‘The deal sucks’: MPs question Tauranga marine precinct sale

Two MPs in Tauranga are calling for the Auditor-General to investigate the sale of the city's marine precinct, which one believes is a "really bad deal for Tauranga".

Tauranga MP Sam Uffindell and Act MP Cameron Luxton have asked the Auditor-General to investigate the sale due to concerns it was sold for "well under" its valuation.

Mayor Mahe Drysdale confirmed the council was investigating the transaction internally and working with the Office of the Auditor-General. No evidence of wrongdoing had been found, Drysdale said.

In May, Tauranga City Council sold the precinct at Sulphur Point for $13.987 million to Christchurch developer Sam Rofe, to be developed into a superyacht refit destination.

The 2.98-hectare precinct, also known as Vessel Works, was valued at $18.63m and $19.24m by different valuers. It is zoned for port industry and some sites within the precinct are already privately owned.

The 7195sq m hardstand area was separately valued at $6.12m and $7.81m.

To reach the sale price, the council started with a "valuation midpoint" of $23.13m then deducted $6.96m for the hardstand and $2.54m for "risk". An agreed value of $110,000 for the hardstand and $250,000 for the Vessel Works plant and equipment was added, according to a report presented to the council.

As part of the sale, the council also agreed to fund up to $29.2m to develop an alongside wharf and replace the existing Bridge Wharf, and the council would receive part of the berthage fees.

Reports presented to the council said developing the precinct under private management would benefit the city's economy.

National Party MP Uffindell said, in his view, it was a "really bad deal for Tauranga".

In his opinion: "[It] sold well below market value, committing Tauranga City Council to an expensive investment for the benefit of a private developer and significantly impacting the fishing industry. The deal sucks. It is a really bad outcome for Tauranga.

"The people of Tauranga deserve better from the council."

He said if the council wanted to get the best price, it should have gone to an open market process.

The sale conditions meant most of the working-boat operators would need to relocate from their precinct berths.

A report presented to the council said Rofe approached the council in late 2023 with a proposal to buy the precinct.

The government-appointed commission running the council decided to sell the precinct. Elected councillors replaced the commission in July, after the decision was made.

Uffindell has questioned whether the council had followed its internal Property Acquisitions and Disposal Policy.

He also had "genuine concerns" about whether appropriate consultation was done with the marine precinct users that would be affected by the sale.

Pāpāmoa-based MP Luxton shared Uffindell's concerns around a "lack" of public consultation and the sale price.

"Ratepayers deserve clarity around this decision to ensure their interests have been put first," he said in a statement.

In his view: "Many ratepayers are already under immense pressure resulting from rising rates bills. Selling the precinct at below market rates is yet another kick in the guts."

At a council meeting in October, marine precinct users aired their frustrations over what one described as the "unconscionable" sale and being forced to leave the precinct.

The marine industry figures said they contributed well over $100m annually to the local economy.

Managing director of marine service company Pacific7 Sean Kelly told the meeting he had planned to file an injunction with the High Court to try to stop the sale, but had since had to abandon the plan due to the financial risk.

Kelly said in a statement that stakeholders received advice if they continued with the injunction it could cost more than $100,000, and if it failed, they could be held liable for the new owner's legal fees and damages.

"We've poured time, resources, and money into trying to protect our livelihoods, the community's best interests, and our industry. But the financial risk became too great to bear."

Drysdale said he asked council staff to provide information to the group looking at an injunction in a timely manner to help them.

The marine precinct sale was yet to be formally settled but legal advice indicated there was a binding agreement in place, he said.

The council was investigating the transaction internally, had gathered legal advice and was working with the Office of the Auditor-General, Drysdale said.

"Those processes will shed light on whether the sale price fairly reflected the actual value of the marine precinct assets and business at the time of the sale.

"While no evidence has been found of personal wrongdoing, as elected members, we are supportive of independent scrutiny of significant property transactions.

"I have written to the Office of the Auditor-General to express full support for any review or investigation they might deem necessary."

This was to ensure that proper processes, legislation and policies had been followed and ratepayers' best interests were considered, Drysdale said.

The newly elected council made the information public to be transparent about what they had inherited, he said.

"I don't think the current council would agree to the same deal or process if it was put in front of us.

"However, I can see the rationale and have to respect the previous governance decision.

"We need to be proactive and find a solution that works for all parties going forward. That's where we can have the most influence.

"The new council is focused on making decisions that deliver the best financial outcomes and value for money for Tauranga ratepayers."

A spokesperson for the Office of the Auditor-General confirmed they received correspondence asking them to look at investigating the issue.

"In line with our usual process, we are considering the issues raised, and whether or not we will carry out any inquiry work, including whether the issues are within our mandate."

LDR is local body journalism co-funded by RNZ and NZ On Air.