtonians for pulling out. But former lawyer, and current company director with investment experience, Paul Ridley-Smith has lobbied against the deal and believed he knew why it was cancelled.

Council chief executive Barbara McKerrow, advised by chief financial officer Andrea Reeves, was given delegated rights by the council to do the deal under the agreement it was “fiscally neutral”. Ridley-Smith had repeatedly shown them it was not, as there was no certainty that the council would get its $32m investment back, he said.

This would have meant Mayor Tory Whanau, a staunch supporter and part-architect of the deal, having to take it back to another vote ― which Ridley-Smith believed she would lose.

“It’s a way of saving face to avoid a defeat on the re-vote,” he said. Council spokesperson Richard MacLean said Ridley Smith was “completely incorrect”.

The Post this month revealed one-time supporter Tim Brown saying he would not vote for it again, and Ben McNulty, who originally voted for it, saying he was now “very sceptical”. Their votes would have had the power to turn the tide against the deal.

It has also been revealed that Wellington ratepayers funded a $1400 dinner for Reading owners and others to hatch the deal,that the parent company had lost more than $150m in the past three years, and that the council was looking to sell money-making land to fund the deal.

Whanau, in a press release on Tuesday, said the cancellation was “disappointing, but the right one”.

“I’ve said many times that I supported officers to find a creative and innovative solution about what to do with the Reading building.

“However, I want to be very clear that this was never a done deal.”

With 80% of the deal done, councillors earlier voted to send officers away to complete due diligence, which was being done when the plug was pulled.

A council statement said its staff had not been able “to reach the best possible outcomes for Wellingtonians and the decision was made this week to not pursue the proposal further”.

The cinema complex, closed for five years since a structural report, has been seen as an eyesore on the party strip since. The deal was an attempt to fix that.

Wellington Chamber of Commerce president Simon Arcus, said it was “no surprise” to see the deal fall over after a “public thrashing”.

“It would have been a terrible precedent to set for Wellington going forward.”

The revitalisation of Courtenay Place remained a focus for business and the Reading complex was an anchor in that area.

“This shows the need for clarity in leadership and decision-making,” he said.

He was left with “more questions than answers” about why the deal had stopped in its tracks and “where do we go from here?” in terms of revitalising the rundown entertainment area.

McNulty said the deal had 'noble intentions' to revitalise the area, but “unfortunately it has been mired by excessive secrecy and few will be sad to see its demise”.

“As I said in debate at the recent notice of revocation, council’s severe lack of [enforcement options] when it comes to dealing with delinquent property owners is a major problem.

“Sadly, I imagine we’ll continue to see this property vacant until 2035 as a result.”

Councillor Nureddin Abdurahman said he had strongly opposed the deal because “I thought it was a bad deal for the city”.

“The council should not be subsidising a multinational corporation when it is proposing to cut community facilities and sell off the airport,” he said.

Councillor Nīkau Wi Neera emailed a statement.

“We appreciate the work of our officers in keeping us, and ratepayers, safe in this commercial process,” it said.

“I am committed to the outcome Reading was designed to create – namely the reactivation of the dead centre of Courtenay Place. I’ll be working hard to bring life back to this part of the city.”