Photo: RNZ
New documents revealing Wellington council negotiations with Reading Cinemas over a $32 million deal shows council staff recommended pulling the pin a year before it was dumped, but soon changed their tune.
In April this year Wellington City Council announced it had pulled the plug on the plan which would see the council buy the land under the Courtenay Place earthquake prone complex and lease it back to the cinemas company so it could redevelop it.
Documents relating to the deal released under the Official Information Act to RNZ show council staff recommended the deal should be abandoned in April 2023.
In a memo dated 27 April 2023 Council City Development Manager Phil Becker wrote to the council's Chief Executive Barbara McKerrow outlining concerns about the project.
The memo said the council and Reading Cinemas had been working on the deal for six months and had not reached agreement on key commercial terms.
It stated due to the council's short to medium term budget pressures the proposal places the council financial's position at too high of a risk and that they should not go ahead with the deal.
The memo did state there were implications with not proceeding with the proposal which included an extended period of inactivity on the site, reputational risk of withdrawing from a plan that could have been well supported by the community and damage to the council's relationship with Reading Cinemas.
It said the risk associated with nothing happening on the site was significant due to the risk of "impacting public perception of the Courtenay Precinct and investors' confidence".
It recommended the council still support economic activity on Courtenay Place through work led by their economic wellbeing team.
A Wellington City Council spokesperson told RNZ the Reading Cinemas deal was an ongoing negotiation where at times, officers were considering walking away from negotiations
They said this is a typical back and forth that occurs in a commercial negotiation.
The spokesperson said the impasse in negotiations was solved shortly after the memo was sent to the Council officer's satisfaction.
The same memo noted that Reading Cinemas and the council had commissioned independent market valuations to determine the land value of the site.
The council's valuer came up with a figure of $31.9 million whereas Reading's valuer came up with a figure described as significantly different -- but that was redacted in the documents.
In a briefing two months later it noted that negotiations had been held up because the terms that had been discussed with Reading Cinemas were not fiscally neutral.
The proposal being fiscally neutral was a key justification for the plan -- with Wellington Mayor Tory Whanau having said she was confident a fiscally neutral plan would be approved by the city council.
A Wellington City Council spokesperson said it was an ongoing negotiation where at times it did not look like fiscal neutrality (as it had been defined for this deal) could be achieved but that was always the aim.
The documents released to RNZ show that the deal continued to be worked on till 16 April 2024 when the council choose to inform Reading Cinemas of their decision to axe the plan.
The public were made aware about the deal ending on 23 April.
At the time of the announcement the deal would not go ahead senior council staff said they were not able to reach "the best possible outcomes for Wellingtonians" in negotiations with the company.
Wellington Mayor Tory Whanau has refused to comment on the documents that have recently been released.
