The $500,000 consultants’ bill for failed Reading cinema deal

Wednesday, 28 August 2024

The council proposed a $32 million deal which would allow the US property and entertainment giant to lease back the land while it redeveloped the quake-prone site.

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Wellington City Council spent more than $500,000 on lawyers and consultants to work on its failed Reading cinema deal.

Figures released on Wednesday reveal law firm Bell Gully was paid $387,076.78 (excluding GST) between November 2022 and April 2024 for drafting documents, including a draft transaction and undertaking due diligence.

Consultants PWC received $36,563.34 (excl GST) for a commercial and financial assessment of the proposal to buy the land under the vacant city centre complex.

And commercial real estate agents Colliers provided valuation services worth $17,100 (excl GST).

The council proposed a $32 million deal which would allow the US property and entertainment giant to lease back the land under the Courtenay Place property while it redeveloped the quake-prone site.

But the plan was hugely controversial, and viewed by some as corporate welfare for Los Angeles millionaires while Capital residents faced spiralling rates bills and an infrastructure crisis.

Councillors axed the deal in April and the site is now up for sale.

Wellington Mayor Tory Whanau said it was “disappointing” when the Reading deal was dumped.

Mayor Tory Whanau championed the deal, which she saw as vital to regenerating the Golden Mile and central business district.

Details released under the Local Government Information and Meetings Act reveal senior staff including a city development manager, development manager and principal legal counsel spent “substantial” time working on the proposal.

“The salary of these three staff combined is in the range $520,000 to $580,000 per annum. Other Council staff were involved as required,” the council said in a statement that accompanied the release.

The exact time spent on the deal was not recorded.

Also included in the release was an invoice for hospitality. The Post reported in February how the council treated sisters Ellen and Margaret Cotter, who head the family’s cinema empire, to a seafood dinner, with almost a quarter of the bill for booze.

“The American-based Reading representatives expressed interest in meeting with Council officers while they were in Wellington, to discuss its future plans for the Courtenay Central cinema complex,” the council said in the unattributed statement.

“This created an opportunity for the Council to meet directly with Reading’s senior management, to illustrate the opportunities for market growth and build confidence and a commitment to invest in Wellington.”

Not included in the disclosed spending was the $43,000 investigation launched by Whanau into the conduct of five councillors.

The code of conduct probe was launched last year after deputy mayor Laurie Foon complained her colleagues leaked commercially sensitive information about the deal.

High-profile lawyer Linda Clark was appointed to undertake the review but couldn’t find the leaker.

She concluded councillors Nicola Young, Tony Randle, Ray Chung, Diane Calvert and Iona Pannett did breach a code of conduct by speaking to the media after details of deal were leaked.

The costs have been revealed as some residents come to terms with a rates hike of up to 21%.

The council budget is under huge pressure to make up for historical underinvestment in infrastructure, particularly leaking pipes.

Last week, Prime Minister Christopher Luxon urged local government to “rein in the fantasies”, live within their means and cut spending on “nice-to-haves,” in a speech that was poorly received by many in the sector.

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