Reading deal wrangling: Public vote … only if mayor wins

Friday, 30 August 2024

Ellen Cotter, pictured top right, heads her family's entertainment empire with sister, Margaret. The pair met with mayor Tory Whanau, bottom right, in late 2022. (Composite image)

The behind-the-scenes wrangling as the Wellington City Council tried to get the Reading deal done included months of secret work and a vote only to be held in public if the mayor would win.

The council has defended its senior staff, saying its chief financial officer’s email was ambiguous but a case of her playing by contractual rules — not politics.

Mayor Tory Whanau, chief executive Barbara McKerrow and senior staff met Reading’s millionaire foreign owners for a ratepayer-funded $1400 meal at Ortega Fish Shack in Wellington in late 2022, when a $32 million plan was hatched but kept secret from all apart from a select few in council.

But the deal eventually leaked and, in February this year, councillor Iona Pannett was calling a vote for the council to pull out.

Councillor Iona Pannett: “If it is all about whether you could get the numbers, that isn’t confidentiality.”

Documents released under official information laws show that, just before that vote, council chief financial officer Andrea Reeves emailed staff saying that if Whanau looked like she would win the vote, the council should support a public vote.

If there was “no chance of the mayor getting the numbers”, the public should be excluded from the meeting, she said.

“I am still waiting to hear back from Nadine,” Reeves wrote. Nadine Walker is Whanau’s political adviser. The vote ended up being held in public and Whanau won.

“If it is all about whether you could get the numbers, that isn’t confidentiality,” Pannett said on Thursday, adding she would have respected confidentiality on legal grounds.

The first time she had an “inkling” about the Reading deal was about September 2023 — long after the $1400 meal set the wheels of council secretly in motion.

Wellington City Council chief executive Barbara McKerrow was at the Ortega meal.

The deal would have seen the council spend $32m on the land under the long-closed Courtenay Place cinema. The money was to be put towards fixing and reopening the complex, widely seen as a blot on the capital’s party and hospitality strip.

But the council pulled out out of the deal in April this year after a leak of details turned into a flood of bad publicity: It was seen as corporate welfare, there were doubts about Reading’s financial ability, and struggling boutique cinemas bemoaned paying rates to help their multi-national competition.

The documents also show the deal almost fell apart, after Reading's valuers came up with a significantly different figure to Colliers, which was contracted by the council and submitted $31.9m. The amount was redacted.

A memo written by Phil Becker, city development manager, endorsed by Reeves and sent to chief executive Barbara McKerrow in late April 27 2023, recommended walking away.

“Council and Reading have been unable, over a six-month period, to reach agreement on key commercial terms … given the short to medium council budget pressures, the initiative as proposed by Reading places too high a risk on the council's financial position,” he wrote.

But this didn't happen. The valuers agreed to meet and compare methodologies, and eventually both sides settled on $32m.

It was a change of tune from two months earlier when Becker emailed Reading talking about setting the project “on a path of success in securing a favourable decision by councillors by end of June”.

He drew attention to the “urgency with which we need to work” as the council was about to start debating its coming annual plan, which included major funding decisions.

It was “crucial” an agreement was sought before the debate began, he said.

“This reduces the risk of the project competing with other funding decisions,” he told people at Reading, whose names were redacted.

Council spokesperson Richard MacLean said Becker was only raising the question of whether Reading was a matter for the coming annual plan.

“In order to maintain confidentiality as required by the Memorandum of Collaboration and Understanding [with Reading], staff considered that the annual plan discussions and the Reading discussion should be separate matters,” MacLean said.

To argue Reeves, in her email about excluding the public from the vote to ditch the deal, was making a political call was “incorrect and a misrepresentation”, MacLean said. He said her words were “ambiguous”.

It was a commercial deal and the council had a confidentiality agreement with Reading, meaning public were going to be excluded. But most councillors wanted the meeting to be public and Reeves was trying to ensure the council paper was “appropriately written”, MacLean said.

Whanau would not comment but all councillors were asked for comment.

Tim Brown, a deal supporter, said he and two other councillors were brought into the fold earlier due to their commercial experience: “As I recall, we three were expressly asked on the basis that there would be no benefit in doing further work if we … weren't OK at least conceptually.”

Nicola Young said council staff, under a previous council, had tried to get a similar deal over the line. “It’s not surprising they would have a preferred deal the second time and want it done urgently,” she said.

Diane Calvert said it wasn’t the first time staff had tried to get decisions in before council considered other spending: “We have seen this in other areas especially around transport projects,” she said.