Rates bill to soar for Reading, 59 other abandoned Wellington buildings

Thursday, 25 April 2024

Wellington City Council failed with the carrot so is bringing out the stick for the owners of the Courtenay Place Reading complex, whose annual rates bill could climb past $1.5 million a year.

Derelict buildings such as the Amora hotel on Wakefield St, closed since 2019, and about 59 other buildings could also be caught in council plans to crack down on owners of derelict buildings and vacant land in the city centre now facing a proposed 400% rates increase.

Wellington Mayor Tory Whanau on Wednesday confirmed a plan was proposed in the council’s long term plan that would mean owners of vacant land or derelict buildings in the city centre would pay five times their normal rates.

It is an effective change of tack from helpful to punitive for the council, which on Tuesday pulled out of a deal to buy the land under Reading for $32m, which owners would have put towards reopening it. Neither Whanau nor the council were willing to say what specifically derailed the deal, which Whanau said was cancelled by council boss Barbara McKerrow.

On Wednesday Reading’s chief executive, Ellen Cotter, made her first public statement on the deal and its failure. “There was no prior notification or indication council was terminating. To say we are disappointed is an understatement,” she said.

Her full statement can be read below.

Whanau’s office confirmed neighbouring land owned by Reading was exempt from the proposed rates hike because it was used for car parking so not deemed vacant. Council information shows vacant land has no active use, is not under development, and includes derelict, unused buildings.

The council estimates there are about 60 “vacant” inner city buildings that could face the rates hike.

Reading’s Courtenay Place cinema complex is charged $318,960 in rates per year but that would increase to $1.59m under the proposal. The $270,024 for adjoining car park sites would not be affected other than by usual rating changes.

Rates at the Amora Hotel on Wakefield St would jump from $132,839 to $664,195. On Wednesday the council could not release a full list of affected buildings.

Unanswered questions from the council about the Reading failure include:

• Are Reading owners considering legal action? Whanau couldn’t say if there was any push back from Reading on the council’s decision to pull out.

• How much has the ordeal cost Wellington ratepayers? We know about the $1400 meal for the Reading owners and others in Wellington, and $43,000 to investigate five councillors accused of leaking information about the deal. But what about staff time, any other hospitality, accommodation, travel costs, plus external legal advice? The council has been asked to supply the costs under the Local Government Official Information and Meetings Act.

• We know that the council told Reading the deal was dead last Tuesday but took a week to tell the public and councillors. Whanau said there were discussions with Reading through the week and the final decision was made this week. But council staff emailed councillors on Tuesday this week saying they told Reading the deal was off “effective immediately” a week earlier. What happened during the week and why was it kept secret?

• When The Post earlier in April revealed Reading’s United States parent company had lost $150m in the past few years, council chief financial officer Andrea Reeves said the financial status was “aligned with council’s understanding of Reading’s financial position”. If it wasn’t the company finances, what changed? Pannett believed it got “too hot politically”, while Wellington company director Paul Ridley-Smith believed the council found it was not fiscally neutral as promised and would have had to go to another vote, which would have failed. The council denied this.

The council is currently consulting on its long term plan, which is due to be adopted on June 30.

Reading CEO Ellen Cotter’s full statement:

Following 18 months of working constructively with Wellington City Council to secure a positive future for the Reading Courtenay Place complex, Reading was notified on 16 April, of the Council’s decision not to proceed with the redevelopment deal.

The redevelopment in collaboration with the Wellington City Council would have delivered Wellingtonians a 100% NBS building, including a top to bottom transformation, recreating a world-class cinematic experience and a diverse mix of hospitality. It would have generated up to 200 employment opportunities when open. Based on significant pre-development work that Reading had done pre-pandemic, Reading’s plans would have ensured an accelerated re-launch of Courtenay Central.

The cinema and shopping complex has been closed since January 2019 when Reading discovered a latent seismic structural risk with the building.

Courtenay Central was a very popular Wellington entertainment centre hosting millions of visitors annually. The decision to close, to avoid risk to our people and customers, came at a huge ongoing cost but it was the right thing to do.

The challenges of finding a viable solution and funding a redevelopment were then complicated by the Covid 19 pandemic and its aftermath, including ongoing high inflation and interest rates.

We nevertheless remained committed to Wellington. We have a significant presence in the city. We have the Courtenay Central site and two adjoining sites. Also, our primary accounting and property development office, where we employ a dedicated team of 26 employees, has been headquartered in Wellington for decades.

We have been wanting to redevelop the site and were encouraged when the Council agreed to assist by buying the land for $32 million and leasing it back to us. This was not what Reading considered to be a full market price but was part of a package which included a buy back right.

We appreciate the Council was making a significant capital commitment, but the Council would own the land, receive revenues intended to meet its cost of capital and be able to control and ensure certain key civic outcomes for Wellington.

Reading’s capital commitment would have been more than double the Council’s investment while also bearing all the construction and leasing risk.

Reading has worked hard with Council staff for months to find a solution to relaunch the Courtenay Central complex. A memorandum of understanding was agreed between the parties in December 2022. By October 2023 we had also agreed the key commercial terms. Final and binding legal documentation remained outstanding, but drafts were well advanced when Council terminated.

The Reading team were told by Council staff just ahead of a meeting which Reading understood had been organised with key principals of both parties in order to bring the deal to a close. There was no prior notification or indication Council was terminating. To say we are disappointed is an understatement.

We believe the redevelopment would have been very positive for Wellington. We don’t see how the process and its abrupt termination can be good for Wellington City.

Reading will now take time to consider its options.