Value the port land before you decide

Eric Crampton talks sense:

I wish then to advance three propositions.

First, Auckland Council might have a better idea about the actual value at stake were it to put up a serious request for proposals and invite bids.

Second, the high downtown land values that could make the case for moving the port also make the case against using the site for a stadium. Stadium maths are worse than Pythonesque – they firmly reach into Douglas Adams territory.

Finally, decisions to move the port should be contingent on just what alternative uses might be found for the port land. Deciding to move the port first, and only subsequently exploring the options for the vacated waterfront, would be a mistake.

Crampton is basically saying it is barmy to decide to move the Port first, without knowing how valuable the land that would be freed up is. That makes total sense.

And the best way to find out is to invite bids. Ask companies to put in a bid saying how much they would pay for the 550,000 square metres of waterfront land.

The case for moving the Port would be rather simple if the Port could really recoup $20 billion by selling the land on which it sits. It would have more than enough money in that case to buy and develop a site elsewhere. The case would be far more difficult if the underlying land were only worth about a billion dollars, as the Port’s CEO has suggested it might be. Deciding to move the Port before finding out what the underlying site is actually worth could lead to regret.

So a sensible way forward – the Auckland as owner of POAL could invite indicative tenders for the land.