Photo: CC 4.0 BY-SA / Tom Ackroyd
Wellington City Council have decided to not go ahead with the $32 million Reading Cinemas deal.
Senior council staff have not been able to reach "the best possible outcomes for Wellingtonians" in negotiations with the company.
Wellington mayor Tory Whanau said the outcome was "disappointing, but the right one".
A press release said Whanau and elected members voted last year in favour of council staff undertaking due-diligence and negotiating the $32m deal that would see a refurbishment of the building, including earthquake strengthening.
The building has been closed since 2019 due to its quake risk.
Council chief executive Barbara McKerrow said staff had worked "extremely hard and endured great pressure in a bid to negotiate an arrangement with Reading".
"We always signalled that we would halt negotiations if we were not able to reach a formal agreement in a timely manner. We've reached that stage."
Whanau said she hoped Reading would look at the cinema site as holding great potential for redevelopment.
"It would be heartbreaking for the site to sit unused for too long so I urge Reading to continue to explore development deals."
Whanau told RNZ she couldn't say exactly what stopped the deal from going ahead.
"That's certainly between the [council] officers and Reading."
Whanau said she wanted residents to be assured the council has a plan to revitalise the city but the Reading site itself would not be part of that plan.
She said that included projects such as the Golden Mile project and pushing ahead with negotiations around changes to Civic Square.
RNZ asked Whanau if she had faith Reading Cinemas would do anything with the building over the next 10 years.
"It'll be a lot more difficult without us in the mix I have to say but I certainly hope that Reading will still proceed with other offers of partnership."
She said these included an offer from Wellington property developer and philanthropist, Sir Mark Dunajtschik who previously offered to buy the complex, at a council meeting earlier this year.
Wellington councillor Ben McNulty voted for the deal to proceed but was sceptical about what the deal looked like once the land was bought.
McNulty said he supported the intention to reactivate the area near Reading Cinemas but the way the plan had been rolled out had not "brought Wellingtonians on board".
He said Reading Cinemas had approached almost every property developer in town before coming to council.
McNulty said the fact they could not make it work with those companies or the council showed the city council shouldn't have partnered with them.
He told RNZ he believed the building would sit empty for the next 10 years.
Councillor Tony Randle has welcomed the deal not going ahead.
"I thought the Reading deal was a bad deal from the time I first read the details and I have just been waiting for the penny to drop for all those people that supported it."
Randle said the issue with Reading Cinemas reflected a problem with other areas of the city where building owners are reluctant to spend money to strengthen buildings.
"There was nothing special I think, for Reading Cinemas to get special treatment."
Deputy mayor Laurie Foon said she was disappointed the deal was not going ahead.
Foon said she was concerned about what the future of the building would be with the council walking away.
"That is the big downside of this, but I think the reality is Reading still has opportunity to work with developers [and] other offers."
