A Cr on why he opposed the Reading deal

Cr Tony Randle writes:

Firstly, and in some ways most importantly, this is an unprincipled deal. No Council should be using its special privilege to tax its residents (which is why we can borrow at much lower interest rates) to help individuals or private for-profit companies. 

This disadvantages all the other individuals and private companies who also “need help” to redevelop their business. That there is no agreed council policy covering this deal and that Reading International has lobbied the Council for years to finance them only makes this deal even more unprincipled.

All the other building owners who didn’t lobby Council are not happy about this.

Secondly, this Council is facing much bigger financial problems in fixing water, waste and transport. 

Reading is simply not on the priority list. 

Our infrastructure deficit is largely because previous councils diverted tens of millions of infrastructure depreciation funding towards projects they deemed as “needy” such as Tākina – our impressive new but loss-making convention centre. 

Even before this deal, the WCC Long-Term Plan includes borrowing to 245% of our rates income. This is over our own financial policy limit of 225% … so why are we even considering non-essential projects when we cannot properly fund our essential ones?

The Council decided this was a higher priority than essential services. They are already at their debt limit.

You would think getting a $32M loan at significantly below market interest rates (by my estimate worth over $10M) should be enough for Reading International to get on with their strengthening project. But no, this council has also agreed to give Reading the option to buy its land back any over the next ten years for the same price! Wellington CBD land roughly doubles in price every decade which means this land in 10 years’ time will likely be worth over $64M. In ten years, Reading can give us the $32M back and then immediately sell the same land for $64M walking off with the extra money. 

Because the Council plans to fund this deal by selling $32M of other CBD land, this loss of the land capital gain is real money … hell, we haven’t even got the buyback price inflation-adjusted so we lose on a decade worth of inflation on our loan principle!

It’s a great deal for the US owners of Reading.